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Accountant vs. Bookkeeper: Who Do You Need On Your Team?

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Accountant vs. Bookkeeper: Who Do You Need On Your Team?

Cash can be tight when running a Small Business, so you want to have the best accounting team possible without spending too much.

As an accountant running a bookkeeping business, a question I get asked all the time is ‘Do I need an accountant or a bookkeeper or both’?

Well businesses in different stages have different needs and budgets, but this doesn’t really answer the question. Let’s start by looking at who could be on your team and what their role is:

  1. The CEO (business owner) – A business owner is ultimately responsible for understanding ‘their numbers’. An accountant can help to prepare the ‘numbers’, but a business owner needs to understand them and use this information to drive their business forward.
  2. The Accountant – Accountants have done extensive study on top of their accounting degree and are usually CPA’s or Chartered Accountants. They lodge tax returns, but they can also provide strategic advice around business structures and tax planning. Accountants can also add plenty of value with performance reporting and working with business owners monthly / quarterly to improve the performance of their business.
  3. The Bookkeeper – A bookkeeper is responsible for keeping your day to day accounting records up to date. Bookkeepers will have done further study and some will have accounting degrees. If you have a great bookkeeper your accountant can focus on providing strategic advice rather than using their time to correct bookkeeper errors.

Understanding the roles of your accounting team helps, but the next question from here is ‘what is the best mix of roles for my stage of business’?

I’ve put together a case study to demonstrate accounting teams at different stages of business.

Free-lancer

Anthony works full-time as a designer at a local agency. He has also been doing some freelance design on the weekends. He has an invoice template he sends his clients and he keeps a spreadsheet with a list of sales and business expenses. At the end of the year he sends the spreadsheet to his accountant.

Accounting team check-in: Most of Anthony’s income comes from his salary. He is meeting his record keeping obligations and lodging his tax return on time. This is a suitable setup for a side business, but if the business grows he’ll need to look at accounting software, business structure and separate business bank accounts.

Small Business ($100k p.a)

One of Anthony’s clients has won a major tender and wants Anthony for 3 months of design work. This is just the push he needs to quit his job and focus on his business. His business grows rapidly and in less than a year his sales are over $100,000 per annum.

Accounting team check-in:
His accountant has helped him to register a company. He has also set up separate business bank accounts and has them feeding into Xero (accounting software). He is doing the bookkeeping himself, but is struggling to keep this up to date each quarter in time for the BAS. He sees his accountant once a year at tax time.

Small Business ($100k-300k p.a)

Anthony realises he needs help with his bookkeeping and that he can add more value by focusing on providing a great experience for his customers and on growing the business. He hires a bookkeeper to keep Xero up to date every month. He still only sees his accountant once a year.

Accounting team check-in: Anthony has made great progress in terms of using accounting software and hiring a bookkeeper. The bookkeeping is only being done monthly which means he doesn’t have up to date details about whether customers still owe money. Anthony should move to weekly or daily bookkeeping in the near future.

It is a concern that Anthony is only meeting with his accountant once a year. At this stage of business Anthony should be tracking business performance against some Key Performance Indicators and discussing the results with his accountant regularly.

This case study is an example of how an accounting team can progress as a business grows. The numbers of your business have a direct impact on the success of your business.

Build the best accounting team for your business that you can and make sure to adjust the team as your business grows and develops.

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