When managing a small business, it’s common to feel the pressure of handling everything, which can be daunting even for experienced entrepreneurs. While juggling various responsibilities, we need to evaluate how effectively we are managing each aspect. For instance, understanding financial records and reporting can be challenging without a finance background. This is where having a supportive team becomes crucial; they can guide you through uncertainties, establish processes, and aid in decision-making. Your Finance Team plays a vital role in this support system.
When deciding whether to outsource the finance function or keep it in-house, consider the following:
- Expanding a Finance team doesn’t always require hiring more employees.
- Many business owners opt for external support to add flexibility and access expert advice.
- Outsourcing can suit growing small businesses by allowing quick team expansion when needed.
- As your business grows, you can add external professionals or reorganise roles internally.
- There’s no definitive answer to outsourcing vs. internal finance teams; the key is having access to expertise.
- Whether internal or external, each team member should collaborate effectively to fulfil the finance function and keep the business owner informed.
Distinguishingthe difference between Accountants and Bookkeepers
Many businesses typically establish their finance team starting with either a bookkeeper or a small business accountant. Although both professions have distinctive tasks, there can be some overlap in their responsibilities, leading to potential confusion about who manages what. As a business owner, it is crucial for you to clearly understand each person’s role and your own responsibilities.
To break it down:
- Bookkeeping involves daily recording of financial transactions and data entry into software for report generation. It is primarily administrative and may cover areas such as payroll, accounts receivable, and accounts payable.
- Accounting focuses on analysing generated reports, adjusting for tax laws and reporting standards, and evaluating the business’s performance. This role is advisory and focuses on assisting business owners in their decision-making.
If you find it challenging to differentiate between a bookkeeper and an accountant, you are not alone. This is a common question that arises for accountants and bookkeepers alike. However, understanding the distinction between the two roles is crucial to ensure that the right individual handles the appropriate tasks, preventing unnecessary costs. Keep in mind that accountants typically charge higher rates than bookkeepers. Therefore, assigning tasks that a bookkeeper can handle to an accountant could result in increased expenses for your business.
To Bundle Accounting and Bookkeeping, or Keep Them Separate?
Having one company combine bookkeeping and accounting services may appear to be the simplest choice. Nonetheless, there are benefits to keeping these functions separate. At firms like Gold Coast Accountant Lemonade Beach, the focus is on accounting and advisory services, distinct from bookkeeping. This approach enhances the transparency and accountability of services. Combining services like accounting and bookkeeping can present challenges, as it may be difficult to pinpoint any issues that arise.
This is why many businesses choose to engage an external professional to handle bookkeeping and accounting separately, allowing them to gain a fresh perspective and broaden their financial team. Remember, teamwork makes the dream work!