What’s the difference between an accountant and a bookkeeper?
Do you really need both?
If you’re like many small businesses, you wouldn’t be the first to wonder if a bookkeeper can do your accountant’s job at a fraction of the cost. Back up the bus! Let’s look at the differences between the two – and why you need them both.
What bookkeepers do
Bookkeepers record transactions, raise invoices, chase non-payers, reconcile your bank statements, manage your payroll, do your GST and maintain your general ledger, to name just a few tasks. A good bookkeeper will keep you in the loop and have accurate numbers at the ready when you need them.
Some bookkeepers also operate as tax agents do your income tax. At Admin Army we review and submit GST and PAYE returns for our clients, but not income tax. We know enough about NZ tax law to code your transactions and claim every deduction possible. However, beyond that, we think you’re best served to do your tax with a chartered accountant (CA). CA’s keep up to date with the latest tax law, which helps to ensure your income tax bill is minimised as low as possible.
What accountants do
While you might be in touch with your bookkeeper every week or month, you’ll talk to your accountant at the end of the year when it’s time to file your company and personal income tax, and during the year if you need advice or coaching. Advice is the key word here – accountants fulfil an advisory role. They use the data compiled by your bookkeeper to see the big picture and help you make wise decisions.
Your accountant will also prepare company financial statements, business reports and valuations. What accountants really shouldn’t be doing is getting caught up in the nitty-gritty of your general ledger, stumbling on transactions that aren’t coded correctly which skew the books.
These days there seem to be two types of accountants, and some are more collaborative than others. An ‘old-school’ accountant has a transactional focus and keeps their knowledge and services close to their chest. They’ll often end up doing your bookkeeping for you and charging you too much for the pleasure.
The ‘new school’ of accountant is one that has emerged as accounting software has changed in the last decade. They’re a team player who is more like a business coach. They’re happy to work alongside your bookkeeper and is focused on helping you grow your business.
Building a great team
When you’re building a team of people to manage the numbers side of your business, it pays to choose a certified bookkeeper and a chartered accountant.
A trustworthy bookkeeper will register with the Institute of Certified NZ Bookkeepers. Certification isn’t compulsory, but choosing a certified bookkeeper will help you find a bookkeeper who isn’t a cowboy and follows best practice.
Equally, anyone who has an accounting degree can call themselves an accountant. However, a chartered accountant has done additional study and has to meet technical and ethical standards.
The best result for clients is achieved when an accountant and a bookkeeper are working together collaboratively. With the bookkeeper keeping on top of the transactional side of things, the accountant will know they are working with accurate, up to date information. This allows them to focus on the advisory side of things. In turn, you’re getting great advice which helps see your business to flourish.
Are you interested in finding out if the Admin Army team can help with your bookkeeping and work alongside your accountant? Get in touch today for a free 30-minute, no obligation discussion. We’re accountant agnostic, so are happy to work with your current accountant to provide you the best result possible.