Bookkeeping and accountant are common terms that a business always comes across. Often, we find these terms used interchangeably in various situations, but the practices have a considerable amount of difference that it is necessary to understand them. There are firms that provide both bookkeeping and accounting services while some provide only one of them. Check the directory or the company website first before contacting them so that you don’t come across as a newbie.
This blog will explain how crucial an accountant is to a business and how hiring one could save your business from an eventual downfall. Let’s start with understanding the difference between bookkeeping and accounting.
What are the bookkeeping and accounting services?
While your business needs to obtain both bookkeeping and accounting services — a bookkeeper is responsible for recording and classifying financial data while an accountant analyzes that data to prepare financial reports for account audits, providing financial advice, taxation, and more.
Bookkeeping forms the basis of accounting. The focus is on maintaining an accurate account of all financial transactions, carrying out bank transactions, and preparing invoices.
Accounting, on the other hand, is more than just tax filing. He will be available to help you make informed decisions from a financial perspective.
Should you hire an accountant?
If you are assuming that the guy you hired to log your financial records will take care of your financial report preparation, check once again; otherwise, you will be in for a surprise you wouldn’t enjoy during the tax season. Because that’s an accountant’s job.
Some findings by the U.S. Bureau of Labor Statistics (BLS) show that approximately 20% of new businesses tend to fail during the first two years of opening. While there are many factors responsible for it, poor financial management remains one of the top contributing factors.
For small businesses, accounting is of utmost importance. It provides important information like profit and loss and assets and liabilities, beneficial for decision making. There should never be a question of whether you should hire an accountant or a bookkeeper because both of them are necessary for every business.
Benefits of Hiring an Accountant
Hiring an accountant does much more than what’s explained above. Let’s take a brief look at some of them.
Maximize Tax Deductions
Small businesses are not well aware of the significance of having an accountant until the tax season starts. Now they will be desperately trying to find ways of maximizing their tax deductions, which is not a good idea at all.
An accountant will be able to help you make strategic decisions by finding out all possibilities of tax deductions throughout a financial year. Maybe you will even get some deductions that you had no idea about.
Prevent an audit
It’s not a wise idea to hire an accountant after an audit has occurred. There’s not much that can be done.
There are many reasons for an IRS rep to come knocking at your door, from errors on tax forms to excessive deductions. Unfortunately, it is more likely for a small business to get audited because they are seen as having comparatively low financial competence and organization. Here is another compelling reason to hire an accountant.
Save your time and energy
Small businesses are usually run by one or two individuals who prefer to spend time running the business and making strategic marketing decisions. But they usually end up worrying about the financial status of their business, worrying about audits, and end up making errors in financial logs and reports.
You must be wondering whether to hire an accountant or a bookkeeper. Hire a bookkeeper to make accurate financial entries and prepare invoices and an accountant to prepare financial statements to stay safe legally and strategically.
Now you must be well briefed about the value an accountant can bring to your business. You don’t have to hire someone in-house to do the job for you; many remote bookkeeping and accounting services are waiting for you, just a google search away.
Remember, an accountant can be a bookkeeper, but a bookkeeper may not be an accountant unless they are certified to be one.