Hiring a Bookkeeper vs. Hiring an Accountant
All businesses need to hire a bookkeeper or an accountant to manage their daily transactions, track their expenses, monitor incoming payments, and interpret financial statements at some point. There are pros and cons to hiring both a bookkeeper and an accountant; below are a few notable ones that would allow you to choose which option would be better for your business.
Hiring a Bookkeeper
A bookkeeper can help you to save time and money, as well as guide you on how to file your taxes. They can identify potential errors in managing and categorizing your asset purchases in time, which can be helpful to avoid incorrect reporting while filing your tax return. Besides, having a bookkeeper on your payroll means you do not have to manage your books on your own, but can spend that time saved on other business roles.
Hiring a bookkeeper has a few downsides to it as well. Firstly, their services are not free of cost; you will have to pay them a fixed salary or as per the contractual terms. Note that their costs are likely to be more if they have more experience in the field. Although it will pay off in the long term, you need to decide how much you can afford for having a bookkeeper to manage your books at present.
Another drawback of hiring a bookkeeper is that you will also need to purchase accounting software. If you are already using one, you might need to train them on using the software if they are not familiar with it. In addition, you are also giving control of your business’ finances to a stranger here, which can be risky at times.
Hiring an Accountant
An accountant can help you to save time and money, as well as guide you in making strategic financial decisions as required. Accountants are experienced in identifying errors in categorizing and managing assets purchases very quickly, which can help to avoid mistakes while filing your tax return and inviting unwanted penalties. If you hire a licensed Certified Public Accountant (CPA), they can also help you to understand the areas where you need to invest and where you do not need to spend anymore. This can effectively help in your business growth.
The main downside to hiring an accountant is that you might end up relying on them too much. Although accountants can help to create a financial forecast to assess the potential risks and gains when planning an expansion, they are not perfect and can make mistakes too. If you rely too much on the accountant and distance yourself from managing the financial side of your business, you could end up losing capital as well. The best way to address this is by scheduling monthly meet-ups with your accountant and review the financial reports carefully.