Bookkeeping services are sooo different from accounting services. Trying to compare the two is like comparing apples to oranges. Bookkeeping is about the day-to-day management of your finances. A good bookkeeper will actually become involved in your business and is all about working closely with you to help you achieve your goals. An accountant is valuable for preparation of tax returns, conducting an overview of the business and providing financial planning.

Did you know that your best $$ value is achieved if you spend

80% of you account management time with your Bookkeeper

and 20% with your Accountant…

The Bookkeeper:

Bookkeeping is seen by many small business owners as a chore that they have to submit to on a regular basis and this leaves them quite vulnerable to half hearted efforts or only doing the bare essentials. They are then missing out on some really useful and profitable information about their business. The smart small business owner will see this weakness in their business and realise the true value in outsourcing their bookkeeping to a professional.

A professional bookkeeper can offer you more then just data entry to satisfy ATO requirements. They can keep you informed about what is happening in the wider business community. One of the most common mistakes when hiring a professional bookkeeper is not taking full advantage of their experience and knowledge. A bookkeeper talks to many business owners and accountants. Ask them for tips on how other clients do their advertising, source referrals or reduce their costs. You will be surprised by the answer.

It’s also important to be aware that not all bookkeepers offer the same services.

Good bookkeepers should be skilled in:

• Computerised system such as MYOB, QuickBooks, Xero or Saasu. (A good bookkeeper will be familiar with several systems). They should be able to offer you basic data entry as well as managing your reporting and your chart of accounts.
• Keeping track of your sales invoices and customer payments. They should tell you when your customers are not paying on time and offer suggestions for encourging prompt payment and debt collection.
• Keeping track of your purchase invoices and telling you when to pay your bills or making sure you get that prompt payment discount. They should be able to develop forcast budgets to help you make sure the funds are always available for paying your bills.
• Managing your payroll system. They should keep track of sick and annual leave accruals as well as superannuation and payroll tax.
• They should help you to set up a budget and every month run a report comparing your actual figures to budget and identify areas for improvement and act on them.

How do I know if my bookkeeper is going to do the job correctly?

If you don’t have some set standards for your bookkeeper, you have nothing to measure them by. Remember, you can only manage what you can measure. For example, some business owners require their bookkeeper to do bank reconciliations within 7 days of receiving the bank statements. They also want to see management reports soon after, to make crucial business decisions. Take time talking with your bookkeeper to define what duties your bookkeeper must perform. A professional bookkeeper should provide you with a clearly defined scope. Ask them to give you an engagement letter outlining all their services. It will help you in deciding if your future bookkeeper really understands your business and your requirements.

Gain more out of your bookkeeper.

A good bookkeeper will help you in implementing business systems and procedures.  For example, if you have a problem with late payments they will help you get a formal system in place. The real key to getting more out of your bookkeeper is to work with them and not around them.   If they make a recommendation for a system that involves you having to develop a new habit of placing receipts in a nomited pile or file or making sure personal expenses are indicated on bank statemnets before sending them in  it will ultimately help you get quality information from your bookkeeper to help you grow your business rather than paying them to spend hours chasing you up with emails and phone calls to clarify the little details.

A bookkeeper can be the independent unbiased person taking care of your financial day to day record keeping. They have no other agenda except to see you grow and succeed in your business. With a consistent person performing all the financial recording, you will get reliable and accurate financial reports. You will be free to run your business, focus on delivering a high quality product or service, knowing that your financial health is taken care of.

N.B. Your Professional Bookkeeper should have current membership with a Recognised Association and attend regular seminars and training to update skills, knowledge and professional development.

The Accountant:

Don’t think of your accountant like the dentist. This isn’t someone who inflicts pain with a calculator instead of a drill who should be avoided until a visit is absolutely necessary. Accountants are an important part of a small business owners operations but like the dentist, if business owners leave their visit until it’s too late, the pain can be excruciating.

The Purpose of Your Accountant

Once an accountant has all the clues, (from the efforts of your Professional Bookkeeper) he or she can do their job effectively and painessly. They will give you specific direction on the steps to be taken to save money on your tax bill this year. Equally important, they will give you advice on how you are going to save taxes in future years. Depending on your situation, they may even recommend a long-term tax strategy for putting away money to pay for your children’s education or your retirement.

The purpose of using an accountant is not just to put tax returns together. They put together tax strategies to save you money this year, the next and throughout your life.

The more work your Professional Bookkeeper does to provide complete and correct records minimises the cost factor of an accountant and minimises costs both in downtime and disruption on your daily operation in answering the accountant’s queries. It will also allow your accountant to be able to add value to your business beyond the compliance work.

Where business owners hurt themselves most is by not consulting their accountant prior to major, usually infrequent transactions:-

• Is it best to lease a new vehicle or buy on HP?
• What is the best way to finance new equipment?
• Help in preparing to discuss financing with the bank

Accountants are there to help, not hinder, so business owners should work to build rapport and a working relationship between themselves, their Professional Bookkeeper and their Accountant