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.

Accountants are usually members of a statutory association. In New Zealand they would be registered with Chartered Accountants Australia New Zealand.

Bookkeepers can manage lots of different responsibilities within a small business. But the main focus is the organisation, recording and reporting of financial transactions as part of the operational life of a small business. In more recent times, some bookkeepers have extended their range of duties to include:

  • 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.

You will often find that a bookkeeper has an area of specialisation and it’s a great idea to ask them more about this when you are looking at hiring them for services.

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.

In summary, it’s the bookkeeper who does the day-to-day work so that the accountant can concentrate on strategic financial operations. So bookkeepers play an important role – without them, accountants can’t do their jobs.t important tasks for a bookkeeper is making sure the company doesn’t run out of day-to-day money.

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.

This is a sensible way of sharing the workload. The accountant does the work that they have been trained to do, while the bookkeeper provides the necessary financial data.

Note the information above was sourced from Xero.com

Chartered Accountancy practices now regularly employ book keepers as well to ensure you are looked after at the practices standards.

Book an appointment with Michelle – michelle@elevationaccountants.nz if you would like to discuss book keeping.

Try These Useful Tips…

To help minimise your time and your accountants time at year end, try these tips.

  1. Keep your personal expenditure in your personal bank account and your business expenditure in your business bank account.
  2. Diarise your tax dates and ensure you save money to pay taxes as they fall due – understand how to estimate the taxes due on the payment dates easily or save a % – work with your accountant on what that % will be each week/month
  3. Categorising expenses – ensure you are consistent and pay attention when coding transaction in your accounting system
  4. Stop thinking of Inland Revenue as the enemy – they are negotiable with discussion. If you cannot afford to pay any taxes we can organise an arrangement and minimise interest and penalties.
  5. Reduce time shuffling paper, there are numerous ways to save things electronically now which saves hours
  6. Getting behind in your bookkeeping, keep a regular time in your diary to do the paperwork – at least weekly if you are not doing it daily – 5 minutes a day can be all it takes
  7. Not setting a budget – if you don’t have a financial plan how do you know if you have achieved it?
  8. Talk to your accountant – in less than 10 minutes proactive accountant can give you practical tips on how to reduce the bookkeeping requirements for you.
  9. If you have no interest in doing the bookkeeping outsource it – cheaper in many cases than employing someone
  10. Learn to read your accounts – this will help you understand if things have been done incorrectly.

Book an appointment with Michelle – michelle@elevationaccountants.nz if any of these issues are a problem and we will give you a free consultation to work out a better way.

Do you know your revenue target for the month?

If you don’t have a money target how do you know if your business is elevating?

Talk to us and discover how you can make time to set realistic financial goals and monitor them to ensure they meet their potential.

Compliance issues

The compliance issues that small and medium sized enterprises are most concerned about are, in order:

  • Tax (by a huge margin – 84 % of small businesses rate tax as their biggest compliance cost),
  • ACC compliance
  • Employment, holidays and health & safety laws.

If these are your concerns, we can help you work through it

Christmas Hours

Season Greetings To You All

We are now closed until 14 January 2019, we wish you and your family a wonderful Christmas and a happy new year.

We have enjoyed working with you during the year and look forward to a successful 2019. If you have urgent issues please email us and we will respond upon our return.

Cashflow is important this month

Remember that terminal tax is due on 7 April and provisional tax on 7 May – If you need to save some more funds to pay these you may want to think about how to find that extra cash.  Talk to us  so we can discuss your options.

 

How good is your business communication?

Open communication is vital to business success, a concept that almost all businesses claim to value, but very few truly achieve.

How would you rate your current business communication? Maybe this is something that perhaps you may need to work on.