Wednesday, 15 Sep 2021
Capital is an essential resource of a business. The data relating to cash inflow, outflow and management allows the entrepreneur to make significant financial decisions. Whether micro or macro, every business needs accountants and bookkeepers in Melbourne to deal with the humungous amount of financial data.
The time-consuming task cannot become a part of the business owner’s to-do list and cannot be handled by an amateur. Thus, they need professionals for the task who do the calculations accurately and provide the desired support.
Many small business owners in Melbourne become confused about the role of accountants and bookkeepers in an organisation because the terms are often used interchangeably by people. However, they are two separate job profiles and have their responsibilities defined within the organisation. Let us understand the difference between the work of an accountant and a bookkeeper.
Bookkeeping involves everyday financial management and recording of transactions. The professionals need to keep track of every dollar coming into the business and going out of it without fail. They also ensure the accuracy of every amount that is transacted so that there are no misrepresentations of financial data.
Usually, small businesses or start-ups in Melbourne that do not hire accountants to save money utilise bookkeepers for a variety of tasks, such as payroll management and inventory management.
On the other hand, big corporates do not make bookkeepers sweat too much and restrict their responsibilities to recordkeeping, reconciling bank accounts, and generating financial reports to be used by the accountants.
In big organisations, accountants use the data provided by the bookkeepers for financial projections, generating reports, preparing the budget, etc. Thus, the roles and responsibilities of a bookkeeper depend on the type of organisation that employs them.
Bookkeepers are proficient in a variety of financial management tasks that they may have to perform for a business. These include maintaining an updated book of accounts, data entry, invoicing, preparing financial statements, generating reports, processing payroll, managing the inventory, cash flow management, tax planning and ensuring compliance with the state laws in Melbourne.
Accountants are responsible for analysing, auditing, organising, interpreting, and reporting the financial data of the business in Melbourne. They use the records maintained by the bookkeepers to prepare the income statement, balance sheet, file tax returns, complete cash flow forecasting, etc.
With the help of the inferences drawn from the data analysis, the business owner can make informed decisions related to investments, purchasing new equipment, etc. The financial advice of accountants is helpful in introducing cost-cutting measures to make more savings and amplify the cash reserves. They utilise their analysing skills to offer solutions for a variety of business challenges related to the flow of capital.
They work closely with the management and stakeholders to help them understand the financial reports and make sense of the numbers and gauge the financial well-being of the business in Melbourne. They make a variety of calculations, such as determining the profitability, net cash flow, gross profit, and also do a lot of planning that includes forecasting and budgeting.
Let us break down the differences between these two job profiles for further clarification.
As stated above, the need for the services of a financial professional depends on the size and type of the business. A retail business has several transactions to manage every day, so they need bookkeepers to track every purchase, bill, sale, payment, and receipt.
Many businesses in Melbourne utilise accounting software for the purpose of recordkeeping as it saves time, effort and eliminates the risk of making errors in calculation. However, they need bookkeepers for invoicing, payroll, stock taking and overall financial management.
A bigger organisation with retail stores at various locations will need a full-fledged accounting department with accountants and bookkeepers taking care of each store. Thus, the decision to hire a professional depends on the needs of the business. Also, while hiring, you need to keep their qualifications and expertise in mind to choose the right professional.
If you plan to hire a bookkeeper in Melbourne but are not aware of their differentiation from an accountant, make sure you clear your doubts. It will help you to understand the exact requirement of your business to make the recruitment accordingly.