Accountant vs. bookkeeper: managing small business accounts


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After starting two small businesses, I've learnt from experience that maintaining the accounts is critical to staying afloat and keeping the tax office at bay.

Mercifully, with the assistance of an experienced accountant and bookkeeper, along with online software packages, it's possible to keep a neat set of books and even generate some decent cash flow for your small business.

The accountant

bookkeeper vs accountant small business

Opt for someone who has small-business experience and "speaks your language".

"The way an accountant explains things should match your level of understanding," says chartered accountant Paul Meissner, the director of Melbourne-based 5ways Group. "They must be commercial and practical."

An accountant should present a straightforward cost structure for their services and a fixed fee often works best for many start-ups, Meissner says.

A business expecting to make a few hundred thousand dollars in turnover in its first year should expect to pay $600 to $700 for ad hoc advice.

"Expect to pay between $150 and $250 a quarter for the preparation of a business activity statement."

The bookkeeper

The advent of cloud computing software packages, such as Xero, has disrupted the world of bookkeeping. However, quality bookkeepers still have a role to play.

"There was a lot of work that bookkeepers did, which they probably shouldn't have undertaken, such as typing out bank statements or manual data entry," says Meissner.

"Now the quality bookkeepers are chasing down debtors, analysing the expenses and giving business owners an accountability partner."

Katarina Vencel, a CPA (certified practising accountant) with Sydney-based Vencel & Co, says it's a mistake for owners to allocate time to bookkeeping when they should be concentrating on the business.

As a rough guide, expect to pay between $50 and $70 an hour for bookkeeping.

"Technology can help to shave the costs of bookkeeping," says Vencel. "Using the likes of Xero, MYOB or QuickBooks' Intuit can save some bookkeeping time, as they can do some of the data entry." And cloud-based software makes collaborating with your live advisers very efficient.

The software

Check the websites of Xero, Intuit QuickBooks and MYOB for their features and then talk to colleagues, your accountant or bookkeeper about the most suitable solution for your small business.

While Meissner says price should be the last consideration, New Zealand's Xero offers its Starter plan for new businesses for $25 a month.

The package manages the payroll of one employee, can raise five invoices a month and 20 bank transaction reconciliations. QuickBooks has a $15-a-month start-up package (without payroll) and Essentials is MYOB's most affordable package at $29 a month (again, payroll for one).

Meissner says that understanding the requirements of your business trumps price every time. "Job costing and inventory tracking currently set the software packages apart," he says.

"Xero doesn't do great job-costing or inventory-tracking without the help of an add-on, which can be expensive." Xero uses an app called TradeGecko which costs an extra $79 a month.

Vencel advises new business owners to consider whether they'll be employing people and paying wages and super, and then compare the accounting software packages on that basis.

"MYOB, for example, offers payroll but it will cost you more a month as you add more employees," she says. Xero includes up to five employees in its Standard subscription package.

The IT partner

Running a successful business is rewarding but it can also be a complicated, difficult experience. From managing employees to taxes, marketing and customer relations - there's a lot to consider.

Your IT situation is one more thing to worry about, which is why it's important to choose a supplier that make running your business easier, not harder.

A technology supplier should be an extension of your business, not simply a provider of the tools and services you need. By choosing a supplier with a reputation for excellent customer service and high-quality products, you'll have access to your own around-the-clock IT support and the latest business solutions.

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Anthony O'Brien is a small business and personal finance writer with 20-plus years' experience in the communication industry.
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