With so many different accounting roles within a business, it can be difficult to distinguish the duties of each. If your company employs a bookkeeper, do you still need the services of an accountant; and if your business has a lead controller, does it still need a bookkeeper?
Here we take a look at the role of a bookkeeper, how this function differs from that of an accountant, and which of these functions are best suited to the needs of your business.
What does a bookkeeper do?
Bookkeepers play a crucial role in the accounting side of a business, not only are they responsible for providing accurate and current financial information about a business, but they also assist accountants to prepare financial reports that enable business owners’ decision-making.
Here’s a breakdown of bookkeeping duties:
- Capturing financial transactions: Accurately recording the money coming into and going out of the business is an important part of knowing the exact financial state of a business.
- Reconciling financial statements: In addition to keeping a record of business transactions, a bookkeeper must ensure that the internal books match the bank records of a business. This not only serves as a tight hold on a business’s holistic finances but also aids a smoother tax filing process for a business.
- Producing invoices and managing accounts: Bookkeepers typically monitor and manage accounts receivable and accounts payable in a business to ensure healthy cash flow within the business. An important part of this includes producing client invoices.
- Managing payroll: Making sure employees are paid the correct amount and on time, can be a full-time job. It typically involves calculating employee tax and deductions. While this function can be automated by software, it would form part of a bookkeeper’s duties. A bookkeeper will thus also ensure that the necessary automation for this is taken care of within your accounting software platform.
How a bookkeeper differs from an accountant
While bookkeepers and accountants work closely together and one could perform duties in the absence of the other, a bookkeeper’s role is administrative in that it oversees day-to-day transactions and is largely concerned with record-keeping. An accountant plays a more subjective role in his/her ability to provide financial insights by studying and interpreting the data a bookkeeper provides. An accountant can typically be considered a bookkeeper if a business requires them to double up on their functionality, but a bookkeeper cannot play an accounting role without the proper certification.
The below tasks can be considered joint efforts on the part of accountants and bookkeepers:
- Providing financial reports: The bookkeeper in your business typically gathers and inputs the data accountants use to generate financial reports that offer insights into financial trends within the business. The accountant uses a bookkeeper’s raw data to help business owners better understand their financial decisions and to enable them to make more informed business decisions.
- Tax filing: Both bookkeepers and accountants play a role in the gathering and preparing of information for tax filing purposes. Bookkeepers keep records of transactions and therefore are closely linked to the gathering of the data, while accountants are equipped to interpret this data for tax filing purposes. It is important to note that while bookkeepers and accountants play their respective roles in the tax preparation process, neither are considered “enrolled preparers,” which means they have no standing with the IRS in the matter of signing tax returns or representing clients during tax audits and other matters before the IRS. Only CPAs and IRS Enrolled Agents can represent a taxpayer before the IRS.
While a bookkeeper and accountant can perform the same functions it is important to consider the financial needs of your business, as well as your business budget when deciding which role to recruit within your company. It is also important to note that employing the services of a bookkeeper or accountant, doesn’t automatically mean that your business has a certified tax agent.
With reliable accounting software, many of your business’s bookkeeping functions can be automated, but you would still require the expertise of either a professional bookkeeper or accountant to discern and decipher the figures, depending on your business needs.
At Fusion CPA, we offer a host of outsourced accounting services. Whether it be accounting, bookkeeping, or controller services you need, we can help you decide which of the accounting roles your business needs most. You can also outsource a combination of these functions to our accounting experts, who have years of experience and expertise across different industries.
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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.
