Although people sometimes use the words bookkeeping and accounting to mean the same thing, they are very different. Accountants and bookkeepers are professionals who assist with long-term goals and help you to devise strategies to thrive financially. Bookkeepers, however, have the task of focusing more on the daily financial responsibilities of a business, like inputting expenses and invoices, while accountants are expected to provide big-picture financial and tax guidance to help to take your business to the next level. Do you need accounting or bookkeeping services in Charleston?
What is the Role of a Bookkeeper?
Bookkeepers have the responsibility of maintaining records of all financial activity for an organization. That includes daily transactions and operations. They are also responsible for:
- Charting and maintaining accounts – The task of a bookkeeper is to set up a chart of accounts to ensure that you don’t have too few or too many. Small mistakes in the charting can lead to some serious issues down the road.
- Recording transactions – When money flows into or out of a company account, the transaction must be recorded. The general ledger is a document that shows debits, balances, and credits for all financial accounts. Transactions can be in the form of a bill, purchase, or sale, along with many other things.
- Preparing financial reports – Profit/loss statements, cash flows, and balance sheets are all the job of a bookkeeper.
- Reconciling bank statements and accounts – Bookkeepers have the responsibility of making sure that recorded activity transactions match the bank statements monthly.
- Handling accounts payable and accounts receivable – Sending invoices, ensuring timely payment by customer and tracking overdue charges are all things that fall under the responsibility of a bookkeeper.
- Payroll management – Bookkeepers can calculate deductions, process payroll, and be responsible for time sheets.
Bookkeepers typically are certified by the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers. Certification, however, is not required; it’s actually optional. You technically do not need any certification to be a bookkeeper.
What Does an Accountant Do?
Accountants and Certified Public Accountants are not the same thing.
Accountants can do and be responsible for all the same things that bookkeepers are. But they typically have a larger role within the finances of a company. Some of their bigger-picture tasks include:
- Filing and preparing tax returns and documents – One of the biggest differences between a bookkeeper and an accountant is that accountants have the training to organize and file business taxes. By working with an accountant, you can minimize the potential of getting audited, while also increasing the likelihood that you will deduct all that you can.
- Providing financial advice for planning purposes – Accountants can help you structure your startup to move forward. They can also help during the business model preparation to ensure that you have a sound plan for growth and expansion from day one.
- Assisting to secure loans – Having an accountant who is well versed in your financial health is a great resource if you should have to take out a business loan. They can help advise you about terms, conditions, and interest rates if you ever want to secure a business loan.
If you want a qualified accountant, then look for someone who is a certified public accountant. CPAs who are also accountants have a degree and have passed the CPA exam. CPAs need to maintain their certification regularly to make sure that they are current on tax codes and laws. Accountants, however, do not need to be CPA licensed. Some accountants only have a bachelor’s degree without having the CPA certification. Certified Public Accountants are licensed by State Regulatory Boards to attest to financial statements. That is, they may render an opinion as to the fairness of the statements. Further, the United States Treasury allows certified public accountants to represent their clients before the Internal Revenue Service during tax examinations and with regard to other matters.
Which is Right for You?
The choice of whether an accountant or bookkeeper is the proper fit for your business is based on how much advice, guidance, and expertise you need. If you are looking for someone to record just the daily activities and handle payroll and important financial reports, then bookkeeping services in Charleston might be enough.
If, however, you want sound advice about strategic financial planning and the bigger picture of growth and expansion, then hiring a CPA might be a better choice for your organization. At Baldwin Associates, we are registered in the State of South Carolina as a public accounting firm. Our firm has many who possess the Certified Public Accountant license. Contact us today to discuss how to get started if we may be of help to you.