For Tennessee business owners, it’s important to understand the difference between a bookkeeper and an accountant. The difference can be a game-changer for a business, depending upon its goals! There is a common misconception that bookkeepers and accountants are one and the same. While both roles are integral to the financial health of a business, there are key differences between the two professions.
A bookkeeper primarily keeps track of a company’s financial transactions, while an accountant analyzes and interprets this information. While both roles are important, they serve different purposes within a business.
As a business owner, it is essential to understand the difference between a bookkeeper and an accountant so you can make informed decisions about which professional is right for your business. Knowing which professional to hire for your specific needs can save you time and money in the long run.
Keep reading to learn about the differences between a bookkeeper and an accountant role.
How Each Profession Differs
When it comes to financial matters, many people are unsure of what the differences between bookkeepers and accountants are. While both play an important role in accounting tasks, there is a clear distinction between the two.
Bookkeepers typically focus on internal financial operations and reports that provide feedback to management. These are valuable functions. CPAs have that same skill set, but also the expertise to assess the accuracy of the financial statements and the experience to assist with financing and strategic goals. Only a CPA can call themselves an “accountant,” so this title means that they are a Certified Public Accountant. Business owners primarily hire bookkeepers for day-to-day accounting needs. CPAs can offer the business owner a partnership to achieve long-term goals. That’s the difference, and it’s a game changer!
A bookkeeper can keep your books organized and up-to-date on day-to-day transactions within your business in Tennessee.
Here are some services you can expect when you hire a bookkeeper:
- Record and categorize financial transactions.
- Prepare invoices, and reconcile accounts payable & receivable.
- Maintain accurate records of all income & expenses.
- Generate reports for tax preparation purposes.
- Track inventory levels and cost of goods sold.
- Reconcile bank statements with accounting entries.
- Manage payroll processing on a timely basis.
- Monitor cash flow to ensure sufficient funds are available.
- Review account activity for accuracy and consistency.
- Communicate with the business owner on a regular basis.
An accountant can help you with tax planning and preparation and advise you on financial matters such as:
- Strategic business planning for growth
- ‘Turn around’ guidance for struggling businesses
- Investment options that help mitigate industry risks
Here are some services you can expect when you hire an accountant:
- Accountants are trained in all of the tasks listed above that a bookkeeper would provide.
- Prepare and analyze financial statements, such as income statements, balance sheets, and cash flow statements.
- Prepare and file tax returns.
- Analyze information from the bookkeeper.
- Provide advice on financial matters such as budgeting, cash flow management, and tax planning.
- Develop financial forecasting models to predict the future performance of the business.
- Identify areas where costs can be optimized.
- Help apply for business loans.
- Communication may be less often or only during tax season, depending on the type of responsibilities designated upon hire.
Why Hire Instead of Doing It Yourself
Hiring a bookkeeper instead of doing the bookkeeping yourself can significantly benefit businesses. This is because bookkeepers are trained professionals and have experience in managing financial transactions, which will ensure that your books accurately reflect the financial activity of your business and meet industry standards. Errors and inaccuracies could spell disaster for your business.
Bookkeepers and accountants offer services that help businesses stabilize business operations and prepare businesses for growth initiatives.
Their expertise in financial management can ultimately save you time and money while increasing the profitability of your business.
Moreover, having an experienced professional manage your finances can give you peace of mind knowing that your business is in good hands. Accountants are knowledgeable about current tax laws and regulations in Tennessee, so they can provide advice on how to best take advantage of them. They can also help you prepare for audits or handle other compliance issues.
Gives Owners More Time
Finally, having a bookkeeper frees up valuable time for business owners to focus on growing their business rather than spending hours figuring out accounting tasks. With a bookkeeper handling the day-to-day activities, business owners have more time to devote to making strategic decisions for their company’s future.
Should I Choose a Bookkeeper or an Accountant?
The decision of whether to hire a bookkeeper or an accountant for your business should be based on your individual needs and budget. Both professions have a unique set of skills that can benefit a business, and it is important to understand the differences between them to make the right choice.
Whether you are self-employed or run a small business, the success of your venture depends in part on your ability to keep track of your finances.
Choosing a Bookkeeper
For those who do not need complex financial analysis but do need assistance with day-to-day financial tasks, a bookkeeper may be a more suitable option as they can help track income and expenses. Bookkeeping services are crucial to a sound financial strategy; they ensure that your funds and documentation remain up-to-date which supports order and information integrity. An experienced bookkeeper will ensure your financial statements meet industry standards.
A bookkeeper will also keep a constant line of communication open with the business owner, so they stay informed on their company’s financial status.
When it comes to finding the right bookkeeper for your business, it is important to ensure that they are qualified and capable of handling your financial matters professionally. When evaluating a bookkeeper, there are several qualifications you should look for to ensure that your finances are in good hands.
Bookkeepers should have experience, ideally, in the industry of your business. Bookkeepers don’t have to be certified, but if you would rather find one with these qualifications, look for certifications from the National Association of Certified Public Bookkeepers or the American Institute of Professional Bookkeepers. You will notice a CPB or CB designation after their name.
Choosing an Accountant
If you require detailed and accurate insights into your business operations, then hiring a Certified Public Accountant is advisable.
Accountants are true assets when it comes to managing and growing a business. Professional accountants provide guidance and expertise on such matters as strategic planning for growth, ‘turn around’ guidance for struggling businesses, investment options that help mitigate industry risks, tax planning, preparation, and general financial advice. This can help any business owner gain an in-depth understanding of their company’s finances – vital knowledge for running a successful organization.
Partnering with an Accountant offers holistic support.
If you are looking for the highest level of booking mastery and financial business knowledge, look for a CPA. CPAs, often referred to as Accountants, have completed a higher level of education and are certified. This CPA certification also must be kept current, and this help ensures they are up to date on important tax law changes.
Find a CPA for Your Business in Tennessee
If you are a business owner in Tennessee, it is essential to have a qualified bookkeeper or accountant to help manage your finances. Finding the right professional for your business can be daunting, but having the right qualifications in mind will help streamline the process.
Our TriStar CPAs are certified and have years of experience in providing customized bookkeeping and accounting solutions for businesses of all sizes and budgets.
With our help, you can rest assured that your finances will be managed accurately and efficiently so that you can stay focused on running a successful business. If you’re ready for bigger and better, we’re here as a forward-thinking partner to help transform your business.
Contact us today at (615) 601-0936 to learn more about the possibilities. Let’s talk. Let’s plan. Let’s partner!