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Bookkeepers, Accountants, and Financial Strategists – What’s the difference?

By Paula Graham, Financial Strategist

When talking to small business owners, I often get asked “What’s the difference between a bookkeeper, accountant and a financial strategist? When do I use one over the other?” Well, they all add value, but they provide different things.

A bookkeeper records the transactions of a business into an accounting system like Quickbooks. These transactions include sales, purchases, payroll, collection of accounts receivable, payment of bills, bank reconciliations, and travel receipts. To be good at their job, at a minimum, they must have a basic understanding of accounting terms and your industry, be very organized and conscientious, and consistently meet deadlines. Timing is everything to a small business owner: they need their bills paid on time, invoices sent in a timely manner, money collected on time, and employees paid on time. A bookkeeper may or may not have an associate’s degree in accounting. Most small business owners lack the time or the skills to do their own bookkeeping, so they hire someone or use the services of a bookkeeping firm.

An accountant who works with small business owners often provides expertize in two areas: financial reporting and income tax planning and preparation. For financial reporting, accountants will store, review, summarize, and present the financial information in various reports for analysis. They may also work with the business owner to create an annual budget. Once the fiscal year is closed, they may also prepare and file income taxes on behalf of the business owner as well as provide tax planning for future years. Unlike a bookkeeper, an accountant should be degreed with at least a bachelor’s degree in accounting. A good accountant will be knowledgeable, responsive, and have great communication skills, especially in explaining what the numbers mean in a way the business owner understands.

Where the bookkeeper and accountant create and provide historical financial information, a financial strategist helps the business owner understand the numbers. The financial strategist uses this financial information and other information to look ahead, collaborating with the business owner on the future growth and profitability of the business. A financial strategist analyzes financial data to understand what the business is currently experiencing but more importantly to make credible recommendations on the financial actions an owner needs to take to reach his or her future goals. They often focuses on cash flow (where’s the money coming and going), profit margins (how much is being made on products and services), labor utilization (percent of billable hours), inventory and accounts receivable turnover (how quickly are you getting your money back), etc. A good financial strategist listens and collaborates with the business owner on the owner’s growth and profitability goals, then provides the financial analysis and recommendations to make it a reality.

As you can see, bookkeepers, accountants and financial strategists all provide unique, critical accounting and financial expertise that all small business owners need. Where small business owners get in trouble is when they try to use a bookkeeper as an accountant, an accountant as a financial strategist, etc. At EDGe Business Planning, we completely understand this, so that’s why we provide all three in a way that is seamless to the small business owner. Providing simple solutions to meet all the financial needs of a small business is what we do.


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