If you’re reading this, you’re likely a growing business seeking clear guidance on how to set up your company’s finances for success. The terms bookkeeper and accountant are often used interchangeably as both roles deal with financial data, have levels of accounting knowledge, and the ability to generate financial statement reports. But these two professionals deal with very different aspects of your business’ finances.

What Are The Differences Between Bookkeeping and Accounting?

A smaller business can likely make do with bookkeeping services or just accounting software to start. Still, any business that wants to derive deep insight from their numbers should seriously consider investing in professional accounting services.

What is Bookkeeping?

Bookkeeping is integral to any business and involves the recording of financial transactions in ledgers and journals. Without a proper record of financial transactions, accountants cannot perform the analysis that allows companies to make smarter business decisions.

A bookkeeper’s responsibilities include:

  • Logging all debits and credits and comparing them against bank balances

  • Creating customer invoices and making payments on behalf of your business

  • Tracking accounts payable and accounts receivable

  • Maintaining your financial reporting system/ledger software

In larger organizations, a bookkeeper will often be overseen by an accountant, and many who are working towards becoming accountants start as bookkeepers.

What is Accounting?

A Certified Public Accountant (CPA) specializes in preparing financial statements, interpreting financial data compiled by the bookkeeper(s), communicating finances to stakeholders, and assisting in making critical business decisions. Accountants oversee the financial health of your business and provide detailed insights that a bookkeeper would not.

Responsibilities of an accountant include:

  • Preparing the financial statements for your company

    • Balance Sheets

    • Income Statements

    • Cash Flow Statements

  • Financial budgeting and loan proposals

  • Preparing dynamic financial forecasts

  • Performing cost analysis on your operations

  • Completing tax returns

  • Preparing financial reports and presentations

All rapidly-growing companies should employ the services of an accountant to ensure they’re making smarter decisions both in the short-term and in the long-term.

Can Pilot or Bench Complete The Same Work as an Accountant?

Pilot and Bench are popular bookkeeping software solutions that are designed to simplify the bookkeeping function. Many small businesses look to Pilot or Bench to take care of their bookkeeping needs in the early days of their business, and that’s great early on when your finances are very simple and mostly expense management (pre-revenue). However, when your business starts to become more complicated (think loans, tax credits, fundraising, etc.) then you will have to endure the switching of service providers which can be slow and inefficient.

Read our related post: Pilot Bookkeeping vs. Bench Accounting – Their Features and Limitations.

When Should a Small Business Bring on an Accountant?

If your business is in its infancy or your tax situation is very simple, you probably don’t need an accountant. However, any small business who is growing nicely and looking to expand rapidly should be looking to onboard an experienced CFO & accounting service early on. A study conducted by Intuit, the software company behind Quickbooks and TurboTax, revealed that 89% of SMBs saw more success with the aid of an accountant than a bookkeeper.

Though onboarding an accountant comes at a cost, all too often, businesses that wait too long end up losing time and money having to perform their finances and lacking the analytical capacity of an accountant. If you‘re not ready to onboard a full-time accountant but still want access to financial services, consider looking to an accounting services firm like Greenough Group.

California Businesses Trust GCG With Their Accounting Needs

Greenough Group’s client accounting services are highly sought by both small businesses and rapid-growth tech startups alike.

GCG is the preferred accounting firm of executive Tom Rowley, who has utilized GCG’s services in several of his ventures:  “I’ve brought GCG into my last four startups. Getting finance running smoothly, as quickly as possible, allows me to focus on building the business. Hiring GCG is one of the first things I do.”
Our reputation for accuracy, senior attention, and exceptional client service has made us one of the financial community’s most highly recommended back-office services firms. Contact us today for a free consultation and learn how we can help you focus on growing your business.