3 Need-To-Know Differences Between Accountants & Bookkeepers

So, you’re looking for someone who can manage your business’ finances.

You want someone who has professional experience recording and understanding the cash flow of the business, who can provide advice about the state of your finances, and can help make decisions that will make (or break) your business.

If this “someone” has taxation experience – even better!

So… are you looking for a bookkeeper or an accountant?

To the untrained eye, bookkeepers and accountants might seem like the same thing. Both deal with finances, both roles require at least a basic understanding of accounting, and both generate reports regarding financial transactions.

However, sometimes bookkeeping and accounting can be quite different. In this blog, we’re going to clear the air about bookkeeping and accounting, so you can make an educated decision about what level of financial management you need for your business.

#1. Bookkeepers record financial data – accountants analyse it

The big difference between a bookkeeper and an accountant is how each profession handles financial data.

Bookkeepers, for example, record, maintain and measure financial transactions within a business. Their role is to make sure your business runs smoothly; there needs to be a comprehensive record of money coming in and money going out to better understand how successful your business really is.

Enter the humble accountant, stage left.

Where bookkeepers record business transactions, accountants summarise, interpret and analyse financial data so business owners can make important decisions about their businesses, for example whether you need to scale up or downsize your staff, or whether you need to cut back on unnecessary purchases.

Essentially, bookkeepers maintain records and the payroll, whereas accountants help to understand your financial situation and help you make smart decisions about your business.

#2. Bookkeepers have an administrative role – accountants help with audits and advice

It’s time to dig down into the details.

Bookkeepers and accountants actually have very different roles. For example, bookkeepers have an administrative role – in a regular business, you might find a bookkeeper running and maintaining the payroll system, processing invoices, and reviewing your accounting systems.

Here’s an idea of what a bookkeeper’s role involves:

  • Processing invoices, receipts, payments, and other financial transactions
  • Processing and maintaining your payroll system
  • Reconciling bank accounts
  • Preparing reconciliation reports
  • Managing your accounts receivable and accounts payable

Here’s an idea of what services an accountant can offer:

  • Tax advice and planning
  • Assistance establishing a business
  • Auditing
  • Corporate reporting and compliance
  • Cash flow forecasting
  • Structuring for asset protection
  • Budgeting
  • Preparing financial statements and income tax returns

#3. Different levels of training are required to become an accountant vs a bookkeeper

There’s no arguing there are crossovers between accounting and bookkeeping.

To become a bookkeeper, you’re recommended to learn the basics of accounting and even take a few accounting courses before becoming qualified for the job. Plus, bookkeepers are expected to have a decent understanding of mathematics and have some experience in an administrative role.

To become an accountant, you must have at least a bachelor’s degree or, for a higher level of authority and expertise, you can become a public accountant.

Accountants must also meet the strict requirements of the accounting code of practice. There are three professional accounting bodies that manage accountants in Australia – the Institute of Public Accountants (IPA), CPA Australia (CPA) and Chartered Accountants Australia & New Zealand (CAANZ).

The minimum qualification for the CPA and ICAA is a bachelor’s degree in accounting. This is a starting point for further study. This ensures Australian business owners get the best possible financial advice and management possible.

What if I need a combined accounting and bookkeeping service for my small business?

Throughout this blog, we’ve highlighted the big differences between bookkeepers and accountants, from training, to roles within your business. However, it is possible for an accountant to take on both roles and provide you with all the financial support you need to successfully manage your business.

At A Squared Advisers, we’ve combined our expert accounting services with bookkeeping, so we can help businesses of all shapes and sizes throughout Newcastle & the Hunter.

Our team can help manage your finances, collect and analyse financial data, implement an outsider’s perspective to interpret this data, and provide sturdy, trustworthy advice regarding your next steps as a business owner.

Want to talk to a local accountant who speaks your language?

A Squared Advisers is one of Newcastle’s top choices for taxation and financial advice, superannuation management and retirement planning. We’ve been helping local business owners keep their finances afloat for seven years.

Get in touch with Newcastle’s top team of accountants at A Squared Advisers. We can provide trusted advice about your finances.

5 reasons Xero is a must-have for your business

To be a savvy business owner, you need to make smart decisions. One of the smartest decisions you can make is to get your finances sorted. New technology and software makes this easier to do than ever. We recommend talking to your accountant about Xero, cloud-based accounting software that ensures your business finances are on the right track—and that you’re always in the driver’s seat.

Here are five reasons Xero is a must-have for your business.

  1. It gives real-time data, so you can stop flying blind

Do you know what business funds are available to you right now? You shouldn’t have to request a lengthy report from your accountant every time you need quick financial data. Get rid of outdated accounting systems and start streamlining your finances instead. Xero allows you to quickly see real-time data, so you know whether that invoice was paid on time, can easily and instantly settle expenses, and always invest confidently based on current data.

  1. You can log-in anywhere, from the office to the airport

So can your employees, business partners and accountant. Plus, they’ll only see the information that’s relevant to them. Employees can easily submit leave requests and pay slips. Accountants can gauge your financial health in real time. And you can see how your business is tracking at a glance, knowing where your funds are going so you can make smart business decisions on the go.

  1. It remembers your financial obligations, so you don’t have to

Peace of mind is a wonderful thing. Xero remembers your financial deadlines and obligations, helping you avoid nasty fines and penalties—and taking away that niggling “what have I forgotten?” feeling that many busy business owners know well. Xero can ensure you have super set aside, that your pay slips are compliant, and that your business activity reports are accurate and legal.

  1. It connects with industry apps, giving you tailored solutions

Every business and industry is unique. Many industries have great apps that solve business needs and save you time and money. Xero connects with more than 500 of them, so your financial management is all in the one spot and you get a clear overall picture of your financial health. Take a look at this extensive list of compatible apps.

  1. It automates your finances, freeing up your time and attention

As the business owner, your time is invaluable. You want to use it strategically, investing in growing your business and building great customer relationships. And with Xero, you can focus on doing just that. Your finances will be automated and error-free, so recurring invoices and credit card installments are paid on time, and bank transactions are imported automatically. This means you’ll spend less hours looking at numbers on a screen, and more time keeping your business thriving.

How could Xero benefit your business? Call us for a chat on (02) 4959 3882 or send us an email.