The best way to answer this question is to outline the key differences between a bookkeeper and an accountant. So lets look at their role in assisting a small business owner throughout each financial year.
There are many bookkeepers and accountants out there. A lot of them are specialists in different areas or are certified with different accounting programs. The best option is to find a Bookkeeper and an Accountant who will work together with you in order to:
- Grow your business
- Meet all your compliance needs
- Set out ways in which you can hit your financial goals. That is after all, why you got into business in the first place, right?
Setting up your business:
The set-up of your business is a crucial phase in order to get your systems up and running, so you can succeed in business from day one. This may not mean making a profit from day one, but to ensure your cash flow will see you through long enough for you to start seeing some real returns.
Your bookkeeper and your accountant should work together, with you to get your systems set up.
There will need to be some discussion and decisions made between you, the bookkeeper and the accountant. Decision on topics such as:
- Entity structure (for tax purposes and recession purposes) – “begin with the end in mind”
- System structure – accounting software, accounts staff, invoicing set up, payment gateways and options as well as security are just some things to consider in an accounting system.
- Set up of the Chart of Accounts
- ABN, GST and PAYG applications
- You may also need advice on other business services such as;
- employee rates and awards
- industry specific regulations
- asset financing
- marketing etc.
(A great bookkeeper or accountant will have relationships with all these people and can point you in the right direction of who to talk to.)
Day to day running of your business:
Once some of the start-up decisions have been made and implemented, it’s time to get down to business. So that you can do what you do best, providing an amazing service or product to your customers, and managing your staff etc, your bookkeeper can take the reins and work on the day to day transactions, while keeping you informed and updated.
Day to day transactions would include, processing of expenses and running your accounts payable system. Preparing customer invoices and collecting payments, your accounts receivable system. The processing of payroll for your staff. This may occur weekly or fortnightly (sometimes monthly). As well as setting you up for Single Touch Payroll, this is now an ATO requirement.
For information on the services Perth Bookkeeping Professionals provide please see our services page.
Month end processes:
There are various processes that need to be taken care of at the end of each month. Most of them can be conducted by a highly qualified bookkeeper, but they may work with your accountant on some of the calculations such as asset depreciation.
At the end of the month is when most major reconciliations are carried out. Though some may be done more regularly (bank reconciliation for example). Usually if there are a large number of transactions, or if you as a business owner would like more regular updates and reports.
You may also be required to do monthly ATO lodgements and payments. This is unusual for a business just getting started, but as your business grows and your income increases, it is likely that you will change from quarterly to monthly. Your bookkeeper and accountant will keep you up to date on pending changes to your reporting requirements as you approach the different ATO set thresholds.
Quarterly processes and lodgements:
The end of each quarter is a very busy time for a bookkeeper. Most small businesses have their BAS due quarterly as well as Superannuation payments due. This will mean more reconciliations, BAS preparation and Superannuation lodgements.
If the day to day and the monthly processing has been completed then the processes of the BAS lodgement won’t be a big issue for a business owner. The biggest issue is having the money in the bank to make the payment to the ATO and Superannuation Clearing House.
A highly qualified bookkeeper will work with you throughout each quarter to ensure the money is there ready to be paid when the lodgement is due. The best way I can recommend is to put the money aside for GST, PAYG and Super as the liability is formed (when you collect money from customers and when you pay your staff).
This is the big one for everyone!
At year end your bookkeeper will finalise all the processing, reconciling, and journal entries (some calculated together with the accountant). Prepare the final BAS for the year, send final payroll details to the ATO. Your employees will be able to access their PAYG Payment Summaries directly on their MyGov account, now that Single Touch Payroll is in play. Once these things are finalised, your accounts will then be passed on to your accountant.
Your accountant now has some tax and financial reporting work to do. Preparing your business tax return as well as your personal (if using the same accountant for both – which I recommend). With an up to date and accurate set of accounts, this will be a much simpler process for everyone. Especially if there has been lots of communication between everyone throughout the year.
Once your accountant has completed the business tax return and year end financial reports, there will be a few accounting adjustments to be processed by your bookkeeper, prior to closing the year out.
More from your bookkeeper and accountant:
The timeline explanation above is simplistic. There is a lot more both your accountant and bookkeeper can offer. For more bookkeeping services please the ongoing services we offer.
Choosing the right bookkeeper and accountant for you and your business is going make this whole processes a lot less stressful for you. For assistance on how to choose an amazing accounting and bookkeeping team please contact us, we would love to chat with you about this. Perth Bookkeeping Professionals have some absolutely amazing accountants that we work with and would be more than happy to put you in touch with the right one for you.