Every rand counts, but who should count them for your small business? Bookkeeper, an accountant, or both?
The terms "bookkeeper" and "accountant" are often used interchangeably, but they perform different tasks. The right choice depends on the current stage of your business, and the complexity of your business’s finances.
First, you need to determine:
- What are your existing internal accounting capacities, skills and resources?
- What are the compliance and reporting requirements for your type and size of business?
- What are your short and long term business goals?
Based on these answers you can assess what you can do yourself, tasks you need help with and future requirements of your business.
Outsource accounting tasks if you are spending more time on them than on the actual business.
When to hire a bookkeeper
Get a bookkeeper if:
- You want to ensure your income from services and products sold is properly recorded.
- You need regular tracking of expenses such as supplies, gas and rent.
- You need help creating invoices and receipts.
- You seek guidance on which business expenses are tax-deductible.
- You want assistance with payroll management to ensure employees are paid correctly and on time.
- You want to organise your financial documents and establish an efficient filing system.
- You wish to maintain an accurate general ledger and have clear financial reports, such as income statements and balance sheets, to understand your business's financial health.
- You are looking for help with debt collection and making timely payments to banks and creditors.
Bookkeeper focuses on day-to day details, recording and tracking financial transactions of your business.
Good bookkeeping is a necessary foundation for all accounting tasks.
Which brings us to our next question.
When to hire an accountant
Get an accountant if:
- You are starting a new business and need advice on the best legal structure.
- You want to review and understand how your existing business is performing.
- You need support completing tax returns, like PAYE or VAT.
- You require guidance and expert knowledge on tax laws and tax planning strategies.
- You need to perform an audit of your business operations.
- You're looking for help with budgeting, cash flow management, and forecasting.
- You want advice on improving your company's structure and operational efficiency.
- You need to prepare formal financial statements for stakeholders like banks or partners.
- You are applying for a business loan or making significant financial decisions that require expert advice and long-term planning.
An accountant will analyse financial information recorded during bookkeeping and focus on the bigger picture.
Accountants can forecast future needs of the business, recommend the best course of action, and prepare reports for people and institutions outside the company.
How much does a bookkeeper charge compared to an accountant?
The costs depend heavily on the company size, number of employees, annual turnover and number of monthly financial transactions.
A bookkeeper will charge you around R200 per hour for short-term assistance in sorting out financial records. Long-term bookkeeping costs vary with monthly transaction volume. The monthly charge for a bookkeeper ranges from R300 to R2000.
Accounting firms, on the other hand, will usually charge you based on the turnover of your company. For a small business with up to R1 million in annual turnover, the monthly rate for accounting services packages is typically between R3000 and R4000. Check the prices of business accounting for different turnovers.
While a bookkeeper is more cost-effective, an accountant provides valuable insights for measuring and growing a business.
Why should you get a financial Pro through Procompare?
Procompare connects you with both bookkeepers and accountants. Submit a request for one or the other and get up to 6 quotes from top local financial professionals in a matter of hours.
You can then compare quotes from different bookkeeping and accounting service providers and pick the best one for you.
Procompare's clients have already rated hundreds of accounting firms from all over South Africa, so you can check their ratings and reviews before deciding.
