One of your key goals as a business owner should be to keep your costs (overhead) low. One method to do this is to delegate more effectively. What does it mean to delegate smarter? This means that, in order to keep your overhead minimal, you should give specific duties to specific skilled individuals. What I’m getting at is that you should be able to cut your accounting costs by half or more. Rather than paying a CPA or accountant to manage your books, you can do this by hiring a respected, sharp, ethical, well-trained, professional bookkeeper.
The bookkeeper, for lack of a better term, can perform the grunt labor so that the CPA or tax accountant does not have to. What does it mean to do grunt work? Data entry (accounts payable and receivables information), bank statement reconciliation, and other clerical tasks are examples of grunt work. To be honest, most CPAs and accountants would prefer not to deal with this kind of work. Some CPAs and accountants may believe that doing that kind of labor (grunt labour) isn’t why they acquired their accounting degrees in the first place.
The majority of accountants prefer to see clean records. They don’t want to have to worry about figuring out which chart of accounts an expense belongs in, and so on. That is something a bookkeeper can do for a lot less money than an accountant. Furthermore, freeing up time for the accountant will allow him or her to focus more on the financial health of your firm, prepare your company’s tax returns, maybe assist you in applying for business loans if and when necessary, and assist you in soliciting investors if necessary.
We understand that using the word grunt work implies that it is low-paying labor, but it isn’t. The activities that bookkeepers may accomplish for you can be really beneficial and save you a lot of money. Isn’t saving money your ultimate goal?
Let’s go over some of the essential responsibilities of the bookkeeper and accountant with the goal of helping us comprehend their jobs.
• Bookkeeper
A bookkeeper’s general responsibilities usually include recording a business’s day-to-day financial activities, managing the chart of accounts, and preparing financial statements for a specific period. A bookkeeper can work part-time or full-time. Full-charge bookkeepers have greater responsibilities than entry-level bookkeepers, but not as much as accountants. Using the services of a bookkeeper is well worth the money, which can be at least 50% less than the cost of hiring an accountant. The bookkeeper should have a minimum of an associate’s degree in accounting and a working knowledge of Generally Accepted Accounting Principles (GAAP).
• Accountant
A professional accountant who is trained in all aspects of accounting, including bookkeeping, which most accountants despise. Accountants’ responsibilities include analyzing various accounting records, performing tax computations, managing employees, and developing budgets. Accountants are classified in a variety of ways. Certified Public Accountant (CPA), Certified Internal Auditor (CIA), and Certified Management Accountant are the most common designations (CMA). Essentially, the accountant takes the information provided by the bookkeeper and uses it to file tax reports, make financial projections, and maybe help in budget preparation.
In general, if the bookkeeper is qualified to do some critical responsibilities, a firm can get by with simply the services of a bookkeeper. For a moment, let’s talk about money. A CPA or accountant typically charges hourly fees that start at roughly $45/hour on the low end. You can employ a bookkeeper for roughly half that amount per hour. You may be wondering why you need an accountant or a CPA if a bookkeeper can perform all of the essential work to keep your company’s finances in order. To begin with, a bookkeeper typically lacks the qualifications and knowledge that a CPA or accountant possesses. A bookkeeper, on the other hand, is unlikely to have the same level of training as a CPA or accountant. Even if this is the case, bookkeepers can do the task for you for half the price. You can leave the tough lifting to the accountants and save money in the process.
You may be a small firm that is just getting started, and you have a basic understanding of bookkeeping and wish to try to manage the books yourself. That’s not a good idea, to be honest. Managing your own books, in my opinion, is akin to attempting to teach your child to drive, and anyone who has attempted this (teaching your child to drive) knows that it rarely works. Even if you are well-versed in and skilled with the most up-to-date bookkeeping software, you can make mistakes, and those mistakes can be costly in some situations. Again, the ultimate goal should be to reduce rather than raise your overhead. Besides, instead of wasting time completing the bookkeeping, you might be focusing on growing the firm by attracting new clients and increasing revenue. Instead of working harder, you want to work smarter. Delegating bookkeeping responsibilities to a trained bookkeeper would be a good decision.
You can give the bookkeeper a little or a lot of responsibility, depending on how much trust you have in them. In some situations, full-service bookkeepers can perform functions similar to those performed by accountants, such as evaluating accounting records, performing tax computations, and possibly filing tax returns for your company, all for a fraction of the cost of hiring an accountant. Don’t dismiss the services of a bookkeeper as a low-cost option; that low-cost option could save your company a lot of money, stress, and angst.
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