How to Choose Between an Accountant vs. a Bookkeeper

You may be embarrassed to ask, but you shouldn't be. What's the difference between an accountant and a bookkeeper? Which one is right for me? How do I choose?

You shouldn't be afraid to ask because the lines between accountant and bookkeeper have become unclear since the the world of point-n-click accounting software is becoming readily available.

So, What's the difference?

Accountants help you with the big picture of the business's finances at year's end. They normally focus on preparing financial statements, conducting audits of your financial statements, tax preparation and tax planning. An accountant can help you save money with good tax planning. They also can help you with reviewing your cash flow when they meet with you at the end of the year.

Bookkeepers record the daily money spent and money received by your business. They can assist you with preparing invoices and monthly statements to be sent to your customers. They can also make sure that your bills are paid on time so that you can avoid those embarrassing phone calls when you forget to pay the bill. A great bookkeeper can help you save money by setting up and monitoring a budget. Yes, I said that unpleasant word: "budget". Everyone needs a budget for their personal finances and more importantly for business finances.

Which one is right for me?

As a small business owner, it's important to be proactive about your cash flow. The best way to keep on top of it is to review your cash flows monthly, not just annually. It's not very cost effective to have an accountant to report on your monthly cash flows. Since bookkeepers see and categorize your everyday cash spent and received, a great bookkeeper can assist you with monitoring your cash flows monthly for a fraction of the price of an accountant.

Another important thing to keep in mind is that if your accountant has to do a lot of clean-up work to get your financial records up-to-date and categorized properly at the end of the year, you'll normally get stuck with that surprise bill. So, if you're an entrepreneur that hasn't logged in to your accounting software in a few months, hiring an accountant can be quite expensive.

How do I choose?

Actually the correct answer is for a properly functioning and profitable business, you need both a bookkeeper and an accountant. Your bookkeeper can communicate with your accountant and make sure that all of your financial records are complete, organized and readily accessible to you at a moment's notice. This helps you to make informed financial decisions throughout the year. Then, when tax-time comes, you can have a smooth, pleasant experience with your accountant. Both professionals will work together to help you to achieve your business goals.

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