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Bookkeepers and accountants are not the same!
Accountants and bookkeepers have different jobs and responsibilities. An accountant’s main focus is:- the preparation and lodgement of statutory returns
- advising on legal entity structures
- giving general business and financial advice.
- training clients to use accounting software
- implementation of document management and inventory control processes to create efficiencies within the business
- implementation of POS (point of sale) systems that capture the daily transactions in a retail environment.
- Develop, implement maintain and review internal business processes.
What can bookkeepers do?
Here are some of the tasks of bookkeeper that will help to keep your business running smoothly:- Keeping track of daily transactions A bookkeeper can handle the recording of day-to-day bank transactions. If the accounting software you use has daily automatic bank feeds, this is a great tool for your bookkeeper to use. When your bank statement lines are fed into your accounting software, it’s much easier to keep an eye on cashflow and it also saves on data entry time.
- Sending out invoices and managing the accounts receivable ledger Preparing invoices and sending them to clients is usually the bookkeeper's responsibility. Managing the accounts receivable ledger – and chasing late payment – is also likely to be done by a bookkeeper.
- Handling the accounts payable ledger Up to a certain dollar amount, it's usually bookkeepers who will make payments on behalf of the business. This includes payment of supplier invoices, expenses and petty cash.
- Keeping an eye on cashflow One of the most important tasks for a bookkeeper is making sure the company doesn't run out of day-to-day money. They can do this by watching the balance of revenues to expenses. Then they can take action or offer advice if it looks like the company needs more ready cash.
- Preparing the books for the accountant It's the bookkeeper's job to ensure that the accounts are valid and up to date when the accountant needs them. This allows the accountant to use their skills and knowledge to make business recommendations, report to the board and complete company tax returns.
Bookkeepers and accountants working together
A well-run business is likely to make use of both accountants and bookkeepers. The division of labour is important. Here's how it might work:- Company formation You should use an accountant to help you set up your business. Accountants can help you create your business plan and set up a company structure that best suits your business.
- Accounting systems An accountant or bookkeeper can also help you choose the right accounting software and set it up so that it works well for you and your employees.
- Bookkeeping work After completing the above tasks and keeping a bookkeeper can focus on keeping your company's accounts up to date on a daily basis.
- Accounts reconciliation The accountant and bookkeeper will get together regularly, perhaps once a month. They might meet in person or they might work remotely, using cloud accounting software with shared access. Either way, the accountant will look at the figures in the accounts and the bookkeeper will explain any numbers and decisions that aren't clear.
- Reporting The accountant will report to the business owner and the board members. The accountant will report on the state of the accounts so that the board and owner have a clear picture of the financial health of the business. A bookkeeper can also provide reporting, but in a less formal way on a more regular basis with what is called management accounts. These reports are often used by the business owner as checkpoints to see where the business is going often in a weekly basis.
- Strategy Armed with up-to-date figures, the accountant will make recommendations to the business owner and the board. The accountant will offer advice about any planned expansion and investment. They will also advise on whether the business can afford to move into new markets and other financial strategies.
- Legal compliance The accountant will use the information prepared by the bookkeeper to write the company reports. These reports will include information about income and expenses, net profit, assets, liabilities and tax. The accountant will also file the company tax return forms and arrange for tax payments to be made.
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