Different specialisations available in the field of finance
means different finance professionals bring different skill sets to the table. This
gives rise to varying degrees in rank, expertise and service fees. Start-ups have
to choose the right skill set for the job at each point in time. Business
owners should consider team composition to be flexible. It is normal for the
business team to change, evolve, and grow as the business itself does. Yet in
the face of change some things will stay the same. The accounting function will
always be required.
Bookkeeping, often called record keeping, is that branch of
accounting that records transactions and business events in the accounting
system. This accounting system can be manual as in paper records or electronic
as in an accounting program like Quickbooks, Xero, etc.
Bookkeepers generally have a good understanding of GAAP and
are responsible for dealing with a company’s daily financial details. Accountants
rely on the meticulous records maintained by bookkeepers. This means
bookkeeping is the foundation of accounting. Bookkeepers often have to exercise
judgment calls and analytical skills when recording transactions since they are
the major source of accounting information in the business.
Accountants use their knowledge to establish the procedures
a company needs to follow for accurate financial record keeping. Once the needed
information has been collected (by bookkeepers), they analyse it to provide valuable
business information. The accountant can reveal the business’ strengths and weaknesses,
create strategies for improvement, identify or prevent fraud, plan wisely for
tax season, and prepare for future growth.
Large companies will employ both. Smaller businesses will usually
have bookkeepers for reasons of cost and complexity of transactions. Accountants
are more expensive to retain full time and small businesses do not normally
have very complex transactions. Since bookkeepers
are all about the details while accountants focus on the big picture, the
smart move for small businesses is to retain a bookkeeper and have accountants
consult on bigger issues like business growth and improvement strategies.
Even so, professionals from both fields play vital roles in
maintaining the financial health of any organisation, whether big or small.
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