Accounting vs. Bookkeeping: The Entrepreneur’s Dilemma
Should I hire an accountant or a bookkeeper? Every entrepreneur asks this question at some point as the realities of financial management set in. But it’s the wrong way to think about the issue.
Realistically, entrepreneurs need someone to fill both these roles. Effective bookkeeping is non-negotiable because companies need a perfect record of their financial activities. But their responsibilities don’t end there. Bookkeeping is just the beginning.
Once entrepreneurs have reliable records to work with, they must use that information to their advantage. That’s where accountants come in. They go above and beyond bookkeeping to help entrepreneurs make sense of their financial situation and then act accordingly. If bookkeepers supply the “what”, accountants round it out with the “why, when, where, and how.”
In that context, it’s clear that accounting and bookkeeping are complementary, and one isn’t complete without the other. Entrepreneurs need a bookkeeper from their earliest days onward. But they should also have an accountant to rely on, ideally sooner rather than later. Consider why:
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Leverage Diverse Experience
Accountants have worked first-hand with diverse businesses in good times and bad. All the obstacles and opportunities an entrepreneur will experience are ones that accountants have been through before. The hard-won knowledge they bring to the table proves invaluable for companies that want to avoid the mistakes of others.
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Elevate Financial Activities
When it’s time to report on financial performance, meet compliance obligations, or reach out to investors, there needs to be an accountant involved. Mature companies have high-level financial obligations. Getting them right is a sign of the company’s legitimacy and a prerequisite for continued growth. Having an accountant on board ensures that a company’s accounting requirements never exceed its abilities.
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Understand Business Performance
Successful business decisions depend on having a complete, accurate, updated, and detailed understanding of business performance. Accountants can perform the kind of thorough financial analysis that reveals what’s actually going on – for better or for worse – inside a business. For entrepreneurs, it’s the difference between being fully informed versus acting on assumptions and taking gambles.
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Develop and Improve Strategies
More than anything else, accountants are there to help companies achieve their goals and fulfill their potential. Accountants work closely with entrepreneurs to devise effective strategies, drawing on their deep knowledge of the company, expertise with the current economic landscape, and experience in similar situations. It’s hard but essential to know the right next move. It gets much easier with an accountant in the equation.
Picking a Financial Partner
A bookkeeper isn’t enough. That’s why many entrepreneurs, at all stages in their trajectory, work with accountants who offer bookkeeping among many other financial services. There’s never a bad time in the entrepreneur’s journey to have seasoned financial professionals to consult with. And when circumstances, planned or unplanned, make those professionals essential, they’re already up to speed. Every business will need an accountant eventually. But every business would also benefit from having an accountant at inception. Contact Proseer to bring on a financial partner that can assist with everything.
