What is a Bookkeeper vs an Accountant?
So many times I get asked, “Are you an accountant?” and I am surprised by how many people don't know there is a difference between a bookkeeper & accountant (that is just a lack of education - nothing you did wrong).
Think of accountants and bookkeepers as the dynamic duo of the financial world. They both play crucial roles, but they've got different hats on.
Bookkeepers are like the meticulous record keepers.
They're the ones who roll up their sleeves and dive into the nitty-gritty details throughout the year. They will:
track your daily transactions
make sure the numbers add up
organize your financial data neatly (all expenses in the correct deduction categories, receipts matched, reconciled accounts)
send you monthly reports so you know what is happening in your business
They're the ones who help maintain your financial house, so it doesn't turn into a messy, chaotic nightmare. This can be done with one-time and ongoing projects to get your bookkeeping caught up and kept up!
Accountants are the final preparers.
They take all that well-organized data from the bookkeepers and work their magic at tax season.
Analyze the numbers
Create financial reports & provide insights
File Taxes & ensure you're following tax laws correctly
They are the ones who fill out all of the pesky forms and make sure they are done accurately and on time!
Now there is a third financial person who you may hear about when it comes to your business, and that is a tax strategist!
Tax strategists are your financial gurus.
They are diving deep into your finances, and working to make sure you keep more of your hard-earned money! They're the ones who can tell you where your money is going and how to make it work smarter for you (aka all of those tax breaks you are probably looking for!
Having both a bookkeeper and an accountant is like having a neat freak and a financial closer on your team!
So, in a nutshell, bookkeepers keep the records tidy, while accountants interpret those records onto forms and help you stay tax compliant.
The confusing thing is that some people CAN do all of these things for you. You want to make sure you are asking the right questions so you know exactly what services they will be providing for you.
Does the accountant also do bookkeeping or does it need to be done before you come to them at tax season?
Will they offer you tax strategy advice? Or will they just take the numbers and plug them into the tax forms and tell you what you owe the IRS?
Now, just because someone CAN provide you ala carte bookkeeping, tax strategy, and tax filing services doesn’t mean they should!
Some firms offer you it all. Going to one place definitely can make things easier - but let me explain why I think it is a good idea to seek help from different people.
Checks & balances - with different people doing your bookkeeping, tax strategy, and filing, you have many sets of eyes to catch unusual things and keep each other in check
Response time - sometimes, when you are working with an accountant (not all the time) they take on quite a heavy workload during tax season and then their response time can be delayed and sometimes nonexistent during the year if you have questions
When thinking about what order to hire out, it should almost always be
bookkeeper
accountant
tax strategist
This is because, before an accountant or tax strategist can really help you - your bookkeeping needs to be done! Before you can know if you can REALLY afford the accountant or tax strategist, you need to look at your numbers!
I am not going to tell you that you NEED a bookkeeper. BUT you do need to do your bookkeeping.
It is one of those tasks that can only get pushed off for so long. Before you know it, tax season is here, your accountant is asking for a profit and loss report, and you haven’t even looked at your QuickBooks account.
When it comes to bookkeeping, you have two options:
DIY your bookkeeping
The key is to START getting organized today. Not sure where to start? Get the free bookkeeping checklist
2. Hire a bookkeeper (*wink wink* like me!)
Sometimes you may not have the time, energy, or resources to DIY your small business bookkeeping, and that is where I come in! With one-time projects and ongoing bookkeeping, I help female creative entrepreneurs get their bookkeeping caught up and kept up! Before you even think about your bookkeeping, you will have reports in your inbox from me!
