For those of us who are not financially minded, it might seem confusing to see a bookkeeper and then see an accountant. What's the difference anyways? If an accountant is going to get your money ready for the IRS anyways, do you really need to see a bookkeeper?
The short answer is: most likely yes.
Individuals vs. Business
If you're an individual with excellent record keeping skills, very few (if any) major medical or business expenses, and/or aren't afraid of using tax software to calculate your deductions, you probably don't need to hire a bookkeeper before finding an accountant.
Additionally, if you're a business and you have someone on staff who keeps your books organized, even if they don't have the official title of "bookkeeper,"" you might not need to hire a bookkeeper.
However, if you're an individual whose record keeping consists of a pile of receipts somewhere, (We're not judging, we've all been there [link].) you should consider having a bookkeeper help you organize your finances first. But if your pile of receipts isn't organized or worse you don't even know where it is (!), then it might be time to hire someone to handle the receipts before your accountant looks at them. (It's even better to hire one longer term so you don't lose any receipts along the way.)
Or!
If you're a business who doesn't already have someone on staff to keep your records in order, it's probably a good idea to get your books looked at before you see an accountant. This is especially true if you haven't taken the time (or had the time available) to organize your books all year. (In the financial world, we call that "a clean-up."")
Why?
Help me understand.
Bookkeeping ≠ Accounting
It's important to remember that bookkeeping and accounting are very different jobs. While an accountant probably does have the skills to handle bookkeeping-related duties (such as creating a profit-loss statement), what an accountant is the best at is tax planning and advising. This means that if you bring your unorganized financial documents to the accountant, you're asking them to do something outside of their specialized skill set. They can probably do it, sure. But is their quality of work going to be the same as someone who specializes in bookkeeping? Probably not.
Additionally, unless an accountant works with you regularly, it'll probably take them longer than it would take a bookkeeper. Not only are they working outside of their skill set, but also they're trying to interpret your own unique method of organizing your books; this will take them more time to reconcile the books and make sure everything is correct, and even then, they might miss a financial tweak here or there due to lack of familiarity.
This is particularly important if you're in a time crunch or you're a business in need of a clean-up. If you need a clean-up or are doing your taxes at the last minute, the fastest way to get your books in order is to hire a bookkeeper and then, when the bookkeeper's done, pass the bookkeeping file to your accountant so that both professionals are playing to their strengths and doing what they do best.
This is your accountant's happy place.
While many accounting firms do offer clean-ups as part of their services, it will invariably be more expensive for your business due differences in accounting versus bookkeeping billable rates. Some accountants charge double or triple the price of what a bookkeeper would to do the same work.
Deductions
Even if all your records are neatly organized, it's still a good idea to consider seeing a bookkeeper first so that they can help you find the most profitable deductions. A bookkeeper can organize your records so that your accountant knows whether to go for a standard deduction or an itemized deduction. Although it may be tempting to take the standard deduction in order to save on time, energy and record keeping, the effort of filing an itemized deduction can sometimes save you more money in the long run. This is particularly true if you have a mortgage, a large number of charitable donations, travel expenses for work, or a high number of medical bills. A bookkeeper can help you get your records in order to prove whether or not an itemized deduction is the best option for you.
In Conclusion
Whether you need a bookkeeper to help you and your accountant decide which deductions to take or if you need a clean-up for your business, M. Root Bookkeeping has experience in both and is happy to help. Reach out to us today and let us know how we can help you!