Understandably, many small businesses tend to prefer to cut costs wherever they can at the start. They focus on the elements that will help them turn a profit quickly, sacrificing the quality of their products or services in the process. Sometimes, this extends to the misguided belief that when it comes to finances, a "do it yourself" (DIY) approach is best. In truth, taking on an ecommerce accountant or bookkeeper from the start is a worthy investment.
Handling of Financial Data
Needless to say, one of the core functions of anyone who is hired to deal with company finances is to be responsible for data. Data needs to be updated constantly and accurately; this way, your cash flow will stay healthy and you can make informed decisions. Whenever a business starts to grow in size, of course, the data that has to be recorded and sifted through grows as well.
When it's time to call for help, many people find themselves unable to decide between a bookkeeper or accountant. In this article, we will explore the differences between the two terms. Understandably, the terms tend to be interchanged since some of their functions overlap. However, there are marked differences between them.
Accountants
An accountant is generally defined as 'a person whose job is to keep, inspect and analyse financial accounts.’ They are the ones who analyse financial data and provide verification as well. The results of that are what they use for audits and financial reports. Certified public accountants (CPAs) have the added benefit of being able to represent a company should they be audited by the IRS.
When they do an analysis, it can be used to better inform business trends, forecasts and even possible growth opportunities. They're also the ones who can sound the alarm if spending has to be contained for cash flow management.
Bookkeepers
By definition, a bookkeeper is responsible for the daily recording of financial transactions like payments, purchases, sales and receipts. Software such as Xero and QuickBooks come in handy for this particular task as well.
That said, the very role of a bookkeeper can shift with the needs and size of the business they're working with. They can take on more responsibilities when there's no accountant at the company they're at. Responsibilities can include processing payroll, payables and receivables, as well as other related tasks. Bigger companies tend to see bookkeepers as the ones who do bank reconciliation, monthly reports and data entry.
Tasks can include, but are not limited to:
Accounts payable handling
Accurate record maintenance
Day-to-day accounts management
Dealing with foreign currency transactions
Ensuring law compliance
Managing accounts receivable
Managing bank feeds
Managing cash flow
Performing stocktake
Preparing the books for the accountant
Processing payroll
Sending out invoices
Conclusion
One of the best investments a business can make, especially small ones and start-ups, is hiring a financial professional. Accountants do everything that involves the company's cash flow, finances and taxes. Bookkeepers have a more diverse role that also involves the likes of ensuring law compliance by the business, performing stocktake and preparing the books for the accountant.
Looking for accounting services online? Reach out to The ECommerce Accountant! We are business advisors for online stores and influencers.