Business owners will often use the term Bookkeeper and Accountant interchangeably, while these roles might appear to be the same on the surface, there are some important differences between both roles. Additionally, the role of a Trusted Advisor is often confused with the Accountant’s role. In this article, we explore the commonalities and differences between each of these roles. We will also identify how each of these roles impacts the level of engagement with your business based on your individual needs.

Bookkeepers:

The Bookkeeper role is more transactional, focusing on entering and reconciling financial transactions that flow through your Business Accounts. The bookkeeper will often generate Financial Statements using Accounting Software and provides these statements to the Business Owner for review. Bookkeepers often focus on the following areas:

  • Reconciling Bank and Credit Card Transactions
  • Reconciling Business Loans
  • Categorizing Revenue, Expenses transactions
  • Posting debits and credits
  • Maintaining General Ledger Items
  • Running Payroll
  • Generating Financial Statements on a regular basis

Often Bookkeepers will categorize transactions based on the most up to date IRS tax rules so that financial records are ready for tax preparation. Bookkeepers often will also assist in making sure that business owners understand the Supporting Business Documents required by the IRS in order to substantiate business transactions.

Accountants:

The Accountant role is more strategic in nature, the focus is not about entering and reconciling transactions but to help business owners understand the story behind the financial reports. Accountants will often work with Business Owners to identify Key Performance Indicators (KPIs), business goals, and tracking the overall growth and progress of the business. Accountants will focus on the following areas:

  • Review and analyze Business Financial Statements
  • Develop Business Goals and KPIs
  • Develop Financial Forecasting and Budgets
  • Prepare Income Tax Returns
  • Report Sales Tax to Taxing Authorities
  • Maintain business compliance with Federal and State taxing authorities

Trusted Advisors:

The Trusted Advisor brings the role of an Accountant to a higher level by proactively identifying planning opportunities intended to reduce taxes, improve the business cash flow and help entrepreneurs grow their business. Trusted Advisors establish deeper relationships with their clients, and work with other financial and legal specialists to reach the business owner’s unique goals. Trusted Advisors offer Business & Personal Advisory Services by taking the role of internal strategist in order to work in conjunction with other experts by implementing proactive advanced planning strategies. Trusted Advisors will often focus on the following:

  • Identify and implement proactive tax reduction strategies
  • Work with other professionals as a team in order to reach their client’s goals
  • Work with clients by Taking a Holistic Approach to the Business Finances
  • Work to implement advanced planning strategies including:
    • Retirement Planning
    • Business Valuations
    • Social Security Planning
    • Succession Planning
    • Employee Stock Ownership Plans
    • Captive Insurance Companies
    • Cost Segregation
    • Long Term Care Planning
    • Business Financing
    • Business Exit Planning
    • Estate Planning

The bottom line:

Depending on the Accounting Firm you decide to engage with, Bookkeepers, Accountants, and Trusted Advisors can be the same person. In our case, Polaris Tax & Accounting offers business clients Bookkeeping, Accounting and Advisory Services. We find that managing the business accounting records for our clients allows us to become better Accountants and Trusted Advisors. Therefore, clients can benefit from a holistic approach to their finances as we proactively identify Tax and planning opportunities throughout the year.