As a business owner, you must ensure everything regarding your finances goes as smoothly as possible. The best way to ensure that is by recording and tracking all your business transactions. Two most common ways business owners do it are by hiring a bookkeeper or accountant.
Bookkeepers record and track every transaction your business makes and preserve all the data. On the other hand, the scope of work of accountants is much wider, as they analyze the financial data and make strategies for the companies. Also, bookkeepers usually don’t need any professional certifications, but accountants do.
Let’s take a detailed look at a comparative analysis of bookkeepers vs accountants.
Difference between accounting and bookkeeping
When you own a business, you need your finances to be recorded and tracked. This will not only help you keep an eye on the state and improvement of your business but will also help you during audits, filing taxes, and other legal issues. Of all the ways you can keep an eye on your business’s finances, hiring a bookkeeper or an accountant is the most popular.
Although these two terms have been used interchangeably, there are not the same. Yes, both jobs require keeping tabs on the finances, but the scope of work of these positions is quite different.
We have prepared a comparison of bookkeeping vs accounting so that you can make up your mind regarding which one to hire.
Bookkeepers
If you have a small business or have just started, you don’t need to keep tabs on many transactions. Sometimes you can track these transactions yourself, but this will take away your valuable time. In this case, you can hire a bookkeeper. A bookkeeper is a person that tracks all the transactions of your business and records them.
The scope of work is a big talking point in the accounting vs. bookkeeping debate. Bookkeeper is an administrative role, and they play no part in making business decisions and strategies. Their only job is to maintain the books and provide data whenever needed. Their job includes functions such as managing payrolls, creating invoices, maintaining ledgers, etc.
As a business owner, it is not mandatory to hire a full-time bookkeeper. You don’t even need to hire a bookkeeper all the time, as you can teach the basics of bookkeeping to an existing employee and tell them to perform the job whenever needed. This is why bookkeepers don’t need any professional degrees or formal education regarding bookkeeping, which reflects in the bookkeeping vs accounting salary.
Since the scope of bookkeepers’ work is quite narrow, they don’t charge that much compared to accountants (which we will come to in just a bit). Australian bookkeeping’s average cost per hour is around $40, which is quite low.
When you hire a bookkeeper, you always have to supervise their work and revise their entries. This can sometimes be a bit bothersome.
Accountants
While bookkeepers only record and keep track of your transactions, accountants have a much wider scope of work. While they can do the job of bookkeepers, their main job is to analyze the data provided by the bookkeepers and make business decisions, strategies, and suggestions. This is the biggest difference in the role of bookkeepers vs accountants.
If you want a full picture of how your business is doing, what the future holds, and how you can improve, you should hire an accountant. Also, unlike bookkeeping, you must have an accounting department if your business has grown enough that you have thousands of transactions weekly and the books have become more and more complex.
Accountants, unlike bookkeepers, require both professional certifications and formal education in accounting. They must have an accounting degree, which makes them more qualified to do their job than bookkeepers. As a result, bookkeeper vs accountant salary also leans heavily towards accountants.
This is evident in the bookkeeper vs accountant Australia salaries. The annual salary of an accountant in Australia is around $74500, which is much higher than that of a bookkeeper.
Also, accountants help business owners with many serious legal issues, such as filing tax returns, performing audits, and other legal stuff. This makes their work much more rigorous, and the scope of the work gets wider.
Here is a table depicting the key points of the bookkeepers and accountants comparison to help you understand.
|
Bookkeepers |
Accountants |
|---|---|
|
Suitable for smaller businesses |
Suitable for larger businesses |
|
Narrower scope of work |
Wider scope of work |
|
Don’t have decision-making abilities |
Make important business decisions |
|
Don’t require formal education |
Require degrees and certificates |
|
Cheap |
More expensive than Bookkeepers |
Final Words
Our above comparative analysis of bookkeepers vs accountants aims to help you decide which one you should hire for your business. You should hire a bookkeeper if you have a smaller business and fairly similar books. On the other hand, if you have a large business and the books are more complex, then you must go for accountants.
FAQs
What services do bookkeepers typically provide?
Bookkeepers typically provide services such as recording and tracking financial transactions, preparing financial reports, maintaining accounts payable and receivable, reconciling bank accounts, preparing tax returns, and providing financial advice.
Bookkeeper vs Accounting – which is better for my business?
It depends on the needs of your business. A bookkeeper may be sufficient if you need someone to record your financial transactions. However, if you need someone to analyze your financial data and provide financial advice, you may need an accountant.
How do I choose a bookkeeper or accountant?
When choosing an accountant or bookkeeper, you should consider the facts- experience, credentials, cost, communication, etc.
Contact our office: (03) 6153 0180 to discuss your scenario
