Similarities Between Small Business Bookkeepers & Small Business Accountants
There are many similarities between small business accounting and small business bookkeeping. Both are needed to gather financial records and comprehend them. Critical financial decisions depend on the results of both bookkeeping and accounting. While both are extremely important to small businesses, contrary to what many believe, they aren’t the same.
Differences Between Bookkeepers and Accountants
While bookkeepers and accountants are similar in many ways, their job descriptions are quite different. Small business bookkeepers record financial statements, while accountants prepare financial reports from those statements.
Accountants have a license. To become a Certified Enrolled Agent, you must have coursework credit hours and pass a written exam. Bookkeepers, on the other hand, may have a degree, but it is not required.
In short, small business accountants sort the information that bookkeepers gather and record. Here’s a closer look at the job descriptions for each:
Small Business Bookkeeping
Bookkeepers record and maintain financial information, such as daily transactions. They also tend to the day-to-day business activities. Without bookkeeping, it would be a mess trying to balance books and conducting other financial business that requires figures to be in place.
Small Business Accounting
Accounting is summarizing, analyzing, and interpreting books as well as generating reports. While bookkeepers make raw data supplies available, accountants put the figures into topics that make sense – like cash flow and so forth.
A bookkeeping service keeps up with corralling financial data on a daily basis and performs such tasks as:
Recording transactions. Recording important transactions such as invoices and customer payments is one of the main duties of a bookkeeper.
Tending to forecasting. The records kept in the books help determine the growth rate of the business and analyze the data in areas such as new accounts and increased traffic.
Looking after payroll. Not only do bookkeepers tend to the payroll, they also collect information on past, current, and future payroll.
Managing cash flow. The records they keep on bank statements help keep up with where cash comes from and where it goes.
Small Business Accountants and Financial Data Duties
Small business accounting is more about defining the data that bookkeepers gather and record. Some of the most important services accountants provide include:
Tax accounting. Certified Enrolled Agents are experts at preparing tax returns. They are well-trained in compliance with tax regulations and can also help optimize deductions.
 Public accounting. From generating reports from internal financial data and statements to dealing with balance sheets, conducting reviews, and doing audits. Accountants are professionally trained to tend to a multitude of duties.
Financial accounting. Financial accounting is one of the main duties of an accountant. It requires generating reports from internal financial statements and understanding IFRS and GAAP standards.
Forensic accounting. Forensic accounting is when an accountant audits or conducts other investigations into the financial conduct of a business. This is a specialty niche that is typically not a service that is not often needed except in the insurance industry.
Bookkeeping Vs. Accounting: Which Path is Right for Your Business?
Whether you need an accountant or a bookkeeper, depends on the job at hand. If you are needing help with uncomplicated taxes where gathering figures is the biggest part of the job, a bookkeeper will most likely be able to fit the bill. If your taxes are complex, or you want to analyze your tax data in order to maximize deductions and make a plan for future taxes, an Enrolled Agent is who you’ll want to turn to.
Knowing and understanding the difference between the two professions of bookkeeping and accounting will help you make the most optimal choice when it comes to hiring a small business bookkeeper or a small business accountant and ideally, you may want to have access to both. If you want any other information related to bookkeeping or accounting tasks for your business, you can contact us today or at our phone number. Our professionals are ready to assist you.
Successful small businesses don’t happen automatically. They require hard work and a lot of planning. Having excellent accounting for your small business is imperative if you want your business to be the best it can be. From bookkeeping, audits, payments, and tax services to financial statement preparation and advisory and assurance services, an accounting service delves into every part of the business the whole year round to ensure ultimate success.
Top 4 Benefits to Year-Round Accounting for Small Businesses
Although there are a myriad of advantages to having access to small business bookkeeping and accounting services throughout the entire year, four stand out as being the most important. They include:
Provision of a solid record of finances – Finances don’t just happen once a year, or however often you decide you need accounting for a small business or a bookkeeper to do your small business tax, or whatever services are needed at the time; records and analysis are a year-round requirement if you want to make sure your business is healthy and moving ahead at all times. By systematically keeping track of every single transaction involved in your small business, during the whole year, you can maximize performance, help eliminate the chance of errors, and evaluate such areas as cash flow, employee performance, and so forth.
Provision of business opportunities and insightful financial analysis- Whether you are seeking growth or just wanting to stay afloat, thorough analysis and realization of business opportunities are a must. It takes a healthy accounting program to do either of these feats because in-depth accounting is key to managing costs, seizing opportunities, catching directional mistakes, and improving your business cash flow. If you only employ accounting services for your small business tax at your annual tax time, you are likely losing out on information you could have gained throughout the year.
Provision of optimal tax advice and services – Small business tax isn’t a once-per-year activity. You need to have information at your fingertips that will help you save money on taxes over the course of the entire year. You also need tax planning so you can maximize deductions throughout the year. By having a year-round tax service, you can be well-prepared when tax time comes.
Provision of a good game plan – Business takes place all year. If you only hire an accounting firm for small businesses on occasion, you’ll miss out on the advantages having well-kept books and analogies provide the rest of the year. By the time your Enrolled Agent comes, your finances will have already changed from what they were when you could have corrected a mistake or grabbed an opportunity. Your business plan is ever-evolving and if you don’t have a professional overseeing the finances of it throughout the year, your business will not be functioning as optimally as it should be.
A Firm Decision: Hiring a Firm vs. Hiring Multiple Accountants
When your right-hand doesn’t know what your left hand is doing, it spells disaster for a small business. Even though your business likely needs multiple services, like small business taxes and day-to-day bookkeeping, if you go hiring different people from different places to tend to those duties, you may end up in trouble. Why spread it out when you can trust one firm to tend to your small business accounting, bookkeeping, taxes, and Enrolled Agent needs all in one place? Some reasons that a one-stop-accounting-shop is wise include:
Consistency. You are more likely to achieve a high level of accuracy and efficiency when you have one and only one accounting firm tending to all your bookkeeping and accounting needs across the board. There’s no wondering what the “other guy” is doing when you have an experienced, expert-level agency working for you.
Cost-effectiveness. When you go with one outsourced agency for all your accounting needs, you’ll get services like financial statement preparation, tax preparation, bookkeeping, analyzation of your books, and so much more for one fee.
Minimizing fraud or financial misconduct threats. Having only one accounting firm to deal with lessens your risk of being cheated, fraud, or being the victim of any other type of misconduct or criminal activity. Especially when the small business accounting firm is a well-established, reputable company, you can rely on them to meet your needs without security threats.
Lower risk of penalties. It’s not enough to not be aware of a law or regulation. You are still held accountable. In small business bookkeeping and accounting, there are a multitude of penalties you may encounter. By having service from one firm year-round, you lower your chances of being fined or penalized.
The Bottom Line: How It All Adds Up
The bottom line is that although you may think you are saving money by going with a small business accounting, bookkeeping or tax service only when you need them throughout the year and by hiring multiple outsources rather than one outsourced firm, the fact is that you may be costing your company dearly. It’s time to rethink your game plan, so you can come out winning.
When tax season comes around, it is time for the yearly grind of tax preparation for your business. Few things have the potential to be so time-consuming, frustrating, and problematic. The IRS has the power to levy serious penalties that can severely affect the finances of your business. It is just a smart move to hire a tax expert for SMBs to help you navigate the complexities of the tax code and the filing process. If you search for tax preparers near me, you will find both certified public accountants and federally licensed Enrolled Agents, but which is best for your business? In this article, we will look at the differences between them and help you figure out which is best for your business.
Who is a Certified Public Accountant?
There are a number of requirements that it takes for someone to become a Certified Public Accountant. They must have a bachelor’s degree in business, finance, or accounting. It is also mandatory that a CPA candidate have a minimum of two years of accounting experience and finish 150 hours of education. Passing the Uniform CPA Exam is the final hurdle to becoming a Certified Public Accountant. Then they must be licensed by the Board of Accountancy for their state.
Who are Enrolled Agents?
To begin with, a Federally Licensed Enrolled Agent (often abbreviated to EA) is a highly trained specialist in tax issues. In order to become an Enrolled Agent, a tax professional must either complete at least five years of employment with the IRS or successfully pass a complex exam administered by the IRS. Being given the designation of Enrolled Agent is the most distinguished credential granted by the IRS. An EA is an expert in a wide range of tax topics, including tax planning, IRS representation, 1040, and much more. That expertise means that they usually earn $15,000 to $20,000 more a year than a CPA.
Which of the Tax Preparers near me should I Hire?
When you hire a tax expert for SMBs, you will want to take a few things into consideration. Both a Certified Public Accountant and a federally licensed Enrolled Agent can be a lot of help to your business. Both are highly trained, but there are differences that you should keep in mind. Because of the direct experience that an Enrolled Agent has with the IRS and their specialization in tax law, they can be enormously helpful in getting business taxes in order. Their title also lends weight to their representation of your company.
EA or CPA: Which Will You Choose?
A Certified Public Accountant, on the other hand, is a great choice for helping your business with bookkeeping, both in organizing and maintaining your books. They are also useful for business advice and help you manage your business’ assets. They often offer a wider range of services than an EA and often charge less. A CPA can, of course, also help you with taxes and represent you before the IRS. Whether you choose an EA or a CPA for your business will depend on your specific needs and which has the special skills to address them.
Ask anybody who runs their own business what their biggest headache is, and taxes are sure to come up. It can be difficult and time-consuming to organize and prepare tax returns for your business. You don’t want to run afoul of the Internal Revenue Service, and you need some help. That is when you should consider hiring a local Enrolled Agent tax preparer near your area in Florida. Federally licensed Enrolled Agents are experts who can help you with the tax return for your small business. In this article, we will be looking at what an EA is and why you should be searching for a Certified Enrolled Agent near your area.
What is an Enrolled Agent Tax Preparer?
When you have to deal with the IRS, an Enrolled Agent will serve as a tax advisor. They are certified to represent you in matters such as filing a return when you and your company are audited, dealing with issues around payment and collections, and appealing fines.
Federally licensed Enrolled Agents must pass the Special Enrollment Examination (SEE). It is a comprehensive exam that tests the taker on individual and business tax law, in addition to tax representation, practices, and procedures. If someone was formerly employed by the IRS for five years or more, they might be eligible to be an EA without taking the SEE. All EAs are required to pass a background check and take 72 hours of continuing education courses every three years.
What are Small Business Enrolled Agent Services?
Enrolled Agents offer a variety of accounting and bookkeeping services ranging from tax planning to help you understand tax rules and regulations, to preparing, signing, and filing your tax return. They can also represent you before the IRS at hearings, and audits, and deal with collection and payment issues. They can counsel you on pretty much any tax issue your small business might have because they have what is called unlimited practice rights (also known as unlimited representation rights).
You might be thinking that a CPA or an Attorney could help you with your taxes, so why do you need an EA? There is a difference. A Certified Public Accountant can help you with a wide variety of accounting issues, including how to minimize your tax bill, but they aren’t always experts in tax issues or able to represent you before the IRS. Likewise, Attorneys can help with a variety of legal issues and some are tax specialists, but they are broader legal experts and not focused on being tax advisors in the way that Enrolled Agents are.
How Can I Find an IRS Enrolled Agent Near Me?
When you want to find an Enrolled Agent tax preparer near me, you can simply here: RPO Preparer Directory (treasury.gov). The IRS has provided this useful directory for finding an EA. Follow the prompts and enter your country, then your zip code. You can enter a person’s surname if you have a specific name to look for. You then check the “Enrolled Agent Credentials†box and hit “Search.†Furthermore, you will be given an alphabetical list of credentialed Enrolled Agents near you. When hiring an agent, you can also email the IRS at [email protected]. Simply provide the IRS with the person’s name, address (if you have it), and agent number (if you have it). You can also check out an EA with the Better Business Bureau. Then you will be confident that you have a tax advisor who will be in your corner at tax time!
If you have a new business and are searching for a small business consultant near me in Florida, it’s important to learn all you can before even securing an advisor. There are some major pitfalls you will want to be aware of in order to avoid falling into them, such as what your federal and state tax obligations are and the best way to handle them. Making even a small error regarding your small business can hurt your chance for future success. There is no guaranteed, fool-proof plan, but it’s imperative to make the wisest decisions possible.
What a ‘Small Business Consultant Near Me’ Actually Does
Before hiring a local Florida small business consultant, it’s wise to understand what they do for your company – or what they should do. The more you know about their role, the better able you’ll be at choosing a competent one. Here are 7 money mistakes to avoid with financially managing your business:
1. Failure to make a cohesive business plan
Many entrepreneurs are pantsers which means they fly by the seat of their pants – making decisions on the spot rather than planning their business all out. A clear-cut business plan is a necessity for those who are looking for investors or a loan to get their business off the ground. Even if you are not needing a plan for financing, you will need one to succeed. One of the best ideas is to hire an expert to help you put together a pitch deck, so you’ll see all your plans fall together in one presentation.
2. Neglecting federal and state tax obligations
It’s tempting to take a shortcut when doing your taxes. Don’t! Be sure the powers that be will find out and penalize you dearly. You’ll need a professional accountant or an excellent tax program you can run yourself online or one that you can hire someone to run. Ignorance is no excuse, so be sure to properly tend to your federal and state obligations.
3. Not being a goal-setter
If you aren’t setting goals, you’re probably not reaching them either. Setting long and short-term goals helps you take steps to achieve first the short-term ones and then those that take longer to reach. Start by writing your long-term goals down and figuring out the smaller steps it will take to reach them. Make sure to list your short-term goals too. Mark them out as you achieve them, one by one. It is motivating to cross them off, so you’ll be pumped to continue the winning cycle.
4. Avoiding innovative new technology
It’s easy to shy away from new technology that you’re not familiar with. It’s important to realize though that often, the technology was invented to remedy some of the exact problems you have with your new business. Being open to trying and to learning new technical devices and programs will set you up to succeed.
5. Over or undervaluing your products or services
To balance your business finances, such as the cost of your services or products, you’ll need to have an accurate value of your goods or services. Lack of knowing a realistic value will upset the entire foundation of your business, down to huge legal factors such as your federal and state obligations.
6. Fear of marketing
Marketing is the wave of the future. Hiring a pro to tend to market management is most likely the wisest decision you can make as a business owner. From branding to marketing you on social media and all points in between, investing in marketing is equivalent to investing directly in your company.
7. Identifying your target customer
Once you know who your ideal customer is, you can market accordingly. You’ll save a lot of useless ads if you direct the ones you put out to the people who are most likely to buy from you. Taking the time to identify that group is a wise decision.
Schedule a free consultation today & let us help you and your business plan for success
By heeding the warnings above, you’ll have a good start to making your company work. Then, when you conduct a search for a new business consultant near me in Florida, you’ll already have a jump start in areas such as federal and state tax obligations and so forth. Then, you’ll be well-informed to find a great consultant to help you manage your small and mid-sized business.