What is the difference between an accountant and a bookkeeper?
Essentially, a bookkeeper organizes your financial data and then an accountant steps in to make sense of it (and much more).
In other words, an accountant will bring your finances to the next level.
Sherman Oaks Accounting & Bookkeeping powered by One Source Services has bookkeepers and accountants who manage businesses across a wide range of industries.
Financial data should be neatly organized and recorded over a period of time and professional bookkeepers are well-practiced experts at doing this.
Accountants may also be bookkeepers, but most of them work with bookkeepers to closely examine and analyze data organized by the bookkeeper. Tax planning, optimizing the Chart of Accounts, streamlining accounting processes, forecasting cash flow, assisting with financing, and analyzing data are but a few services that accountants traditionally provide.
Accountants offer many solutions for categorizing financial transactions and capturing data, as well. The most common categories are used in the General Ledger Chart of Accounts and the Products and Services list (an accountant will set these up if they aren’t already). A good accountant will take it a step further and create other lists to categorize transactions by class, location, and customers. This allows you to track the income, expense, and net profit of different segments of a business including product lines, departments, stores, regions, and projects.
An accountant can educate you on all of this, including sources and targets, because understanding these will help you understand how the different types of categorizations show up on reports. For example, an accountant will almost certainly suggest the implementation of class tracking on financial transactions because class tracking categorizes income and expenses from different sectors.
Classes are often used to track departments, enterprises, properties, product lines, service lines, manufacturers, partners, etc.; class tracking possibilities are endless. For instance, a farmer might create classes for each of their enterprises like corn, hogs, and soybeans, while a construction company might track service lines such as site work, concrete, and masonry. A class can be assigned to an entire transaction or to each separate line in a transaction. An accountant may even turn on a warning in your accounting software so that an error message pops-up when you don’t assign a class to a transaction.
Then at the end of an accounting period, the accountant can make financial statements more meaningful by creating reports for each class.
A good accountant will interface with your CPA. What if you don’t have a CPA? No worries! A reputable accountant will have a huge professional network and can easily match you with a qualified CPA in your price range and industry.
Need a good bookkeeper? Your accountant can probably introduce you to plenty of bookkeepers, too, perhaps even financial planners and attorneys. You only have to ask.
Another benefit of hiring an accountant is that they will ensure that your CPA looks at your financials more than just at tax time. Accountants work with CPAs year-round on tax planning to reduce your tax liability as much as possible, giving you more money to save, spend or invest.
Always consult an accountant before engaging in large transactions such as selling or purchasing valuable assets like property, or before big life events like getting married and starting a family. It may mean the difference between making well-informed tax-smart decisions and making bad decisions that negatively impact your future quality of life.
Sherman Oaks Accounting & Bookkeeping powered by One Source Services makes CPA’s wishes come true by seamlessly integrating bookkeeping and accounting. Our accountants work closely with CPAs, often as liaisons between CPAs and clients, and we’ve learned that many times clients simply don’t understand what their CPAs really want or need.
According to Anna Mazisyuk, the owner of Sherman Oaks Accounting & Bookkeeping powered by One Source Services, “Approach your CPA with complete work and carefully crafted financials and you will get more out of them. Your CPA will instantly take you seriously and be empowered to go above and beyond for you, as opposed to bringing them a shoe-box of disorganized receipts they must put in some sort of order.”
Accountants provide direction and ensure that work is complete and organized before it is handed over to the CPA. “We make this experience enjoyable for everyone,” says Anna, “CPAs love us because we get it, and our clients love that we’re working with CPAs on their behalf, especially when they see the impact of good tax planning on their bottom line.”