Keeping track of finances and accounting is a difficult but very important task for businesses. Even when just beginning, keeping track of this information can help business owners make smart decisions and assure the viability of their businesses. There are two basic choices when considering getting a professional involved in accounting: a bookkeeper or an accountant. But which one should you hire?
Basic differences between bookkeepers and accountants:
Although the terms have official definitions based on credentials and studies, sometimes they may be used interchangeably and people may not always have this in mind when using either of the terms. Technically the differences are:
Bookkeepers: |
Accountants: |
| » Often start as data-entry clerks | » Focuses more on reporting |
| » Keep track of day-to-day financial recordkeeping | » Analyzes businesses and processes |
| » Retain documentation and transaction records | » May give advice |
| » May be certified as a bookkeeper through an organization such as the American Institute of Professional Bookkeepers. | » May be certified through an organization such as the American Institute of Certified Public Accountants. |
Which one should I hire?
The best decision for your business depends on the nature of the business and size. Generally speaking, it’s good to start out with a bookkeeper to keep all of the day to day financial recordkeeping up to date and organized. Then, depending on the size of the business, meetings with an accountant can be arranged to provide advice. Bookkeepers are usually less expensive, so they are a great resource for all businesses. By using a skilled bookkeeper, businesses can also be sure that any major problems will be detected in a timely fashion, and the additional help of an accountant can be brought in. Another solution is to have quarterly or periodic visits with an accountant to keep data accurate, detect anomalies and to deter fraud or theft.
What qualities are important when hiring a bookkeeper or accountant?
Just as hiring anyone else, getting references and checking credentials are the starting points when looking for a good bookkeeper or accountant. A great referral may be the best way to meet your new bookkeeper or accountant. Apart from that, you’ll want to be sure that the professional can explain things to you in a way that you understand. There is a lot of technical jargon used in accounting, and you’ll want to be sure that you and your accounting professional can understand each other clearly. You’ll also want to be sure you can have an open relationship for discussing difficult situations – as if any problems come up with your business, you’ll want to know quickly when you still have time to act.
When should I hire an accounting professional?
Although starting up a business is tricky and it may seem like a bit much to hire a bookkeeper or accountant, if you can fit it in, you’ll be glad for it in the long run. Having good bookkeeping habits and systems are a great defense against financial troubles and unclear numbers.
