While all business owners understand the importance of sound financial management, many still don’t really know the complete role and responsibilities of their main financial employee – the bookkeeper. Further confusion is added because many people use the words accountant and bookkeeper interchangeably, even though they are two completely different job profiles.
Understanding the requirements of the job profile ensures that you know which type of professional (Accountant Vs. Bookkeeper) suits your business needs and what you can expect from them.
So let’s first start with understanding the difference between an Accountant and Bookkeeper
Bookkeeping is one part of the accounting process. Bookkeeping is more about collating, recording, and tracking financial data (namely expenses and income) in the correct format. This information is used to prepare more complex financial reports and to facilitate business decisions.
Hence, an accountant is a financial expert whose main job is to advise the business owner or directors regarding all financial matters. A bookkeeper works under an accountant and is a financial data-entry professional whose main job is to present the accountant with correct and updated records.
Tasks of a Bookkeeper
While recording transactions sounds simple at first glance, the number of transactions, types of receipts, and dealing with a diverse set of people can be a complicated affair for even a small business.
Recording and inputting data into advanced accounting software systems is just one primary function of a bookkeeper. For this, they need to have a thorough understanding of the software so that they can carry out additional tasks such as –
Keeping an eye on the gross profit and expenses patterns
Producing up-to-date financial reports
Bookkeepers must also:
- Calculate interest and investments
- Keep a journal of asset depreciation
- Keep an account of corporate tax liability
- Produce and track invoices – including following up with late payers
- Create reports on unpaid debtors and creditors
- Manage business repayments such as on loans
- Monitor all purchase orders
- Make payments to vendors, creditors, and government bodies
Should you hire a bookkeeper?
Our unequivocal recommendation would be YES. Bookkeeping is the financial foundation of your business. Your mandatory financial filings are all dependant on correctly maintained accounts. So, unless your business dealings are minimal or you have an advanced understanding of bookkeeping, it is advisable to hire a bookkeeper. If you feel your business transactions don’t really require a full-time employee, then you should consider the option of outsourcing to a freelancer or to an accounting firm.
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