Wasting time = wasting money

As business owners, there are several hats we have to wear—from product development to marketing, from sales to finances.  Some are more fun and easier to do than others, but they’re all important. Personally, we at JR Bookkeeping have learned that hiring a professional who can do the things we don’t (or can’t) gives us the freedom to do what we love most, which is providing peace of mind to the business owners we help.

Hiring someone who is an expert in their field is something that we have to do if we want to have a thriving business. After all, what it really comes down to is making sure that we’re making money—not losing it! For example, if you were to do an inventory of where you spend most of your time in the business and what tasks make you the most money, you would quickly find that some of the tasks you’re doing should be outsourced to a professional who not only can do the job in a fraction of the time it would take you, but who can also make sure it’s done right.

Obviously, as an accounting firm, we handle our own finances. But for many businesses, finances is one of those areas that can be a real money pit. Many small business owners do not budget for accounting help and try to do it themselves, usually to end up spending either too much time or not enough. The situation is only made worse when they find out they’ve done something wrong—usually when they find a big deficit they didn’t know was there, or when they’re getting a letter from the IRS.

It’s understandable to feel like you can’t afford to outsource certain tasks, but realizing that you can’t afford not to outsource is invaluable. Hiring the right professional to do things we don’t actually buys precious time back for us, enabling us to focus on the things that we do best.

All businesses need these three things

There are three areas of business accounting, namely:

• bookkeeping

• accounting

• tax preparation

Businesses need to make sure that they’re “taking care of business” in all three areas. However, many business owners don’t know the difference between the three. In this article, we want to explain that difference, and help you understand when you need them.

In almost 20 years in practice as a bookkeeper and accountant, we’ve learned that not all bookkeepers are accountants, and not all accountants and tax professionals do bookkeeping, and vice versa. It is important to know the difference so that you can hire the right individual to cover your needs accordingly.

What is a bookkeeper, and when do I need one?

Bookkeepers are not required by law to have any special training. As with so many professions, many bookkeepers simply gain experience by experience—by actually doing the task of daily business finances. However, there are organizations that certify bookkeepers and offer continuing training and education, such as the American Institute of Professional Bookkeepers.

A bookkeeper a handles all the day-to-day transactions of a business—from accounts receivable, to accounts payable, to reconciliations, to maintaining the books. They even take care of employee payroll.

While accountants are often hired at certain times of the year or for specialized projects where legal or financial expertise is needed, bookkeepers handle the day-to-day finances on an ongoing basis, making sure a business’s financial accounts are in order.

You need a bookkeeper when you don’t have the time or the ability to maintain your business’s daily finances, such as day-to-spending, accounts payable, or employee payroll.

What is an accountant, and when do I need one?

An accountant takes all the information based on the bookkeeper’s work and verifies it, and then creates a big-picture overview of the business’s financial performance. They produce Profit & Loss and Balance Sheet Statements, and assist business owners with analyzing and understanding the overall state of their financials. An accountant is an advisor who can find ways of improving business performance, which they do by educating their clients in what they should watch out for, and assisting them in staying on track of their goals. Accountants will often come alongside a business at specific times of the year or for special reasons, such as an audit.

Unlike bookkeepers, accountants will typically have a degree in accounting or some other field of finance. According to Belay:

“Certified professional accountants (CPAs) represent the most reputable and knowledgeable among accounting pros, having passed a qualifying exam that measures their expertise in business law, audits, taxes, personal finance and accounting. Accountants can work in tandem with bookkeepers, but the price point of retaining one typically requires a larger investment. Many businesses keep an accountant on staff as a key role on the organizational chart, but sometimes they are kept on retainer on a rolling basis, too.”

You need an accountant when you need a big-picture summary of your business financials—such as at tax season.

What is a tax preparer, and when do I need one?

A tax preparer (or tax accountant) files a tax return for the business using the verified financials compiled by the accountant. In addition, tax preparers are up to date with tax laws and make sure the client is in compliance with the law.

No special training is required for tax preparers. Anyone can prepare taxes (which many do). However, Certified Tax Professionals are certified by the IRS and have authority by the U.S. Department of Treasury to represent taxpayers in situations like collections, audits, and appeals (ibid.).

You need a tax preparer when you’re unsure and sense that tax-expertise is called for—like when you’re filing for business taxes.

So is JR Bookkeeping a bookkeeper or an accountant?

JR Bookkeeping is a combination of bookkeeper and accountant. As a bookkeeper, we handle the day-to-day transactions and monthly reconciliations for our clients. But as an accountant, we can also prepare their business financials so they understand them and know what to do with them.

We also work directly with CPAs and tax preparers, making sure they have all the information they need to be able to file our clients’ business tax returns accurately and on time.

You need JR Bookkeeping if your finances distract you from focusing on your business. With so much that we’re able to do—and with a plan to fit every budget—there’s no reason why you need to waste one more hour trying to figure out your business finances.

Contact us for a FREE consultation and get peace of mind today.

This article relies heavily on the helpful and informative article by Belay entitled “Bookkeeper, Accountant, Tax Preparer: What’s the Difference?.”

Icons in cover image by Vectors Market from www.flaticon.com (license CC 3.0 BY).