This article was originally published on Find An Accountant South Africa, you can find it here if you prefer.
The terms “bookkeeper” and “accountant” are often mixed up and used interchangeably. Many a small business owner will tell you that they have an accountant who comes in once a week or once a month to do their books – but often what they actually have is a bookkeeper.
So, what is the difference?
In very basic terms, an accountant can do a bookkeeper’s job but a bookkeeper cannot do an accountant’s. Oftentimes it is not a lack of expertise that prevents this, but legislation. An accountant in practice is required to be registered with a regulatory body, such as SAICA or SAIBA, if you have an accountant who claims to be in practice but cannot give you their practice number it is time to start shopping around for a new one! A bookkeeper has the choice of joining a regulatory body, such as the ICBA, but are not required to (and are not qualified enough to be able to) join ones such as SAICA or SAIBA.
A bookkeeper’s title is very literal: the purpose of the bookkeeper is to keep the books in order. Their job is to record everything as accurately as possible and to look after the documentation. A bookkeeper should be detail-orientated, thorough, reliable and highly ethical!
While an accountant should have the necessary know-how to fill the shoes of a bookkeeper, their reason for existence is the ability to account for the information at hand. Not only are they relied upon to have verified that the records of a company are correct, they are also relied upon to understand, analyse and explain these records.
If you need good record-keeping, then you need a bookkeeper, but if you need someone to take those records and turn them into information you can use to measure, maintain and grow your business, well then you need an accountant.
The reason this knowledge is important for the small business owner, is because you need to know when to pay for what! A bookkeeper is considerably cheaper than an accountant. So, having an accountant only means you are spending more money on your books than you need to. But you do need so much more than plain record-keeping in order to run a business – so don’t think that a bookkeeper is enough!
If you are unsure of how to work out which role you need fulfilled, then here is our suggestion checklist for you:
You need a bookkeeper if:
- You need to keep track of your income and expenses and make sure they have been recorded correctly
- You need to know what you can claim for your business and what you can’t
- You need advice on the best way to keep track of your expenses or look after your documents
- You need a good filing system
- You need help submitting PAYE or VAT returns to SARS
- You need help with your payroll (not all bookkeepers do payroll too, but a lot do!)
- You need to know where your money is going – a good bookkeeper can prepare and explain an Income Statement and Balance Sheet to you
- You need help with debt collection, or with paying your creditors on time
You need an accountant if:
- You need someone to analyse your financial data and provide you with ways of measuring your success
- You need help with budgeting, cashflow and cashflow projections
- You need advice regarding the structure and efficiency of your company
- You need assistance with company policies and procedures
- You need advice on tax planning
- You need official, reviewed financial statements for a bank, business partner or tender
- You need assistance with share certificates, MOIs and other sensitive company documents
Hopefully this suggestion list, while not exhaustive, will help you know when to call your bookkeeper and when to call your accountant and will assist you in saving time and money in the process!
There are many bookkeepers out there who are able to assist with a lot of the items on the accountant’s list – don’t count your bookkeeper out just because of a lack of qualification! If they have enough experience they can provide valuable knowledge and insight for a fraction of the cost of a registered accountant. Ask your bookkeeper for assistance first and only go to your accountant when you need to.
If you are worried that your bookkeeper won’t be honest with you about their ability level, remember that regardless of their level of qualification, a bookkeeper and accountant are required to be honest and ethical in all their business dealings. Take your time when selecting them, you need to be very sure that the person you choose is absolutely trustworthy and reliable – you are placing your company’s most sensitive information in their hands, do not take that decision lightly! A truly ethical bookkeeper will never tell you that they can help when they know that they can’t!
At the end of the day, this business is your baby and you are the one that is responsible for it. Even with the best accountant in the industry helping you, it is important for you to constantly keep learning so that you understand what they are doing for you and can make the most of the information they give you.