"What's the difference between a bookkeeper and accountant?"
A lot of business owners have had this question at least once in their life, and some might actually still have! So really, what's the difference between a bookkeeper and accountant?
Here's a short, quick read that explains it in a way that's probably better than most would expect, and that will really give you some education that will help you do better in business.
I was at a networking event this morning and somebody asked the question, what is the difference between a bookkeeper and accountant? And I actually thought, a lot of people have that question, and so why not answer it on a blog? I really think this is going to be really valuable in terms of you understanding who can help you with the various moving parts of your business, and help you do better in business.
So, here is a difference between a bookkeeper and accountant, and also a strategic bookkeeper – the way I want to define it for you is simply role and focus.
In terms of an accountant, if their role is as a TAX ACCOUNTANT, then their focus is to MINIMISE tax. It's tax planning and strategy, not to deliberately help the business owner do better in business. When you are wearing the tax accountant hat, it is to help that business owner (or can just be a wage earner) to get the best result that they can get in terms of their tax. For example, a tax accountant will be interested in reading the budget when it comes out in May every year, because the budget contains all the changes and the new opportunities in terms of TAX MINIMISATION. Let's say the budget comes out and now, the threshold for what you can put into superannuation each year has gone up – your tax accountant is then able to say to you, "You can put more money into super with a tax advantage." Voila, they've saved you money. So, they can save you tonnes of money if you've got a tax problem. If you don't have much of a tax problem, then you're not going to be able to save much money. In terms of results you can get from a tax accountant,
the bigger your income tax bill, the bigger you can potentially save.
So, what happens if I'm a MANAGEMENT ACCOUNTANT?
Well, in my own words, my role would be in helping you as a business owner with BUSINESS MANAGEMENT. And a big part of that is pillar one, which is the numbers – the up-to-date accurate accounting records, also known as bookkeeping. So, back to role and focus there. The management accountant's focus is around the management of your business, and the outcome that they want for you is to UNDERSTAND your numbers, and be able to really then use your numbers in a way that allows you to make decisions that optimise your PROFIT and CASH.
Now, if you've heard me talk about strategic bookkeeping, and that sounds suspiciously like strategic bookkeeping, well you're on the right track because management accounting as such is very, very similar or almost the same as strategic bookkeeping. It's just that strategic bookkeeping is a methodology I personally developed with the five-step methodology.
So, what's the difference between the management accountant and a STRATEGIC BOOKKEEPER? The strategic bookkeeper can absolutely help you get your numbers up to date and accurate. He or she is really interested in using the five-step numbers methodology and all the agendas and processes and systems behind it, to specifically help you to optimise your profit and cash. He or she is very much in the same lane as the management accountant, but a management accountant may use an ad hoc system, or other different systems.
Some management accountants will even just be doing it off the top of their head because they can do it even with eyes closed because they've been doing it lots of time.
But, what I learned over time from playing in this management accounting space is to make it meaningful, a really robust methodology. The question, what is the difference between a bookkeeper and accountant? – that question was actually posed from a digital marketing professional to a bookkeeper. And the answer that that bookkeeper gave was really interesting. He went into a lot of detail and then he also started to tell us stories about how he loves to help business owners (as he's a management account himself) with their numbers, stories of varying degrees of success and struggles in that space.
And then something that he said is that, it really frustrates him and breaks his heart when he helps someone and six months later, they're back in the same place.
And I have been there 13 years ago.
I was there, and it's one of the reasons I developed a robust methodology and I called it Strategic Bookkeeping, because that really helps to avoid that scenario where the client falls over again. Because I know that strategic bookkeeping, that management accounting, is not a process that should start and stop – it is a process of handholding, and
helping a business owner to understand and use their numbers month to month, in order to continually do better in business, optimise the profit and cash, and pull out prosperity, which is about being time rich.
Purpose. Legacy. Lifestyle.
Now let's move on to what a bookkeeper is.
So, the true term for a BOOKKEEPER actually is an accounting technician. A bookkeeper is interested in getting your accounting records up to date and accurate. A bookkeeper prepares the numbers, so that the tax accountant can lodge the tax and minimise your tax, and so that the management accountant or the strategic bookkeeper can use those numbers, and investigate those numbers with you to optimise your profit and cash.
The bookkeeper's focus is to get your numbers up-to-date and accurate. When he or she tends to wear a hat for lodging and some compliance, in Australia, we would give that the name BAS Agent (which is license-registered and insured). But realistically, the bookkeeper's focus is to get those numbers up to date and accurate, and the outcome they want for you is
for you to be able to put your eyes on your numbers and see what you need to see, and do whatever needs to be done.
You need to see how your business is performing in terms of profit and cash and you need to lodge compliance, but the other things you need to do is make BUSINESS DECISIONS – and the only way you can do that is with those beautiful, up-to-date, accurate accounting records.
So, if you still have questions like,
Do I need a bookkeeper?
Should I be outsourcing my bookkeeping?
Do I need a strategic bookkeeper?
Should I choose a strategic bookkeeper over a management accountant?
Look, yes, I can answer all those questions.
What I probably recommend you do is book in for 15 minutes with me – 15 minutes of gold my friends, so that I can actually give you the floor and answer any questions you've got. Okay? Please do reach out anytime.
And please use the really great resources we have at your disposal. There is The 7 Deadly Sins Cash Flow eBook to help improve and fix your cash flow woes, which I've also kind of put into a podcast. We've also got a free Business Health Check to help you gauge, is your business healthy? You can absolutely grab that.
And something else we have in my bookkeeping practice is we have a Fresh Eyes on your file health check, so that we can give our clients a really great analysis of where their accounting file is at right now in terms of those up-to-date accurate numbers. We give you a score of your file, and then we give you personalised recommendations on what to do next.
So, if you are wondering about the health of your accounting file because you are valuing those up-to-date accurate accounting records, or maybe you've just got a gut feel that something needs to be looked at, again, you can always reach out to me for a complimentary 15-minute chat.