Two terms regularly used in the world of small business, these financial supports to any organisation can both play a key role in ensuring success.
Those in the know, who enjoy the benefits, understand the different roles that an accountant and a bookkeeper play. But for others, the difference may seem too subtle, or simply confusing. Here’s an attempt to explain, from us at Timewise VA.
A bookkeeper concentrates on helping record day to day transactions, particularly sales and receipts. A carefully kept record of incomings and outgoings, regularly updated, will give an accurate record of the company’s cash position, and its profitability. While traditionally this might have been recorded in a book, today’s bookkeeping uses an online software package, such as our favourite, Xero.
For many smaller businesses who are just starting out, this important function can often be left aside, as all effort is focused on winning sales, and completing orders to meet customer requirements. The cliché of a pile of receipts shoved into a drawer or a carrier bag, can become a major headache if left for months before it is tackled! It can be far easier to have a system in place – perhaps an external bookkeeper – to keep control of those receipts before they pile up.
So for us, a bookkeeping role involves getting regular updates from our clients, either physically or electronically. We then record all the transactions correctly, giving our client the opportunity to review the information. As a result, they can easily and quickly check their cashflow, see where money is owed, and assess the ongoing success of the business.
Accountants have a higher level interest in the numbers. They can offer a variety of services, but most start with the very basic support to a business, of preparing accounts that must, by law, be prepared each year and submitted to the authorities. These figures will also calculate the profit the company has made, and therefore the amount of tax that is liable to be paid.
Bookkeepers and accountants often work closely together, with one supplying the recorded transactions, from which the other works. Having both in place, with clarity over who does what, is really helps a small business operate efficiently.
Preparing basic accounting information may be compared with looking in the rear view mirror. The best accountants also help you see clearly on the road ahead. They will be able to offer a broader range of advice, looking ahead to assist the business in several ways. By keeping a close eye on trends, there is the opportunity to plan major expenses strategically, minimising the amount paid in tax while ensuring the company has the new equipment or vehicles it needs to function most efficiently.