Bookkeeper vs Accountant: Which One Does Your Small Business Need?

For many small business owners, money management issues are often a challenge.

From a lack of capital, which is one of the most common reasons businesses have to close their doors, to issues with invoicing and record-keeping, lots of businesses are struggling in the finance department.

If you’re in this situation right now, having the right money management professional on your team can be very helpful.

Who should you hire, though? Do you need a bookkeeper? An accountant? Both? 

Read on to learn more about the differences between a bookkeeper vs accountant. You’ll also gain some helpful insight into which is more important to hire for your business.

What is a Bookkeeper?

Some people assume that bookkeepers and accountants perform virtually the same roles within a company. That’s definitely not the case, though. 

As a general rule, bookkeepers’ jobs are more records-based. Some key responsibilities a bookkeeper carries out include the following:

  • Identifying, recording, and measuring financial transactions
  • Keeping records well-organized
  • Issuing checks
  • Preparing invoices
  • Creating reports on things like taxes, profits and losses, cash flow, and expenditures

Sometimes, when they work for a larger company, bookkeepers have very specialized roles. For example, one may focus specifically on auditing or accounts payable while another will focus on accounts receivable.

In most cases, bookkeepers do not need much, if any, formal education. A high school diploma is often all that’s required, along with the knowledge necessary to use a bookkeeping software program. 

What is an Accountant?

Bookkeepers focus mainly on gathering and organizing data. For accountants, on the other hand, their job involves analyzing this data to help business owners get a clearer picture of the financial state of their company. 

Some key responsibilities that an accountant carries out include the following:

  • Summarizing and interpreting financial transactions
  • Communicating information about those transactions for higher-ups
  • Creating financial statements 
  • Auditing
  • Tax preparation

Accountants have a much more involved role within the company than bookkeepers. They also have much more education and training required of them.

To become an accountant, they must have at least a Bachelor’s degree. Many go on to earn Master’s degrees, though, and earn additional certifications, such as becoming a Certified Public Accountant (or CPA for short). 

Bookkeeper vs Accountant: Which Should You Hire First?

Both accountants and bookkeepers are beneficial employees who can do a lot for a business. Ideally, you’ll have both a bookkeeper and an accountant on your team to help you keep track of your spend and analyze your financial situation so you can make the best decisions for the longevity of your company. 

Depending on the size of your business and how much money you have to spare to hire another employee, you may only be able to hire one for now, though. 

If you’re forced to choose between hiring an accountant and hiring a bookkeeper, it’s probably best to hire the accountant first.

There are bookkeeping software programs that you can use on your own to keep your finances in order. An accountant, though, can provide analysis and interpretations of those finances that a bookkeeper can’t. In general, they’ll provide more value to your company than a bookkeeper, at least in the early stages of your business.

Tips for Hiring an Accountant

If you’re getting ready to hire an accountant and aren’t sure where to begin, it helps to first find someone who understands your specific business.

Look for an accountant who has experience working in your industry (although, it’s best if they haven’t worked for your competitors, as this can be a conflict of interest). If they’re experienced in your work, they’ll be able to provide better insights into your finances and what you can do to improve in the future. 

It’s important to pay attention to an accountant’s educational background and learn about the type of work they’ve done in the past. That’s not all that matters, though.

Remember to look beyond their resume, too, and think about other factors that make a good employee. Can they communicate in a clear and effective way? Do you get along well with them, and do they seem as though they’ll get along well with your other employees?

The answers to these questions can tell you a lot about what it’ll be like to work with this accountant on a regular, long-term basis.

Tips for Hiring a Bookkeeper

If you do have the budget to bring on both a bookkeeper and an accountant, there are some specific things you need to keep in mind during your search for a bookkeeper.

In a perfect world, your bookkeeper will be someone who is detail-oriented and has a thorough knowledge of common bookkeeping software programs such as Quickbooks.

As with your accountant, it’s also best if they have experience working as a bookkeeper for a business similar to yours, although it’s not as important since they won’t be doing much in-depth analysis. 

According to the experts at KR Accounts, you may also want to consider working with a bookkeeping agency instead of hiring an individual bookkeeper. This can be a good way for you to save money (since you’re paying a flat fee instead of hiring a new employee) while still enjoying all the benefits that a bookkeeper can bring to the table. 

When you work with an agency, you can also trust that the people handling your books are trained professionals, and you don’t have to do as much vetting on an individual level.

Hire the Right Person for Your Business Today

Now that you know more about the key differences between a bookkeeper vs accountant, do you think it’s time to hire one or both to be part of your team? They both perform key roles that can help you manage your money in a more effective way.

If you’re getting ready to hire a bookkeeper and/or an accountant, be sure to keep the tips listed above in mind. Don’t forget to peruse our other small business articles as well for some additional advice on hiring the right people to be part of your company. 

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