Who needs bookkeeping and why?
Bookkeeping is one of the main parts of the activity of any enterprise, regardless of what it is doing to make money. Each entrepreneur has the opportunity to organize this bookkeeping at their discretion, taking into account its main varieties:
- Independently keep records in compliance with all the necessary rules
- Hire an accountant/bookkeeper and arrange a workplace for one
- Use the services of an outsourcing company that offers the services of a professional accountant and the opportunity to save money.
Using the services of a bookkeeper, each owner and manager of a particular company gets the opportunity to always be up to date on the following information:
- The availability of all the property that is in the circulation of the organization or enterprise – how much money is in the bank account, what materials and in what quantity are in stock, and so on.
- How much money the company pays to the government in the form of tax collection, how much money remains at the disposal of the enterprise itself.
- The amount owed to other companies that are full-fledged business partners.
- The effectiveness of the firm’s activities, information on the results of the work done for a certain period of time: if the company has made a good profit or worked at a loss.
Thanks to these facts, the owner will be able to make sure the business is going in the right direction and know how to further develop and grow the company.
Role of an accountant in business
To get all the benefits of bookkeeping, the business owner does not need to have an accountant on the team. It will be sufficient to hire a bookkeeper. Did you know there is a difference between a bookkeeper and an accountant? Without going deep into the details, we can say that the accountant’s role in the business covers areas that the bookkeeper simply does not have sufficient knowledge and experience to do. So, what is an accountant?
The activity of any organization requires the presence of accounting, which systematizes the work of the company, draws up accounting records, and so on. Based on these records, the financial reporting of the enterprise as a whole is formed for the management, other divisions, and the tax authorities. After analyzing the reports received, the company’s management can be confident in making management decisions.
When it comes to simple recording of all the transactions at a particular business, the business owner can use bookkeeping software or hire a bookkeeper to do the work. Although bookkeeping does require some knowledge of this topic, you do not necessarily have to have any formal education to do it yourself. However, these records would be worthless if the business owner (manager) cannot draw reports and other conclusions from the financial data in the bookkeeping records.
Once again, if the bookkeeper has sufficient knowledge and experience, they can prepare the basic financial reports. However, when it comes to complex reports, calculating various financial indicators, and, most importantly, analyzing and interpreting all these financial reports and using business measurement tools, this is when you need an accountant. A business owner can also hire an accountant to audit the business.
When hiring an accountant, it is necessary to base this decision not only on trust and intuition but first of all pay attention to their professional skills as a specialist. It should be noted that the accountant at an enterprise is, first of all, an employee who has to deal with the following key accounting tasks:
- Organization of the entire accounting system of the business, which should indicate the timing of depreciation and inventory, the procedure for accounting of all the business transactions, resources, and obligations. This consists of building a working financial system for the company.
- Optimization of tax payments by creating conditions under which an enterprise, carrying out its main economic activity, will be able to pay less taxes legally.
- Communication with representatives of the government, legal authorities, and other law enforcement agencies, including preparing all the necessary financial documents and, if one possesses such right, represent the business before the court.
- Preparation of financial reports, calculation of financial indicators that help in the making of various business and investment decisions as well as evaluation of the effectiveness of these management decisions.
What to look for in an accountant?
Of course, the requirements for the ideal employee may differ slightly, depending on the preferences of the management and business needs. However, accountants should at least meet the following criteria:
- responsible attitude to the position held, which plays an important role not only in correct and timely filing of tax documents but also the effectiveness of the work as a whole, including timely preparation of reports for the employer;
- attention to detail and carefulness because the collection of financial documents, including obtaining missing documents, required for preparation of reports, their further analysis and auditing all require this skill;
- knowledge of popular bookkeeping and accounting software and tools, or at least software the particular business is working with or willingness to learn it;
- a bachelor’s degree or higher education and experience in the related industry, with the last being more of a strong preference than a requirement; at the same time, having a Certified Public Accountant on a team will bring many benefits to the company;
- overall professionalism, which can be described as the ability to not only know but also understand accounting and tax legislation and rules, be responsible, punctual, and, most importantly, honest, and have great communication skills to be able to talk to tax and other authorities and at the same time explain complex things to management who does not have accounting knowledge.
Proper accounting is very important for both small start-ups and reputable enterprises. An accountant is the most important assistant to a manager in a business. It depends on the professionalism of accountants plays a key role in the direction the business will be going.
Well-coordinated and effective joint work of management and accountant helps to achieve a high level of awareness of the manager about the current financial situation of the company. Accordingly, the management will make the right management decisions, as a result of which the main goal of the company’s existence, which is making a profit, will be achieved.
Learn more about the differences between bookkeeper vs accountant and differences between cpa vs accountant.
