If you're a small business owner, you may have been doing a lot of tasks that aren't quite inside your comfort zone. The company accounting is usually one of these jobs that you want to hand off to more experienced hands as soon as possible. But, how can you know who you can afford and who you should hire? Here's a quick guide to getting help with your books.
When to Hire a Bookkeeper
When you're hiring someone to handle your business finances, your two most likely options are a bookkeeper and an accountant. And, while many people use these two terms interchangeably, they describe very different jobs.
Bookkeepers perform the day-to-day functions of compiling and entering information about your business into the ledger or computer program that you use. This includes such tasks as invoicing customers and following up on payment, entering and paying vendor invoices, reconciling bank statements, and making corrections in the entries as they occur. You probably want to choose a "full charge bookkeeper" who has the knowledge to perform end-of month adjustments and generate monthly reports showing your profit and loss, cash flow, or assets and liabilities.
Because a bookkeeper is not required to hold the same certifications or receive the same level of training as an accountant, they are nearly always less expensive to hire. And this can make a big difference, since these tasks take the longest amount of time and are done on a daily, weekly, or monthly basis.
When to Hire an Accountant
So, what does an accountant do, then? An accountant has completed more schooling and has often passed a set of exams that result in the designation "Certified Public Accountant." This added training and certification give them a broader and deeper knowledge of things like tax law, regulations, accounting ethics, financial reporting, and long-term planning. This is valuable knowledge to have at your disposal when you need it, but it will cost more to hire, and it's usually not required on a daily or weekly basis.
In truth, your bookkeeper and an accountant should be able to work together on big-picture issues and during certain times of the year. For example, an accountant should most likely do your business taxes each year. He or she will work with the books prepared by your bookkeeper to do this and may work with the bookkeeper to answer additional questions or perform research on individual entries or items.
You probably also want to have an accountant available that your bookkeeper can call with difficult questions or that you can work with on projects like forming a business plan for the next 1, 2, or 5 years. An accountant can research legal questions, go over your books once or twice a year to identify potential problems, and create reports for lenders.
By combining the best aspects of a bookkeeper and an accountant, you can save money and still get reliable accounting work performed. These two professionals -- when working together -- will help you grow your business for years to come. For more information on the services offered by a small business accountant, contact someone like Teri J Henderson, CPA, P.A.