Starting a Home Based Business

Posted on: 28 June 2019

You just launched your business. Being the savvy businessperson that you are, you understand the need to hire someone to manage your finances properly. However, some people are telling you that what you need is a bookkeeper while others are telling you that you need a CPA. Which of the two do you actually need?

It's not unusual for people to get the roles of bookkeepers and accountants confused. There is some overlap in the roles served by the two.

The Role of Bookkeepers

A small business bookkeeper can play many important roles in your business on a daily basis. In some sense, bookkeepers enable CPAs to do their jobs with more ease. If you hire a bookkeeper, you can expect them to do the following:

1. Record financial transactions as they occur

2. Regularly post credits and debits

3. Provide invoices following a business transaction

4. Complete the payroll

5. Maintain the general ledger of your business, along with the historical accounts

The general ledger is supposed to contain all the data relating to transactions carried out by the business. This makes the management of the general ledger a bookkeeper's most important role.

The Role of Accountants

The work of accountants has less to do with the daily activities of the business and more to do with guaranteeing its long-term financial health. They do this based on the data provided by bookkeepers. Some of what accountants do include:

• Adjusting the financial records; i.e., adding transactions that were not recorded by the bookkeeper for one reason or another

• Doing the tax returns for the business

• Producing financial statements

• Assessing the expenses incurred by the business

• Assisting the owner in making financial decisions for the business

Do You Need a CPA or Bookkeeper?

Before you hire anyone, it's important to first ask yourself what your needs are. For example, a business that's just starting out may need bookkeeping services immediately since it is important right away to ensure that all transactions are recorded, invoices are prepared, and employees are paid.

However, sooner or later, your business will need the services of a CPA. Whether your business is doing very well and you want to safeguard its future or you are experiencing some struggles and you want to know what changes you need to make, a CPA can help you to make decisions that will improve your financial future.

Contact a company that offers small business bookkeeping in order to learn more.