There is often confusion about the difference between bookkeepers and accountants, but any business requires both bookkeeping and accounting. Bookkeeping is the foundation of accounting and while there is often an overlap between what bookkeepers and accountants do, it’s not a matter of one versus the other. Both have specialised experience and knowledge for the tasks they perform.
What is the difference between Bookkeepers and Accountants?
Generally speaking, bookkeepers are across the business accounts on a more regular basis than accountants, as their job is to manage the day-to-day financial applications of the business. At the end of the financial year, they hand over a tidy set of accounts to the accountant.
Having a bookkeeper involved makes the job of an accountant a whole lot easier, as they take what the bookkeeper has done, make year-end adjustments for things like depreciation, FBT, home office expenses etc., and prepare tax returns and financial reports.
Anything income tax or business structure related is usually the domain of an accountant. One of their responsibilities is to make sure you are meeting your tax obligations. They ensure that the business’s accounts accurately reflect the position of the business, and that you are claiming everything you are legally entitled to. They may also analyse the business’s financial reports, discuss with you its financial health and viability, and advise on how to improve business performance.
Accountants generally have an accounting degree and many have completed further study to become a Chartered Accountant or CPA.
Bookkeepers have often learned on the job and have many years’ experience, with many having also studied some accounting papers or qualifications, and are industry-certified.
Bookkeepers and accountants have a very synergistic relationship and, ideally, work well together for the benefit of their mutual client.
Why use a Bookkeeper in your business?
Many business owners love the business they are really good at and love what they do. But, the bookkeeping side of their business often becomes a dreaded chore and is usually not the best use of their valuable time.
In contrast, bookkeepers love keeping your books tidy and will do everything they can to lighten your load. Plus, bookkeepers are much more efficient in processing data because that is their profession.
You may get it wrong. There are many upsides to the great technology now available, however, one of the downsides is that it is often portrayed as being easy to “do it yourself”. Technology still relies on the systems being setup correctly from the start and the information being regularly checked and verified to ensure it is accurate and compliant.
Incorrect data going in equals incorrect data going out, resulting in incorrect IR returns. It’s often a case of “you don’t know what you don't know. For example, the rules around whether that coffee with a client or that travel booked through an online booking system is tax deductible, or how to treat the GST component. IR does not accept ignorance as an excuse and can be pretty harsh when it comes to charging interest and penalties on incorrectly filed returns.
Incorrect data also means that you are not getting accurate information on how your business is performing. For example, if you code something to an asset account when it should have been an expense account, then your profit calculation will be wrong and your business will look like it is performing better than it actually is. This is the information you are making important business decisions with and so it is extremely important that it is correct.
A great bookkeeper will get to know you and your business inside and out, becoming a valued member of your team as they work alongside you to help your business grow. Our members pride themselves on the relationships they have with their clients.
How to choose a Bookkeeper
Make a list of tasks you want a bookkeeper to do for you, what you would like to do yourself and where you want your bookkeeper to work (in your office or remotely). Services offered by members range from training you to do your own bookkeeping through to full-service bookkeeping which may include invoicing your clients, paying your bills and administering your payroll, as well as reporting and tax compliance. Online software means that most of the bookkeeping work can be done remotely, but you may want your bookkeeper to work all, or part of their time, at your office.
To find a bookkeeper, ask for recommendations from people in your business network, accountant or friends and family. New Zealand is a small place and our members often say that a lot of of their work comes from word of mouth recommendations.
When interviewing a potential bookkeeper, determine if you feel they will be a good fit for you and your business. Your bookkeeper is going to be an integral member of your team! Mutual trust and respect is important.
Consider the following items for discussion:
- The accounting software they are proficient in. This is important if you already have software in your business as you need your bookkeeper to be an expert in this.
- Fees - how the bookkeeper charges. Will work be charged based on hourly rate or monthly fee and what the price is. The advantage of the hourly rate is you pay only for the time taken to do the work, whereas a monthly fee provides cost certainty for your business. When considering price, popular wisdom is that cheapest is often not the most cost effective option as a great bookkeeper can add more value to your business than they cost you.
- The types of business they work with. Some bookkeepers specialise in dealing with a particular industry and can bring insights and best practice to help you grow your business.
- Certifications and qualifications held. These show that the bookkeeper knows what they are doing and takes their profession seriously. an ICNZB Certified Bookkeeper™ has passed one or more of our bookkeeping assessments and are required to comply with our strict Code of Ethics.
- A great bookkeeper will add a huge amount of value to your business based on experience and knowledge. They will be detail focused and great problem solvers.
- It is essential to get references from existing or previous clients or employers of the bookkeeper. We recommend you specifically talk personally to referees, even if there are testimonials for the bookkeeper provided.
Start your search for a great bookkeeper today by finding one of our Certified Bookkeeper™ members working in your area - click here to view our member directory.