Before starting a bookkeeping business, you’ll first need to know the basics of operating legally. It’s also helpful to understand how to market your services and manage the financial side of running a business. Both bookkeepers and accountants are eligible to become professionally certified. They work hand-in-hand to ensure that the business complies with all legal and reporting requirements.
A bookkeeper needs a keen eye for detail, solid math skills, and a methodical approach to accurately record and manage financial transactions. In situations where financial strategy and analysis are critical, the skill set of an accountant would be most useful. However, for day-to-day financial management, such as accounts payable/receivable or payroll, a bookkeeper would be the most practical choice. For small businesses with relatively uncomplicated financial transactions, a bookkeeper may suffice. However, larger businesses with more complex transactions, or businesses planning for growth, will likely need the skill set of an accountant. To enhance their career prospects, many accountants also pursue a CPA certification, which requires meeting additional education and experience requirements and passing a comprehensive exam.
Accounting teams and CFOs are working more and more towards strategy, analysis, and decision-making for businesses. They work with statements like profit & loss, balance sheets, and income statements to provide an overview of financial health. Generally, bookkeepers have a mix of formal education, professional work experience and certifications. These professionals typically hold at least a bachelor’s degree in accounting, economics, mathematics, business or a closely related field. However, some employers require job candidates to have only a high school diploma or the equivalent to qualify for entry-level positions. You don’t have to go it alone when it comes to your business’s finances.
Accountants’ qualifications depend on their experience, licenses and certifications. To become an accountant, they must earn a bachelor’s degree from an accredited college or university. Bookkeepers aren’t required to be certified to handle the books for their customers or employer but licensing is available. Both the American Institute of Professional Bookkeepers (AIPB) solved: standard irs meal allowance and the National Association of Certified Public Bookkeepers (NACPB) offer accreditation and licensing to bookkeepers. There are no formal educational requirements to become a bookkeeper, but they must be knowledgeable about financial topics and accounting terms and strive for accuracy. A bookkeeper is not an accountant, nor should they be considered an accountant.
Introducing Intuit Assist
When deciding whether you should hire an accountant vs a bookkeeper, the answer will depend on what kind of help your business needs. Both bookkeepers and accountants may charge a flat rate or, more commonly, by the hour. If you prefer to make inferences and provide solutions, then you should consider a role as an accountant.
Get started by signing up for the Intuit Bookkeeping Certification program today. A bookkeeping certificate can help you find a bookkeeping role, either as an in-house bookkeeper or as a freelancer. Bookkeeping lays the groundwork for many accounting processes, so you can use your experience and knowledge as a stepping stone to becoming an accountant. However, you will likely need to complete a degree program and other certifications to be an accountant or move beyond a bookkeeping role.
- Standard methods of bookkeeping are the double-entry bookkeeping system and the single-entry bookkeeping system.
- Accountants play pivotal roles in tracking and organizing the finances of a business.
- It’s also advisable to hire an accountant if you find your business is experiencing rapid growth.
- If your business can afford to do so, it may be beneficial to outsource your accounting or bookkeeping.
- Both bookkeepers and accountants may charge a flat rate or, more commonly, by the hour.
As you compare online bookkeeping courses, consider the range of topics covered, the course format, and the cost. Whether it makes sense to obtain just one bookkeeping certification or additional tax and accounting software certificates can depend on your niche and the types of services you plan to offer. For example, some small business owners do their own bookkeeping on software their accountant recommends or uses, providing it to the accountant on a weekly, monthly or quarterly basis for action. Other small businesses hire a bookkeeper or employ a small accounting department with data entry clerks reporting to the bookkeeper. It can be difficult to gauge the appropriate time to hire an accounting professional or bookkeeper ― or to determine if you need one at all. While many small businesses hire an accountant as a consultant, you have several options for handling financial tasks.
Why No One’s Going Into Accounting
What’s more, a bookkeeper can continue using the same accounting software that you already have, so hiring a new bookkeeper does not have to mean a transition over to new software. AccountsPortal, for example, lets you add an unlimited number of users, so it’s simply a case of adding your bookkeeper to the access list. Some bookkeepers may also offer to complete your business’ VAT returns if you are VAT-registered, complete basic self-assessment tax returns, and may also offer to manage your payroll. If your goal is to move upwards within a company and have more power, then accounting will offer a better position to do so. If you want to start by testing the field, then bookkeeping is a good first step into the business of finance.
Many smaller companies and startups do their bookkeeping on software that is recommended by accountants. They then have an accountant as a consultant review their books and ledgers every week, month or quarter to analyze the financial data. From there, the accountant can advise business owners on how to spend, save and scale. All small-business owners should consider hiring a professional accountant to handle their tax returns, at the least.
Career Advancement
The overall best bookkeeping software includes Zoho Books, FreshBooks, Xero, and Intuit QuickBooks. Accountants are more specialized, so not every company has an in-house accountant. You can use a firm or work with accounting software for your business needs. When searching for an accountant or bookkeeper, it’s important to note the differences in their services as well as how these specific services can benefit you and your business. NACPB actually describes the Certified Public Bookkeeper (CPB) designation as a license, not a certification. The entity does offer a bookkeeping certification, but this credential is only a fraction of what the CPB designation has to offer.
Accrual Basis Accounting
For entrepreneurs and small business owners, this frees up your time allowing you to focus on tasks more relevant to the overall business. In addition, this puts financial support in the hands of experts, as opposed to having someone at the company learn these skills on the fly. Outsourcing these services also saves you from hiring a full-time in-house employee for these roles. Some bookkeepers, especially those with bachelor’s degrees in accounting, may decide to become certified public accountants (CPAs). CPAs have similar job responsibilities to bookkeepers, but must also analyze data, suggest best practices, and make predictions.
Bookkeeping is the process of recording all financial transactions a business makes from its opening to its closing. This practice helps establish the company’s financial outcomes and allows owners to track where their money is going. A bookkeeper is generally involved in processing and organising your business’ day-to-day financial operations.
signs you need a bookkeeper or accountant
When it comes to how often you’ll see an accountant, you will generally meet with them less frequently than you would with a bookkeeper. If your business is large enough, however, you can have accountants work year-round for your business, effectively operating as an outsourced finance department. Accountants and bookkeepers provide similar services, but accountants can also provide financial advice where bookkeeps can’t.
For instance, they must understand how to produce balance sheets and income statements, as well as record organizational debits and credits. To learn these skills and others, new bookkeepers often receive around six months of on-the-job training to learn how to use bookkeeping software, databases, and spreadsheets. For example, certified public accountants (CPA) meet certain educational and experiential requirements and can perform audits, provide tax advisory services, or give financial advice. Every business, big or small, needs someone to handle its financial obligations. Determining whether to hire a bookkeeper or accountant depends on the scope of these obligations.
Pro tips for hiring an accountant vs. bookkeeper
Equally, even once your business is established, accountants can help provide advice when it comes to business expansion and tax matters relating to a large asset acquisition. There are some crucial differences between bookkeepers and accountants. On one hand, if you are unsure of how far you want to progress in the finance industry, bookkeeping may be the role for you, at least for starters. If you generally enjoy data entry and have high attention to detail, then it could be the end point, too.