To a business owner, an accountant that helps make sense of business finances can seem like a godsend. Whether you’re just starting your business or are already established, having a great accountant by your side is a sure way to keep your business running smoothly. Unfortunately, there are many myths among business owners about having an accountant. Whether it’s the belief that an accountant is just a more expensive bookkeeper or staying with an accountant simply due to a sense of loyalty, we’ve written this post to help clarify some of the most prevalent misconceptions about accountants so you can make informed decisions about hiring and retaining accountants.
Myth 1: “Accountant” and “bookkeeper” mean the same thing
Many business owners believe that accountants and bookkeepers have the same duties. Although accounting firms sometimes offer bookkeeping, this does not mean that these titles are interchangeable. It’s better to think of these two roles as supporting different stages of your business’ accounting, with the bookkeeper performing the foundational work upon which an accountant operates.
Generally, bookkeepers are responsible for tracking and recording expenses and income, using accounting software to do tasks like paying invoices for vendors and suppliers and managing payroll. Bookkeepers also usually prepare four important financial statements: the income statement, balance sheet, the cash flow statement, and the statement of changes.
To summarize the role of a bookkeeper in a few words, they are responsible for maintaining your business finances.
Accountants, on the other hand, are in charge of interpreting the transactions recorded by the bookkeepers in terms of actionable insights and overall financial strategy. In other words, they take the data generated by bookkeeping activities and turn them into organized information and reports that help you plan out your business’ decisions and strategies. Accountants also perform financial audits, prepare documents for tax filing, or analyze your business’ financial health and suggest methods to improve it.
While the duties of both bookkeepers and accountants are vital to your business success, it’s essential to avoid confusing the two roles so you can receive the maximum benefit from their respective position in your business.
Myth 2: Accountants do not handle taxes
Business owners also often believe that accountants are unqualified to help them with their taxes, which is false, though the amount of assistance varies on the type of accountant. Specifically, the level of tax assistance depends on whether you have a certified accountant (CA) of a certified public accountant (CPA). While a CPA can fulfill the role of a certified accountant, the reverse is not true.
In general, a certified accountant can help you gather the documents and reports necessary to file your taxes, as well as sign the return on your behalf. A certified public accountant can fill all the duties of a certified accountant, but can also represent you before the IRS if necessary. An additional characteristic of CPAs is that, because they are required to complete continuing education courses each year to retain their CPA status, their knowledge of tax law is more current and up-to-date.
If you don’t have an accountant, but need help with tax planning or representation before the IRS, contact MBS Accountancy! We’re a team of CPAs that are ready to help you get through any tax challenges facing your business.
Myth 3: You Can’t or Shouldn’t Switch Accountants
Too many business owners feel as if they are “trapped” with their accountant, overlooking red flag after red flag, in the name of “loyalty” or because “they know your business best.” It’s often also seen as an unwelcome hassle to change accountants and to build up an entirely new relationship from scratch. This is unfortunate since the mistakes of a lousy accountant on your business directly affect your business’ success and can cripple your growth or destroy any progress you’ve made so far.
Some Reasons To Switch Accountants Are:
- They don’t understand your business goals (or your business at all!)
- Unprofessional behavior (missing deadlines, excuses for incomplete work)
- Bad information (incorrect tax information or ineffective tax strategy)
Once you’ve decided to switch accountants, it’s merely a matter of finding another accountant (check out this post to learn what to look for in a new accountant) and transferring over to them. In general, the process goes like this:
- You find and hire your new accountant
- You notify your old accountant about the switch
- With your consent, your old accountant will coordinate with your new accountant to securely transfer your information and files
- Your new accountant tells the tax authorities about the change
- You and your accountant go on to reap the benefits of a great partnership
While there are intricate details to each step outlined above, the idea was to show you how you could switch from a bad accountant to a better accountant is four steps. It is worth changing accountants if you notice bad service of ineffective tax strategies with your current accountant.
Your accountant can be one of your most valuable confidants, helping you achieve your business goals and offering you sound advice at your business’ most critical moments. Contact MBS Accountancy if you need help with your business accounting or would like to take your business to new levels of success!