The Answer Might Surprise You.
Unknowingly, most business owners associate the name Bookkeeper or Accountant as one of the same. Do you know what the differences are? Are you getting the services you need to be the most successful business owner possible?
Who is the Bookkeeper and what do they do?
The Bookkeeper is the person in your business who “works in the trenches” of the business and are sticklers for the accuracy of all the transactions posting to the books. One of the main components of Bookkeeping is maintaining the General Ledger and ensuring all activities in the business are posted properly to the ledger. Other activities include but are not limited to reviewing invoices, payroll, and bank reconciliations. Although no formal certification process is required to work as a Bookkeeper, these roles require at least some college and at least 2-4 years of previous work experience in an accounting role. Usually, the bookkeeper’s work is overseen by either the business owner or a qualified accountant.
When and why you would need an Accountant:
Unlike the role of bookkeeping, Accountants generally work at higher-lever processes. One of the biggest reasons business owners and people turn to accountants (also known as CPAs) is to have their tax returns done. In order for taxes to be completed, accountants make sense of all the information that was previously compiled by the business owner or bookkeeper. Accountants will also generally prepare adjusting journal entries, running financial analysis of the company to measure operational performance, and preparing financial statements. There are plenty of other activities that Accountants and CPAs work in including Auditing of financial information or some even provide bookkeeping services to smaller clients.
What is the cost to have a bookkeeper?
Depending on a multitude of factors including annual revenue, an average number of transactions per month, what type of services are required including AP / AR management, Budgeting, Invoicing needs, etc. Services can range from $200 - $800 per month. These are only estimates and reflect a range of bare bones services to having a complete turnkey solution for your small business.
What is the cost to have an accountant?
According to Investopedia, the hourly billable rate in 2016 ranges between $160-$312+ depending on the size of the firm that you are receiving your services from. This rate generally includes all the services you would need from the firm. The same rate would generally apply for tax advice as would be the rate for basic bookkeeping services.
That said, it is generally much more cost effective to have a Bookkeeper working with you for a whole month in what you would pay for a few hours with an Accountant. It is important to note, however, that a collaboration between you, your bookkeeper, and accountant will contribute to the long-term success of your business and they will help you get back to doing what you love most.