Keeping a new small business afloat requires sacrifice, dedication, time, and just plain hard work. Many fall into the trap of the “D-E-Y” mentality, or Do-Everything-Yourself, and find themselves personally controlling every aspect of their business- for better or worse. When faced with the financial tasks integral to keeping a business thriving, many turn to computer software such as Quickbooks in order to facilitate their bookkeeping. Yet there comes a point where an entrepreneur with vision who wants to expand his or her business learns that it is a 24-hour a day job and online bookkeeping is not enough; sometimes it is necessary to hire a professional. This is when the question of hiring an accountant versus a bookkeeper becomes relevant to a growing business.
Maintaining receipts, payroll records, and accurately filing taxes accurately are crucial components of maintaining a thriving enterprise for the long-term. While both accountants and bookkeepers can keep records of purchases and profits, by definition bookkeepers are the specialists in this area. Bookkeepers handle the daily financial transactions of a business, which can easily add up to dozens per day, even for the smallest start-ups. Bookkeepers may submit payroll documentation for employees, track receipts and expenses, submit invoices and pay bills. Professional bookkeepers usually use online bookkeeping software themselves. However, the advantage in hiring a person especially for bookkeeping is the time it frees for the business owner to attend to other aspects of the business; as a company grows, so do the hours required to maintain accurate financial records, and it can easily become all-consuming. Most likely a company will not produce enough financial transactions to need a bookkeeper on staff full-time, therefore some choose to hire a bookkeeper for only several hours a week as maintenance. If you have a bookkeeper in the office several times a week and he or she is still behind on work, then it might be time to consider bringing the person in full-time.
An accountant, on the other hand, works within a much broader frame than a bookkeeper. Businesses employ accountants to help with long-term financial planning. Accountants may use online bookkeeping software, but the bulk of their work is done with the future of the business in mind; their specialty is the “big picture”. Accountants take the information gathered by bookkeepers (receipts, expense tracking, revenue streams, etc.) and use the data to form a vision of growth for the business. They might produce quarterly or annual reports to help keep the business on track, minimizing financial weaknesses and projecting areas of expansion. Also very important, accountants make sure that taxes are filed correctly where bookkeepers can also ensure you are ‘tax-ready’. For these reasons a business might retain an accountant on an on-call basis for quick questions and semi-annual reports. Accountants offer financial advice based on a company’s track record and goals, and help a growing company find and keep its financial footing.
The question remains: should a small business hire an accountant, or is a bookkeeper the better choice? It really isn’t a matter of choosing one or the other; in reality many businesses require both, it depends on the needs and goals of a particular company. Is financial information being accurately and appropriately recorded? Are expenses being tracked and what is being done with this financial information? Is it being applied toward the long-term goals of the business? Most importantly, what can the company afford?
Here’s some additional explanation between the two types to help you clarify your needs:
According to career website Salary.com, bookkeepers earn anywhere from $30,000 to $45,000 annually. In 2013, the median salary for an accountant was $65,080, while the top earners in the field made over $100,000. Therefore if a company’s employee count, expenses and revenue remain relatively low (generally less than $1 million per year), it is advisable to hire these financial professionals on an as-needed basis. This way a small business receives quality professional services with the least financial impact.
For exceptional quality bookkeeping services either in person or cloud-based online in the Toronto and Mississauga area of Ontario, contact Above The Cloud – A Div. Of Admin To Go Business Solutions Ltd. at http://www.abovethecloudbookkeeping.ca – or at (647) 924-0419.