Monday, 16 Jan 2023
Entrepreneurs in Melbourne are often in a dilemma when they need a financial management professional for their business. They cannot decide whether they need a bookkeeper, an accountant, or both. To end this confusion, they must understand the difference between the two roles and their responsibilities.
Although they have similar job profiles, they are two distinct positions in the organisation. Bookkeepers and accountants work in tandem to manage the finances of the business and make it profitable. Many entrepreneurs make the mistake of considering them as one role and use the terms interchangeably.
So, the differences in their responsibilities will help you understand why both are indispensable for a small business in Melbourne.
Bookkeepers and accountants are involved in improving the cash flow of the business to make it financially stable. The main difference lies in their day-to-day activities in the organisation. Let us look at the responsibilities of the bookkeeper:
Small businesses need qualified bookkeeper Melbourne to record every transaction taking place in the company. It helps track the amount of money that comes into and goes out of the business. They are responsible for maintaining up-to-date books and ensuring the accuracy of the records.
Bookkeepers are involved in the reconciliation of bank accounts, which helps identify errors in data entry, check for missed entries, detect fraudulent transactions, and conduct streamlined audits. The professionals match the business bank statements with the books to check for discrepancies. The end balance should be the same, and all the entries must match for accurate records.
The financial reporting standards are the same for businesses across Australia. They must prepare the Business Activity Statement necessary for payments and filing taxes in Melbourne.
They also need to generate an income statement, balance sheet and cash flow statement to abide by the reporting obligations and understand the financial health of the business. Bookkeepers usually use accounting software to create these reports monthly or quarterly.
Staying on top of accounts receivables and payables is another significant task performed by bookkeepers. It involves invoicing immediately after the projects conclude and providing several payment options to customers to get the payment.
They also follow up with clients in Melbourne to reduce any deferred payments. Similarly, they ensure that the vendors and suppliers are paid on time to avoid late fee that leads to losses. Thus, they manage a positive cash flow.
Small businesses with employees need to manage the payroll. The bookkeeper in Melbourne takes charge of calculating the working hours, minimum wages for every employee, their super and allowances. They record all the financial information of the employees and provide them with payslips while ensuring the submission of payroll taxes and reports to the ATO.
Bookkeepers are also responsible for ordering, storing, and managing inventory for the business. They predict the stock requirements for every period and order it accordingly to avoid wastage. They check the expiration date and damage of perishable items to eliminate them and maintain optimum stock levels.
An accountant must be qualified and have a degree in accounting or must have completed the Certified Practising Accountant (CPA) program. Their role is more of an advisor and their work begins where bookkeeping ends. Let us look at the responsibilities of the accountant:
Business owners are often scared of the tax season because they do not want to get penalised by the ATO in Melbourne. Thus, they rely on an accountant to calculate business taxes and file them on time to avoid audits. They make sure that there are no errors in the reports and calculations, and the business claims all the applicable tax deductions to save money.
Accountants analyse the transactions of the business and identify the cash flow problems. They provide guidance and support to the business owner in Melbourne while making investment-based decisions.
They identify the processes that are not generating the desired profits and are quite expensive. Thus, they help eliminate cost-intensive activities and implement cost-effective tasks that make the business financially stable.
Accounting professionals are aware of the industry trends, market forces and other factors that impact a business in Melbourne. They keep track of the financial well-being of the entity and suggest the right time for investment.
They emphasise building cash reserves and ensure that the business can fill the market gap by identifying growth opportunities. They help entrepreneurs to make informed decisions based on their financial analysis.
Accountants have a vast network that includes moneylenders, angel investors, and venture capitalists. They know the terms of business loans offered by banks in Melbourne and understand the interest rates charged by them.
Thus, they provide the right advice when choosing a business loan with a low-interest rate and favourable terms of payment. They help consolidate all the debts and pay them off quickly to become self-sufficient.
Small businesses need both bookkeepers and accountants to handle the financial asks and draw insightful inferences for the growth of the venture. Using professional support goes a long way in strengthening the foundation of the company and steering it in the direction of progress.
