Why is there a need for either?
Every business, no matter how large or small, needs to be run on a profitable basis, with more income than expenditure. It makes sense that, in order to attract money into a business, a certain amount of money must be spent to gain that consequent income stream. Much of a business’s expenditure may well be devoted to advertising and marketing the business to attract new clients and customers. There are, additionally, other expenses associated with running a business, such as mobile or landline costs, computers, printers, internet connectivity, and a certain amount of stationery – and that is simply for an online business with no concrete office space, cleaners, security and office furniture to pay for.
Are you more of a go-getter than a record-keeper?
But who keeps track of the income generated and expenditure? Very few business owners have the time or inclination to monitor what money goes out and comes in, but instead spend their time actively growing their business – the so-called “wheeling and dealing” which is part of every success story. But someone has to do this rather mundane and sometimes irksome job, and that is where bookkeepers and accountants shine.
Don’t pay for more than you really need …
Small business operations rarely call for fully-fledged and full-time accountants to run their financial books and often get the job done efficiently and timeously by bookkeepers who allocate a certain number of hours per week according to the complexity and number of transactions carried out. Bookkeepers are a small business’s go-to person to keep track of the monies coming in and out and reconciling the figures at the end of every week or month, so the business owner can see immediately how the business is doing in financial terms. There might be high sales figures, for instance, but not enough in real terms to cover the costs incurred in generating those sales. On the other hand, if the business is doing exceptionally well and performing strongly, the figures presented may allow for expansion in terms of additional equipment or staff numbers. A bookkeeper will look at sales income and be able to advise on forward planning for the business, although this may fall more into an accountant’s field of expertise.
What distinguishes bookkeepers from accountants?
Accountants are more highly skilled than bookkeepers in terms of their training and expertise, as they must meet specific criteria in order to gain their professional qualifications. This includes obtaining a degree or diploma such as a B.Com or B.Compt from a South African Institute of Professional Accountants (SAIPA)-accredited institution as well as a three year learnership/apprenticeship at an accredited training centre or, alternatively, complete six years of verifiable experience. Accountants are responsible for the preparation of financial statements which can be presented to an external auditor for review. These financials can then be used to provide an annual overall view of the performance of the business, as well as being able to stand up to scrutiny by SARS when it comes to calculating the amount of tax the business must pay.
Accountants can take financial records to a higher level
Whilst bookkeepers are more than qualified to perform the daily accounting tasks of any business, a professional accountant can take these figures and use them to provide the following services, amongst others:
- financial reports according to required standards
- skilled interpretations of financial reports and suggest solutions to problems
- assistance with strategy planning and execution thereof
- assistance in identifying and controlling risk factors
- support in the formulation of business plans and financial forecasts
- provision of taxation advice and services such as e-filing
- provide advice on appropriate business structures
- support and advice regarding regulations governing Human Resources (if applicable), safety and environmental factors
- provide and submit the stats regarding the BEE status of the business
The size of your business – not your ego – will dictate your needs
Just as with any profession or activity, there are ‘horses for courses’, so to speak. Micro to small businesses probably have no need for an accountant, whereas a bookkeeper fits the bill perfectly, keeping the figures straight, balancing he debtors and creditors, and reflecting the overall financial health of the business. However, as a business develops and becomes more complex in its daily activities, a more specialised and qualified accountant will need to take over the reins to give a more detailed overview of the true financial strength of the business. It comes down to a matter of need vs want; it might be great to have the bragging rights of employing your own accountant, but if the business really doesn’t warrant the cost involved, stay with a skilled and experienced bookkeeper for as long as you can to keep you informed of your business’s overall financial health and use an accountant once a year to prepare your financial statements for the auditors or SARS. Both these professionals have their place in business – it’s all a matter of degree.
