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​Hoods Tax &
Accounting Blog


​​​THE INFORMATION IN THIS BLOG IS INTENDED TO PROVIDE GENERALIZED INFORMATION DESIGNED FOR A BROAD SEGMENT OF THE PUBLIC; IT IS NOT PERSONALIZED TAX, INVESTMENT, LEGAL OR OTHER BUSINESS AND PROFESSIONAL ADVICE. YOU SHOULD ALWAYS SEEK THE ASSISTANCE OF A PROFESSIONAL WHO KNOWS YOUR PARTICULAR SITUATION FOR ADVICE ON YOUR TAXES, YOUR INVESTMENTS, THE LAW OR ANY OTHER BUSINESS AND PROFESSIONAL MATTERS THAT AFFECT YOU AND/OR YOUR BUSINESS. ​

Bookkeeper vs. Accountant: What’s The Difference?

9/30/2022

1 Comment

 
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Hello, readers! Welcome back to the Hoods Tax & Accounting blog! If this is your first time here, welcome! We’re delighted to be able to share up-to-date information about taxes, bookkeeping, and accounting. Our blog is also dedicated to educating you about tax-advantaged savings accounts, tax provisions, programs, and more! We aim to provide you with the tools needed to meet your short and long-term goals. Our seasoned professionals are experts on the tax code, eligible deductions, and QuickBooks—all necessary fundamentals for saving you money! The Hoods Family has been around since 1988 and our comprehensive accounting and tax planning services are among the best in the Lowcountry. If you are in need of tax preparation, accounting, QuickBooks training, or business consulting services, do not hesitate to schedule an initial consultation! We are officially in tax season, and Tax Day is fast approaching. We recommend preparing early to maximize your savings and refund. We do offer contactless services using a combination of over-the-phone consultations and digital drop-offs, for safety and convenience. You can read more about our hours and submit a request for a meeting using our website!

It’s already the end of September, which means there are only a few months left in this tax year! Make sure you have your documents ready– Don’t wait until the last minute! We are still available to help with any questions or concerns you may have. Before we get into today’s topic, we would like to make you aware that we are offering tax planning appointments to assist with questions about withholding, small business tax, retirement and investment accounts, sale or purchase of rental properties or other estates, and more! Reach out to us to set up an appointment with one of our knowledgeable tax professionals.

In our last blog, we discussed the importance of tax planning throughout the year– Not just at tax time. Tax planning refers to managing your financial situation effectively in order to minimize the amount of taxes you will have to pay and maximize your tax breaks. The earlier you start planning, the more you can take advantage of tax credits and deductions! We discussed tax brackets, calculating taxable income, and more! If you are interested in learning more about tax planning, check out our last post!

Today, we’ll be discussing the differences between a bookkeeper and an accountant. Both of these professions have to do with finances, and both of them can be beneficial to you in your personal life or in your business’s operations. But what exactly do they do, and do you need to hire both of them? We’ll answer these questions and more in today’s blog, so if you’re interested in learning more, stick around! Let’s get started.

What is an accountant?

An accountant is a professional who is responsible for keeping and interpreting financial records. They perform various accounting functions such as auditing, financial statement analysis, and account analysis. They may work with accounts for individuals or for corporations or businesses. Accountants are also responsible for preparing tax returns and providing advice to clients on how to save more money on their taxes. In fact, accountants play a crucial role for many people during tax season. Working with an accountant lessens your chances of being audited by the IRS for a tax-filing error. If you are planning on opening a small business, an accountant can help you choose the best business structure and can act as an advisor going forward. They can handle your company’s finances and can help you apply for business loans if needed. 

Some accountants simply have a bachelor’s degree in accounting, while others have a CPA certification. A Certified Public Accountant (CPA) has completed a higher level of education and passed a CPA exam. However, you do not need CPA certification to be an accountant. 

What is a bookkeeper?

A bookkeeper is a professional who keeps accurate financial records of a business, prepares accounts, and documents daily transactions. In order to do this, bookkeepers must be involved in a business’s day-to-day operations. Some tasks performed by a bookkeeper include recording transactions in a general ledger, maintaining the chart of accounts, preparing financial reports, handling accounts payable and receivable, and managing payroll. Essentially, a bookkeeper helps businesses keep their finances in order. 

Certifications aren’t needed to be a professional bookkeeper. However, if you are looking for an expert, look for those with certifications from the National Association of Certified Bookkeepers or the American Institute of Professional Bookkeepers. They should have “CPB” or “CB” after their names. 

Key Differences

So if both accountants and bookkeepers have a goal of helping you or your business financially thrive, what’s the real difference between them? Essentially, an accountant provides overarching financial and tax guidance while bookkeepers focus more on daily responsibilities. With that being said, an accountant may communicate with small business owners less often than a bookkeeper. A bookkeeper prepares monthly financial statements and reconciles bank statements each month, while an accountant analyzes financial information from the bookkeeper. An accountant takes a look at what the financial data gathered means for your business.

Do you need both an accountant and a bookkeeper?

The answer to this will depend on your unique situation. Generally, an individual who does not own a small business does not need a bookkeeper. Instead, they should hire an accountant to gather financial information and help them with tax preparation and planning. While business owners should at least hire an accountant to handle their business’s tax returns, they may also want to consider hiring a bookkeeper. Some business owners choose to handle bookkeeping and payroll on their own. However, this can be no less than a full-time job in itself. If you are unsure whether or not you need a bookkeeper, ask yourself this: Do you have enough time to give your company’s bookkeeping the time it really needs? If the answer is “no”, your business could fall into trouble fast. This is especially true as your business expands. Hiring a bookkeeper will allow you to put your focus on other aspects of your business.

If you are still unsure of whether or not you should hire both an accountant and a bookkeeper, here are some things to consider:

  • Are you spending too much time on bookkeeping or payroll? If you feel that you are unable to dedicate time to other parts of your business, hiring a bookkeeper may be helpful.
  • Are your taxes complex? If you have multiple streams of income, investments, or multiple reductions, hiring an accountant is a must. This can save you time and money.
  • Is your business experiencing exponential growth? As your business grows, it will undoubtedly get more difficult to handle taxes and bookkeeping. A professional can help keep your business afloat.

Some businesses have different people or companies handling their taxes, bookkeeping, and payroll. At Hoods Tax & Accounting, we offer all of these services for the complete and professional financial management of your business! We also offer consulting and strategic business planning services. Our seasoned professionals focus on where your company is and where you want your company to go, rather than just collecting data. 

We hope you found this article helpful, and we encourage you to reach out to us if you have any further questions or need any assistance. Here at Hoods Tax & Accounting, our tax professionals are always eager to give our clients as much help as possible when it comes to their finances. If you have any questions regarding your taxes, or if you need help with tax planning, contact us! Hoods Tax & Accounting offers a variety of services including small business consulting, QuickBooks training, tax preparation, accounting, payroll, and more! Visit our website for more information, as well as helpful links to resources you may find useful. Thank you for reading and we hope to see you back next time to keep learning about various tax and accounting topics!

1 Comment
Eli Richardson link
12/5/2022 01:04:09 pm

It's great that you explained the differences between accountants and bookkeepers and their services. My wife and I got married a few months ago, and we're interested in hiring a specialist to help with our finances and tax preparation, so we'll read your article carefully before choosing who to hire. Thank you for the advice on hiring an accountant to take care of our tax preparation and planning.

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