Choosing Your Safe Keeper: Accountant or Bookkeeper?

Small businesses are the backbone of the Australian economy. There are more than two million of them across the country and they make up 97 per cent of all commercial enterprises.

Whether a business is small or large, proper financial management is crucial. In small businesses, particularly in the early days when it’s important to keep costs low, the role of financial controller usually falls to the time-strapped owner — adding stress and stealing time away from other pressing matters.

Yet it is for precisely those reasons getting a financial professional involved is the best course of action a business owner can take. They ensure the right procedures are in place from the very beginning — potentially saving you money in both the long and short term.

Even if a business owner has been muddling through looking after their own accounts, most eventually get to the point where they need outside help. Denise O’Berry — author of Small Business Cash Flow: Strategies for Making Your Business a Financial Success — says these are the signs it’s time to get a professional in:

  • You’re not that comfortable handling your finances and often just cross your fingers and hope for the best.
  • You really would be better off spending time on other things.
  • You think you may be losing money or not controlling it as well as you could.

The question then becomes: accountant or bookkeeper? Which one is better suited to your situation and what is the difference between the two? We break it down for you.

What does a bookkeeper do?

Bookkeepers typically work with less complicated data that is fairly repetitive and they may be better suited to smaller, service-focused businesses. Their key functions can include any number of administrative and operational tasks, for example:

  • Completing payroll, plus recording employees and entitlements
  • Maintaining general ledgers and historical accounts
  • Producing invoices
  • Performing bank reconciliation
  • Providing reports for the client

What does an accountant do?

Although some functions overlap with those of bookkeepers, accountants typically perform higher-level tasks. Areas of responsibility fall under four broad categories:

  • Auditing
  • Management accounting
  • Financial accounting
  • Tax

A good accountant will analyse and interpret data and look for the relationship between events and financial results. Duties include:

  • Preparing financial statements including BAS, PAYG tax and company income tax
  • Preparing and adjusting entries
  • Analysing financial reports to reduce costs
  • Planning for future tax payments
  • Guiding the bookkeeper in any matters
  • Helping the business owner understand the impact of financial decisions

So, what else do you need to consider before hiring a bookkeeper or accountant?

Do they work with small businesses regularly?

You might want the high-flying accountant who has worked with big clients, but really, you need the one who knows the ins and outs of small business. For example, both personal and work finances may be heavily intertwined for many small business owners, something a “big business” accountant might not be accustomed to.

Do they have knowledge of your industry?

Different industries have specific issues that a financial professional will have to contend with. For example a farming business will be very different to an entertainment business, with varying concessions and regulations that need to be taken into account. Someone with experience in your industry will be able to provide strategies and advice specific to your needs.

Which accountancy qualifications are relevant?

If you’re confused about Certified Practising Accountant (CPA) versus a Chartered Accountant (CA), you’re not alone. Broadly speaking, a CPA may provide more varied skills including costing, planning and production, whilst a CA may be more focused on complex accounting issues such as auditing.

Whom should you pick?

Don’t just open up a directory and contact the first person in your neighbourhood. Ask friends, family and business associates for personal recommendations or search for online reviews. Also make sure you interview beforehand — and not just the potential accountant, but interview yourself, too. Narrow down the most important factors, what your expectations are and any potential deal breakers.

If you’d like help with your finances and simplifying things for your financial professional, try out Reep. Reep uses real, constantly updated data to create forecasts and reports for your small business that you can easily share with others.