Bookkeeper vs. accountant. Does having both benefit small business owners?

Although bookkeepers and accountants help your business financially thrive from a long-term perspective, their roles are different.

A bookkeeper is in charge of generating data on the activities of your business that accountants will later use to form a financial insight that helps you grow your business.

Keep reading, and you will determine which one your business needs right now and how long before you need to set up a whole financial department.

Key takeaways:

Bookkeeping is the process of recording all your expenses and sales.
Accounting is a subjective interpretation of what that data means for your startup.
An accountant can be in charge of bookkeeping, but a bookkeeper can’t perform as an accountant without proper certification.
Before getting a financial expert, you should estimate your business’s current state of financial affairs and consider the type of economic growth you’re pursuing. Then you will see if your knowledge is sufficient to get there on your own. And subjectively speaking, it usually is not.
A bookkeeper does all sorts of transactional and administrative jobs.
Bookkeeping is a day-to-day process that records financial transactions like purchases, receipts, sales, and payments.
Accounting is more subjective since it gathers insights from information from bookkeeping data.
Bookkeepers generate data > accountants use that data to form summaries and predictions or to create accounting reports.

Today’s schedule: figure out what to look for in a bookkeeper & accountant: qualifications, credentials, tasks. What to pay them and when to fire them. So basically, this article is your manual for financial abundance.

What does a bookkeeper do?

Pretty much everything that has been done since around 2600 B.C. It started with commerce. A bookkeeper is on a watch of all money that has come into and gone out of the business. Bookkeepers record daily transactions in a unified and easy-to-read way. Their records help accountants to do their jobs.

A sane small business owner makes strategic decisions based on current and accurate data. This way, your business decisions allow you to implement healthy cash flow strategies rather than pray for good.

Staying on top of your finances is a key part of being a successful small business.

Bookkeeper’s Responsibilities Include

Recording transactions: Every money move (whether into or out of your company) should be recorded as a transaction should be in the general ledger, a master document that shows credits, debits, and balances for each financial account. That transaction includes a bill, purchase, or sale, among other things.
Having OCD or moderating bank statements. This is a monthly task, and it ensures that documented transactions match what’s in that month’s bank report.
Preparing essential financial reports. We talk about the P&L (profit and loss statement), balance sheet, and statement of cash flows.
Managing accounts receivable and accounts payable. Keeping track of accounts receivable means sending out invoices, establishing payment terms, ensuring customers pay on time, and tracking down overdue payments. Dealing with accounts payable means making sure vendors get paid.
Keeping the chart of accounts: Bookkeepers set up a chart of accounts, administrate them, and keep track of them.
Managing payroll. Bookkeepers calculate deductions, process payroll, and read time sheets.

Qualifications

How to hire an expert bookkeeper? Your go-to picture-perfect candidates will have the National Association of Certified Public Bookkeepers or the American Institute of Professional Bookkeepers certification.

They’ll have CPB or C.B. after their names. However, you can pull a Harvey Specter from “Suits” and hire someone without these certifications.

Credentials to look for in a bookkeeper:

If your company requires documental proof that a person you want to hire knows how to keep track of invoices or use Excel, you can have them prove it to you with licensing.

Bookkeepers can get the accreditation and license at both:

-the American Institute of Professional Bookkeepers (AIPB)

-the National Association of Certified Public Bookkeepers (NACPB).

AIPB certification can be achieved if bookkeepers have at least two years of full-time work experience and pass a national exam. Bookkeepers must also engage in continuing education if they want to keep it. To maintain their license, they must take 24 hours of continuing education each year.

One can get NACPB credentials if they pass tests for:

-small business accounting,

-small business financial management,

-bookkeeping and payroll.

Bookkeepers must complete 2,000 hours of work experience, pass an exam, and sign a code of conduct before they can earn the certified public bookkeeper license,

Professional certification is a total green flag that makes it easier to spot that the person you hire is committed to the trade, has the skills and expertise required, and is willing to keep learning new methods and techniques.

What does a bookkeeper charge?

The amount they charge depends on three main factors:

-the services you want,

-the expertise you need,

-and your local market.

Services: If you need someone to reconcile the books once a month, it will cost less than hiring someone full-time to handle your day-to-day operations. Hello, obvious. But for real, once you know what tasks you need the bookkeeper to do, estimate how long it will take to complete them. Based on that estimation, hire someone full-time, part-time, or on a project basis.
Expertise: If you need to keep track of many complex sales, go for a certified or licensed bookkeeper. You will pay more for an experienced bookkeeper, but you will sleep like a baby.
Local market: If your small business is trying to make it in a high-wage state like New York, good for you, but be ready to pay more for a bookkeeper than you would in Oklahoma City. In 2020, according to the Bureau of Labor Statistics, the national average salary for bookkeepers was $20.39 per hour.

Get a sneak peek into what an accountant does.

Responsibilities

Accountants generally adopt a broader perspective based on the data they get from bookkeepers to get some insights so you, our dear CEO, can make a data-driven decision.

Here are some of their other tasks:

Filing tax returns: Accountants’ time to shine is during tax season. Their expertise helps minimize your tax liability, keeps you out of jail, and ensures everything is filed correctly. It also strengthens your chances of not being audited by the Internal Revenue Service for a tax-filing error.
Generating reports, performing audits, and preparing financial reporting records like income statements and balance sheets.
Advising you on financial planning: Accountants help you select the most suitable business structure during the early stages of your business and act as trusted advisors. A smart thing might be getting them involved before you’ve finished writing your business plan, so they can provide financial projections and financial planning tips.
Applying for business loans: Accountants can help you tackle all the annoying questions from your lender when they ask you about your business performance. As well as advise you regarding the interest rates, terms, and conditions of any small-business loan offer you receive.
Adjusting entries. Adjusting entries are the differences from journal entries you’ve already recorded. They ensure that your registered numbers correspond to the correct accounting periods.
Providing information for forecasts: business trends & opportunities for growth. In the best-case scenario, they will even create dashboards for you so you, as a leader, can make data-driven decisions for your business.

Accountants look at the big picture, as they have to handle a lot of rebates and a lot of coupons. What is the proper way to record these transactions? Do you have to register just the net amount of the sale or record the gross sale amount, too? It is the accountant’s task to decide how to handle these transactions, and then the bookkeeper carries them out.

Qualifications

A certified public accountant will have a higher level of mastery in accounting.

Certified Public Accountants (CPAs) are accountants who have achieved a higher level of education and have passed the CPA exam.

CPAs must keep their certification current, so they’re often up-to-date on significant tax law changes.

However, CPA licensing is optional for accountants.

A CPA is an MVP about tax codes and can represent you if you get audited by the IRS.

How much do accounts charge on average?

So, how much do accountants charge per hour on average? How much is the average salary for an accountant? Again, the average amount an accountant charge depends on their pricing structure.

Get acquainted with some stats:

Accountants charge clients an average of $175 per hour for services.
Accounting service rates range from $60 – $400+ per hour.
The average hourly pay for accountants is $37.14 per hour.
The average salary for an accountant is $77,250 per year (ranging from $48 000 – $130,000).
Some accountants in significant cities may charge $500 per hour (or more!).

We will boldly say that Fuelfinance can do everything with your spreadsheets, graphs, and automation. You get Accounting, P&L, C.F., Financial Projections, Plan/Actual, Unit Economics, and finally, peace of mind for $999 a month. You may reread the previous paragraph before and compare.

Am I extra, or do I need to get both? Again, as with Birkenstock, it is better to have both.

The bare minimum for all small-business owners means hiring a professional accountant to handle their tax returns.

If we talk about bookkeeping, some owners choose to manage those tasks themselves. However, CEOs or owners can also get help from software tools like QuickBooks Online, FreshBooks, and Xero and automate a considerable amount of this work.

But massive expansion calls for a bookkeeper that can clear your workload and free up your time to devote to other business areas. As we always say, When a CEO or CFO spend time on spreadsheets, where do they find time to think?

A bookkeeper can be a business owner, an in-house employee, a freelancer, or a professional from an online bookkeeping service.

FindMe for accountants: where to find your match

Estimating the suitable time to employ an accounting professional or bookkeeper can be challenging.

When looking for a certified bookkeeper, your options will be limited to first an independent consultant, a firm, or a full-time employee.

Then, always go for referrals from friends, colleagues, or your local chamber of commerce, or search online via LinkedIn for bookkeepers.

It is always an option to look at the American Institute of Certified Public Accountants site to find CPAs with skills in a particular area, such as employee benefits or personal finance.

Be a jealous significant other about it: do some background research to find a suitable bookkeeper because, unlike accountants, they do not have to hold a professional certification at all.

Timing is everything: when should I start looking for an accountant?

Check out 13 reasons; just kidding, only three indicate it’s time to hire a financial professional. If you got the 13 reasons reference, are you even old enough to be a small business owner? Once again, kidding. Fuelfinance is only serious about managing your spreadsheets and giving you data so that you can make business decisions based on numbers, not intuition.

Your taxes are complex. Suppose your taxes have become too difficult to manage on your own. This is a clincher when you have multiple income streams, foreign investments, several deductions, or other considerations. An accountant will stay on top of payroll, tax deductions, and tax filings.
You’re spending too much time on accounting. Suppose you spend so much time taking care of accounting tasks that you cannot work on growing your business or keeping existing customers satisfied. In that case, you’re doing your enterprise a disservice. Unsolicited advice, leave the accounting to the experts. You may make more money long-term and focus on your growth.
Your business is expanding. DIYing your accounting may be fine when your business is teeny tiny, but if it is in a growth mode, it may be time to bring in someone to help. Our tip, start by getting a bookkeeper who balances the books monthly and a CPA who handles your taxes. As your bookkeeping needs increase, involve more staff.

You can hunt for a perfect accountant, spend hours on background checks and months finding money to pay him while dealing with taxes season, or book a free session with our financial wizards and get it off your chest today.