Lesson 2: What's the difference between an accountant and a bookkeeper and why do you need them?
As talented as you might be, you're only human. This means you can't do everything. So when we're talking about money, it's a good idea to call in an expert dig a little deeper into your finances, see things that you can't and point your finances in the direction that you want them to be.
It's an investment into the health and future of your business. This means, the sooner you start thinking about it - the better!
Hiring an accountant or bookkeeper might seem like a daunting task but it really isn't! It all depends on what you need. Like putting tools into a particular job, you get to decide which are the best kind of people to make your business the best version of itself.
So let's break down what they can bring to the table and why their expertise can be good for you.
Accountants can provide many services that could be beneficial for your business right now and into the future. As varied as an accountant's skills are, they might not be right for your business. It's all about choosing the right person that suits you.
Their skills include:
- Assisting with establishing your business
- Tax advice and planning
- Financial reporting
- Business management and analysis
- Superannuation advice
- Generating new leads and customers
Do your research and find out their qualifications and specialties. Find out how long they've been operating and if they try to build relationships with their clients rather than just do the bare minimum.
Here's some more helpful questions to ask your potential accountant.
- What are their regular fees?
- How do they communicate? Face-to-face? Email? And how often?
- Will you always deal with the same person or is there a team?
- How well can they translate complex financial concepts in terminology that you can understand?
- Who are their existing clients? Are they familiar with your type of business and industry?
Bookkeepers are the financial record-keepers of a business. They’re the ones that collect invoices and receipts, record cash flows, pay wages and prepare tax documents.
Some of the tasks bookkeepers perform include:
- Processing invoices, receipts, payments and other financial transactions
- Managing payroll
- Preparing financial statements
- Reconciling accounts and preparing reconciliation reports
- Managing any loans or debt repayments
- Calculating GST
- Preparing and lodging your BAS if you’re in Australia, or your GST return in NZ
- Preparing forecasting for your business
Another crucial service that can be provided by a bookkeeper is your balance sheet. It measures the financial health of your business at any given point. Normally, these sheets are completed monthly or at the end of the financial year. Balance sheets can include:
Net worth - the value of the business
Liabilities - debts, loans etc.
Assets - cash, equipment, stock, land
Balance sheets can be completed once you've got your profit & loss and cash flow figured out.
So what to do now?
Now that we've learned a few things about accountants and bookkeepers, what's important to you? What qualities and skills does your business require?
Download and print off this list. Tick these requirements off as they apply to you and cross check them with the skills we've already discussed.
By the end, you'll have a better idea who you will you need!
|Tax advice and planning|
|Regular financial & cashflow reporting|
|Management of loans and debts|
|Advice about superannuation|
|Business forecasting for the future|
|Preparing and lodging BAS|
|Profit and loss analysis|
|Generating leads and customers|
|Pricing strategy analysis|
|Health of your business|
Remember, good accountants and bookkeepers are a valuable resource and simply another way to support the best parts of your business. It might seem like a scary prospect to reach out for this kind of help but sometimes the alternative means going through years of uncertainty and financial stress.
Hopefully, what we've done today has put you one step further in the direction of financial confidence instead!
In the next lesson
The Australian Taxation Office has heaps of lodgement and payment dates throughout the year, not just around tax time. Luckily, we've got your covered with Lesson 3 - Key Tax Dates & Obligations Explained.