10/17/2022
Just like there are many businesses that require accounting, there are various types of accounting services.
What is Bookkeeping?
Bookkeeping involves recording and verifying the financial information of a business. There are two types of bookkeepers:
(1) Those who collect, ensure the accuracy of, and report financial information.
(2) Those who also process financial transactions such as sending invoices and paying bills.
Every company needs someone who can handle both tasks. However, who exactly performs which tasks within the company varies. For many small businesses, it makes sense for the business owner to actually pay the bills, delegating information gathering to accountants. All bookkeeping includes tasks such as ensuring that the numbers in the books match the bank's numbers and ensuring that the general ledger is prepared for accountants. Some bookkeepers also handle billing and payment of bills that occur in the course of day-to-day business transactions.
However, it is important to consult with your bookkeeper (or bookkeeping service) about your responsibilities and what they will do. That way, the bookkeeping work you need to succeed in your business won't be left undone.
What is the difference between a bookkeeper and an accountant?
The main difference between a bookkeeper and an accountant is that accounting is a regulated activity whereas bookkeeping is unregulated. Both deal with financial information, but bookkeeping involves record keeping only, whereas accounting involves more strategic planning and analysis of data provided by bookkeepers.
Bookkeepers look at your daily transactions to make sure what you record actually happened. Accuracy is the most important criterion for successful bookkeeping. Incorrect books can lead to various tax and legal issues for the company.
However, as a general rule, bookkeepers are not authorized to take any action based on the information they collect. Instead, bookkeepers focus on providing digestible, timely, and accurate information to business decision makers.
An accountant is someone who makes recommendations and creates strategies based on information provided by bookkeepers. For example, an accountant may prepare a company's budget, but the bookkeeper breaks down previous expenses to inform the accountant when compiling the budget. Or think about accounts receivable. A bookkeeper will focus on its accuracy and completeness, but accountants may look at the data to see how long it takes on average for customers to pay in full. It may affect company policy.
In smaller companies, accountants can also do the bookkeeping work, but bookkeepers rarely do accounting. The main reason is that accounting is a regulated strategic activity and bookkeeping is not regulated. To become an accountant, you need to be certified. Anyone can become a bookkeeper.
Bookkeeper or Accountant, which one should I hire first?
For small businesses or start-ups with limited resources, it is more important to hire a bookkeeper and make accounting decisions yourself. It is fundamental to know that the data displayed is trustworthy and can withstand tax filing. Without accurate data to verify, accountants are limited in what they can do.
How much do bookkeeping services cost?
The cost of bookkeeping services depends on the amount of bookkeeping required and whether or not you leave billing and payments to the bookkeeper. The cost of hiring a full-time in-house bookkeeper starts at $25 per hour, thus making it around $50000 per year, more realistically $70000, plus benefits. Outsourced bookkeeping services cost up to $2000 per month. In-house bookkeepers are more expensive than bookkeeping services, especially online services, but they usually handle more functions. Most in-house bookkeepers will handle invoicing and payments. If an outsourced bookkeeping service does that task, they will be on the higher end of the range and cost around $2000 per month, i.e. ½ of the cost of hiring an inhouse specialist. Generally speaking, the more human hours needed to handle your bookkeeping, the more expensive it will be.
It’s worth noting here that brizk’s bookkeeping service starts at $99/month, which is on the lower end of the range. That’s because most bookkeeping services are human-only, but brizk leverages powerful software tools to handle the most error-prone calculations involved in bookkeeping. That ensures better accuracy and fair prices.
