Bookkeeper vs Accountant

When you start up a small business it can seem simple in the beginning to track your income and expenses, after all it’s just money going in and out.  There comes a time though when you will require some expert help and the question that comes up a lot is the difference between engaging a bookkeeper or an accountant.

For many they start with a bookkeeper and then think that is enough because their day to day transactions are recorded however there are many reasons why you might want to consider the services of an accountant as well:

  • BAS and IAS lodgment: an accountant will be able to help you make sure all your ATO obligations are being met. It can seem tempting to just lodge your BAS yourself but ask yourself how much time it is really going to take you and how much your time is worth. Often using a qualified professional works out cheaper anyway. A bookkeeper is also able to assist you with this service but only if they are a registered BAS agent.
  • Forecasting and Budgeting: it’s important in business to know what you are aiming for in terms of income and expenses and how to get there. A good accountant will help you create a financial plan that will take you in the right direction.
  • DIY advice: many business owners prefer to do their own bookkeeping, by engaging an accountant you have the freedom to do this. Many of my clients manage their own day to day bookkeeping but I do a final check at the end of each month giving them the assurance that everything is on track.
  • An expert on hand: having an accountant that works actively in your business and knows your individual situation can be invaluable. Whether they are just keeping an eye on what is going on or available to answer any questions, it’s a great resource you can tap into.
  • Future needs: when you have already engaged an accountant, it makes it easier to understand what your future needs are eg requirements for taking on staff, BAS registration or changes to business structure.
  • Data analysis: An accountant is qualified to be able to interpret the data entered by your bookkeeper to assist you with pricing, cashflow management and strategic decisions to name just a few.

Let’s take a real life scenario:

Tania has a cake baking business which she started as a hobby from home. She has always managed her own accounts using an excel spreadsheet but as the business grew, she changed to an online accounting system. She engaged an accountant to implement the system to ensure it was set up correctly to suit her business structure (Tania is smart, be like Tania!). The accountant she chose was particularly proactive and followed up with Tania regularly to ensure the system was working well and fitted her needs.

In the 4th year of her business Tania decided to rent a premise, her accountant was on hand to ensure these payments were handled appropriately in the accounts, she even set up a recurring expense so Tania simply had to approve it each month.

Shortly after Tania took on 2 employees and again her accountant was there to set up payroll and show Tania exactly what she needed to do. By this time Tania was required to lodge a quarterly BAS and her accountant was able to check the accounts and ensure everything was correct before lodging each BAS.

Tania’s business went from strength to strength and eventually she joined with a business partner, her accountant was there again to ensure that the accounts reflected this relationship and the money each partner took out and put in to the business was recorded accurately.

For Tania her accountant wasn’t someone who worked in the business every day though eventually she handed over all the accounts to them to manage as she grew too big to do it herself. The accountant was however someone who understood her business from day 1 and was able to step in whenever she was needed. Whenever you are looking for an accountant it’s vital that you find someone that will be proactive and assist you to understand and implement the financial tools that you need to make your business a success.

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