As an owner of your business, be it small or big, you will love to see your business growing every time. For that, you will need your financial data to be accurate and updated so that it can help you to make wise business decisions and your cash flow remains smooth. With its growth, you have to deal with a greater cash flow and more people. Keeping track of that is indeed complex and time-consuming. You may go for several options like a DIY approach or hiring an accountant or a bookkeeper to keep records. In this article, you can get a rough idea of accountants and bookkeepers’ responsibilities and the benefits you can get from these three approaches.
What Does an Accountant Generally Do?
An accountant plays several roles in your business.
Verification and Analysis:
The first and foremost thing an accountant does is verify and analyse the data.
Preparation of Documents:
After verification and analysis are done, the accountant will generate reports, perform audits and prepare financial reports, including tax returns, income statements and balance sheets.
The benefits of hiring an accountant for financial purposes are that the accountant’s analysis can give necessary information on forecasts, business trends, and opportunities that can be utilised to grow the business. An accountant can also give you invaluable advice on restricting your expenses to manage your business’s cash flow. To summarise, the accountant supervises the handling of different transactions.
An accountant can also do the job of a bookkeeper. You have to pay a greater amount of fees to the accountant, including fees for keeping accounts and bookkeeping. While choosing an accountant, it is recommended to choose a certified public accountant or CPA who can help you more with his depth of knowledge, like tax codes, relative to a general accountant.
What Does a Bookkeeper Do?
A bookkeeper’s responsibilities vary depending on the size of a business and its unique necessities. For instance, if a business’s size is small and there is no accountant, the bookkeeper may have to do extensive duties. In general, the bookkeepers have to do the following duties in a business company.
The bookkeepers have to maintain accurate records of all the financial transactions and related records.
Handling day-to-day Management:
Besides maintaining records, the bookkeepers must manage accounts daily.
Ensuring Compliance With Legal Obligations:
The bookkeepers have to check whether the business complies with the government laws.
Managing Bank Feeds:
A bank feed is a digital link that occurs between your bank account and accounting software and can import bank transactions to your software daily. A bookkeeper’s job is to manage these bank feeds.
Handling Accounts Payable:
If there is no accountant, bookkeepers have to handle the payable accounts.
Accountants may prepare the invoices, which bookkeepers can send to the right persons. At the same time, it is the bookkeeper’s job to manage the accounts receivable.
Preparing Financial Statements:
This is one of the primary jobs of a bookkeeper to prepare financial statements. Financial statements are nothing but reports that include details of financial information like assets, liabilities, income, expenses, cash flow etc.
Payroll is an utterly important thing because it covers several factors related to employee payment like tax deductions, payment at the right time, and the right amount. Bookkeepers should check whether the company complies with the payroll laws or not.
Dealing With Foreign Currency Transactions:
If you do business internationally, you have to deal with many foreign currency transactions. The foreign currency price fluctuates daily, and for that reason, it is recommended to hire a bookkeeper to deal with these transactions.
Preparing Books for The Accountant:
Big businesses hire accountant and book-keeper separately. Using all the records, book-keepers prepare the accountants’ books, making accountants’ job verification and analysis easier.
Just like an accountant, there are several benefits of hiring a bookkeeper too. The most important service you will get from an experienced bookkeeper is that the chances of errors can be readily reduced. If not properly trained, even highly experienced book-keepers are also prone to make mistakes which can cost them heavily. Like an accountant, a bookkeeper can also do a good analysis on a company’s financial level, which may help make big financial decisions.
While hiring a bookkeeper, you should always look for certain qualities. You should first check whether your budget permits. Then you have to look for his/her tax and software experiences. In this era of digitalisation, a virtual bookkeeper can be a feasible option. Xero bookkeeper Perth can come in handy in case your business is based in Perth, Western Australia.
What are The Pros and Cons of The DIY Approach?
Does the DIY approach stand for ‘do it yourself? As the name suggests, you can clearly understand that you can do all the accounting and record-keeping activities all by yourself. However, there are some pros and cons of this approach.
Benefits To Note
This approach’s most primary benefit is that you do not have to pay a professional accountant or bookkeeper. Thus it allows you to save a decent amount of money you can use for other business purposes. You can easily go for the DIY approach if you are used to filing taxes and sorting documents using the necessary software. Another advantage of this approach is that your business records will be kept private. No one can get access quite easily as it is you who are keeping records all by yourself.
Cons To Watch Out For
The cons are more than the pros when you do all the record-keeping by yourself. You have to remember to keep tracks of all the records and receipts. This is hugely mind-tiring and time-consuming. It will take hours after hours to find and sort all the documents and to upload them. It can be worse if you make any mistake. On this note, making mistakes is another potential drawback of this approach, leading to incorrect information on your taxes, giving rise to unwanted consequences.
Depending on your business size and the transaction nature, you have to choose the correct method. However, it is always advised to hire a professional because it is more rational than doing it yourself. To know more, you may consult with a professional accountant in Perth.