To help you understand better, we have listed the duties of a bookkeeper and an accountant separately in this blog.
Duties of a Bookkeeper
Keeping Track of Daily Transactions
A bookkeeper keeps track of a business’s daily expenses and earnings. Bookkeepers use advanced accounting software to collect financial data and sort it in a way that makes sense. Recording each transaction helps businesses understand where their money is going. This data collection is also called ledger maintenance.
Bookkeepers also check non-digital payments like those made by cash and cheque. They ensure invoices are cleared on time by sending reminders to suppliers and customers.
Recording such transactions helps maintain a systematic record of a business’s finances. This comes in handy during audits and tax filing. It also helps business owners gauge their financial status. Efficient bookkeeping saves both money and time for businesses.
Keeping a Check on Business’s Cash Flow
In addition to keeping records, backups, and archives of financial data, a bookkeeper is also responsible for determining a business’s cash flow. They calculate the proportion of income to expenditure for a business to determine whether the company is profitable or lost.
A good cash flow indicates that a business has enough money to pay salaries to its employees, advance to its suppliers, and buy new assets or make investments. However, if a business has a negative cash flow, it needs to limit its spending to make only necessary expenses. Thus, having a bookkeeper monitor a business’s cash flow is very important.
Managing The Payroll
Another area where bookkeepers offer tremendous help is in payroll. When a business has a few employees, it is easy to hand out salaries; however, as the employee count increases, handling salaries, payroll taxes, compensation, etc., can become complicated.
Handling payroll is one of the duties of a bookkeeper. They manage employee timesheets, pay the required payroll and superannuation taxes, distribute due commissions, etc.
Bookkeepers reconcile employees’ banking information with accounting software to ensure smoother and more efficient payroll management. This helps businesses focus on adding value rather than being stuck on handling employee payroll challenges daily.
Helping in Decision Making
Businesses make complicated decisions daily. Most of these decisions are directly or indirectly related to money. Bookkeepers have the financial documents to help business owners make these financial decisions.
For example, bookkeepers can suggest cost-cutting methods to save more money; they can also suggest tax deduction methods, etc.
Duties of an Accountant
Preparing Budget Forecasts
An accountant uses the financial documents a bookkeeper prepares to make budget forecasts for a said period. He uses his analytical skills to find patterns in data and visualises the financial market to make this budget estimate. He also oversees the work of a bookkeeper.
For example, even though a bookkeeper stores financial data and updates it, an accountant is the one who monitors the storage, management, and updation of this data, and decisions can only be made with his permission.
This is one of the essential duties of an accountant, and a bookkeeper is not allowed to do so by the regulatory authorities. An accountant is authorised to file taxes on behalf of a business, and He also sizes up the tax return to ensure that the company receives a good tax deduction.
He also helps the management make decisions by providing financial consultation on important questions after doing data analysis.
Making Financial Statements
A business must produce certain financial documents for the government to verify. They are also bound to generate internal financial documents to understand their financial situation. An accountant prepares all such financial statements.
These business reports, including profit and loss statements, are significant for the growth of a business.
Following Regulatory Laws
The government keeps updating the tax laws and other regulatory laws for businesses. An accountant stays current on all such information and helps companies ensure compliance.
This helps companies adhere to industry standards. Accountants also manage balance sheets and monthly and yearly closings.
To Sum It Up
An accountant and a bookkeeper have different tasks. The best way to make your business succeed is by outsourcing your accounting and bookkeeping work to a third-party entity that provides both services cost-effectively.