As a sole trader, professional service provider or small business owner, your ‘life’ depends on your cash flow and your accountability. And most of you will say, “I hate doing accounts,” or I don’t know about accounting” or alternatively, “I don’t know whether I need an accountant or a bookkeeper or both” and then “Where can I find a qualified, reliable bookkeeper/accountant?”
The accurate recording of transactions with proper processing and assessment of your business finances are the ‘lifeblood’ of a successful business. What is the difference between a bookkeeper and an accountant?
A bookkeeper is responsible for, amongst other things, the accurate recording of all transactions including purchases, sales, receipts and payments. This is carried out through a general ledger and most often using accounting software that suits the business’ needs. I refer to my blog, What Accounting Software is Best for Your Business for general advice on accounting packages. A bookkeeper registered as a BAS Agent will also lodge your business activity statements to the ATO.
An accountant verifies the data entered, generates reports, analyses the accounts, prepares financial reports, including Balance Sheet and Profit and Loss. After analysis of the reports, information can be provided to the business owner and not limited to, how to manage cash flow, trends and opportunity for growth. A professional must be registered as a Tax Agent in order to provide taxation advice or preparation of income tax returns.
THE MARRIAGE OF A BOOKKEEPER AND ACCOUNTANT
Consider the following:
• Am I a sole trader and new to business?
• Do I understand my accounts and the preparation of them?
• How complex are my accounts?
• Am I confident my bookkeeper is providing an accurate set of accounts to the accountant?
• Am I paying an accountant to do bookkeeping work?
With the evolution of accounting software, many sole traders are carrying out the bookkeeping function themselves, but how far can they go? From my experience some of the accounting software available, have been designed for people who have none or very little accounting knowledge and limited to entering invoices and doing bank reconciliations with bank feeds. When it comes to handling transactions that are outside the norm they struggle. Often times they have to contact their accountant to rectify or explain how to process the data correctly. So while it may seem to be the easy route, it may not always be the best for a person to prepare their own financial accounts. An expert, reliable, on call bookkeeper/accountant can take all the stress out of preparing and processing their accounts.
If you are a small business, the marriage of bookkeeper and accountant is even more important. If you employ a bookkeeper, it is in your best interests to know and understand how your accounts are being prepared. You need to be confident that your set of accounts are accurate, organised and up to date. If you have employees, your bookkeeper needs to be up to date with all legislation regarding employers obligations. If the ATO were to audit you, would you be convinced you had nothing to worry about? In the past you could rely on your accountant for all lodgements and any recourse would be to the accountant. But not now. As a business owner you have to be aware of what lodgements are being made to the relevant bodies, ie Australian Taxation Department, ASIC etc, as you are the one wholly responsible for what is being lodged. Otherwise, you may be liable for fines or other penalties.
Therefore, the marriage of the expert bookkeeper and accountant is integral to the success of your business and it needs to be a harmonious relationship. Your accountant needs to be provided with accurate accounts that only an qualified expert bookkeeper can provide.
If you are in need of a qualified accountant who is also an experienced bookkeeper please contact Lynne at firstname.lastname@example.org or 0402 819 611