There is often a misconception that bookkeeping and accounting are the same thing. While they both work to assist you with your finances, there are some important distinctions between the tasks of a bookkeeper and an accountant. It is important to understand that both bookkeepers and accountants are integral parts of your business. While their tasks can sometimes overlap, there are definitely certain aspects of your business that you would specifically entrust to an accountant, and others that you would give to your bookkeeper.

In simple and very general terms, a bookkeeper will be the person that assists you with the ongoing financial recording and transactions that keep your business running smoothly. Your accountant, on the other hand, will be the person who analyses the data produced by your bookkeeper, reports on it, and is best suited to give you financial advice. Your accountant will also have a strong understanding of your taxation requirements, and will be best able to assist in that area.

Some tasks that are regularly undertaken by your bookkeeper can include:

• Processing invoices, receipts, payments, and other financial transactions

• Processing and maintaining your payroll system

• Preparing initial financial statements

• Reconciling accounts and preparing reconciliation reports

• Managing your accounts receivable and accounts payable, i.e. amounts owing by debtors, and amounts owing to creditors

• Calculating GST

• Preparing and lodging your BAS

• Designing, establishing and reviewing accounting systems

There are a wide variety of other tasks that a bookkeeper can undertake, and much like the tasks outlined above, they are generally related to the ongoing maintenance of your financial records.

While an accountant will also be qualified to assist you in these areas, it is important to be aware that there is likely to be a substantial difference in fees charged by bookkeepers and accountants.

The role of an accountant in your business, will be in a position to offer financial projections and advice on future financial elements of your business through analysis of past performance. Accounting is more subjective, providing business owners with financial insights based on information taken from their bookkeeping data. They will prepare financial statements and complete tax returns, can undertake audits, and importantly, can help you to analyse strategic financial matters, like operating costs and forecasting.

Further services offered by your accountant can also include:

• Taxation advice and planning

• Business establishment assistance

• Auditing

• Corporate reporting and compliance

• Superannuation fund advice

• Financial management advice

While not an exhaustive list of an accountant’s services, the tasks outlined here serve to highlight the analytical and advisory nature of their position.

Given that there are substantial differences between the services offered by bookkeepers and accountants, it can be seen that both are important to the growth of your business. Instead of viewing them in a ‘bookkeepers vs accountants’ situation, it is important to understand that your accountant and bookkeeper work best together to serve the financial requirements of your business.