As a small business owner, nothing is more important than keeping your financial records in order. Every business needs to be able to keep track of how much money it brings in and how much money it expends. Many times, business owners do not have the time to do the bookkeeping for a small business, or they don’t have the expertise. Once your businesses reaches the point where it makes sense to bring someone in to help with the financial record-keeping, you have a choice. You can hire a bookkeeper or an accountant or, in some cases, both.
Bookkeepers and accountants share some responsibilities, and there can be a lot of overlap between the two. Understanding what the differences are can help you decide which one you need.
Small Business Bookkeepers
Bookkeepers record a company’s day to day transactions, such as sales, expenses, salaries, cost of goods and so on. They may use a software program like for small business to keep track of how much money comes in from what sources, and how much money goes out to whom.
A bookkeeper may also pay the bills and balance the company’s checkbook. Often the software program the bookkeeper uses, such as Xero, will help automate these tasks as well.
Small Business Accountants
Accountants analyze the data that is recorded by the bookkeeper. They may audit the company’s records, making sure that the company has and will continue to have enough money to continue operating. An accountant may advise the owners on financial matters, and they may prepare the company’s tax returns. You’ll likely see your accountant using QuickBooks Accounting Software.
Finding the Right Fit for Your Company
Typically, a small company that is just starting out may use only a bookkeeper, and only on a freelance or part time basis. You may be able to hire someone to come in once a month or once a week to record your transactions in an accounting program. If your accounting software includes a tax preparation module, your bookkeeper may be able to use that to file your tax returns as well.
As your company grows, you may find you want to hire a bookkeeper to work in your office, either part or full time. At this point, you may also want to engage an accountant to file your tax returns.
As your company gets larger, you may find you use your accountant for more than just your taxes. At this point you may find you have enough work to keep a full-time bookkeeper and a part-time accountant busy.
Once your business becomes even larger, you may hire an accountant or an accounting manager to work in your office full time. A bookkeeper—or more than one—would report to the accounting manager. Businesses that are larger still may require a finance manager or Chief Finance Officer.
Whether you choose a bookkeeper or an accountant, or some combination of both, make sure that whoever you use maintains errors and omissions insurance. This coverage, sometimes called E&O insurance or professional liability, will cover mistakes that the bookkeeper or accountant makes.