What is the difference between a bookkeeper and an accountant?
Bookkeepers and accountants share common goals—they support your business in different stages of the financial cycle.
Bookkeeping is the process of recording financial transactions and it is the first part, and the foundation, of the accounting process. Bookkeepers record financial transactions on a daily basis. However, because accounting software automates many of the processes, some bookkeepers in small organizations also able to classify and summarize financial data in financial reports.
On the other hand, accountants look at the big picture and are qualified to handle the entire accounting process. To be a designated accountant (i.e. CPA—Chartered Professional Accountant), one must have at least a bachelor's degree and a higher level of expertise. The role of an accountant is to verify the data, analyze it, and use it to generate meaningful reports which could provide valuable information for forecasts, improvements, business trends, and opportunities for growth.
Therefore, to ensure accuracy, accountants often serve as advisers for bookkeepers and review their work. In short, bookkeepers record and classify financial transactions, laying the groundwork for accountants to analyze the financial data.
Should I keep my accounting functions in-house?
You should think about what you want to get from your in-house bookkeeper or accountant and how much is the cost associated with it. Outsourcing your accounting and payroll functions could definitely reduce operating costs. Below is the suggested wage/salary of different positions1:
- Minimum Wage BC: $12.65/hour or $2,192/month or $26,312/year2
- Accounting Clerk: $16.70/hour or $2,895/month or $34,750/year
- Bookkeeper: $19.00/hour or $3,291/month or $$39,500/year
- Accountant: $24.16/hour or $4,187/month or $50,250/year
Every business decision is somehow relating to cost-and-benefit relationship. You may have a specific reason to keep your accounting functions in-house. However, by outsourcing your accounting functions, it is most likely that you could get more at a lower cost.
What is Cloud Accounting?
Cloud accounting is using an accounting software that is hosted on remote servers. It provides accounting capabilities to businesses in a fashion similar to the SaaS (Software as a Service) business model.
Accounting data is sent and stored into "the cloud," where it is processed and returned to the user. All software functions are performed off-site rather than on the user's desktop. Using cloud accounting software could free the business from having to install and maintain it on individual desktop computers. It also allows users, either in the office or not, to access the same data and the same software version remotely.
As data is stored in remote servers, accounting data backup and disaster recovery is one of the critical areas for which cloud accounting software providers will continuously monitor and invest.
What is the benefit and risk of using Cloud Accounting?
A coin has 2 sides, there is nothing which could be always good. Below are some benefits and risks of using Cloud Accounting:
Benefits:
- Anytime & Anywhere Access—Cloud accounting software and operating results are available to you from a browser or mobile device. This is something that you cannot do with today’s desktop accounting program.
- Better Security—Most cloud accounting software is run from a data center, which offers multiple levels of security to protect the software and your data. The typical data center has significantly better security than most small businesses. The security level of some cloud accounting software is actually comparable to online banking system.
- No Installations or Updates Required—Cloud accounting software providers maintain the software and install the updates.
- Automatic Backups—The cloud accounting software provider assumes responsibility for system backups. Your data is often stored in multiple data centers that are in geographically diverse locations.
- No Startup Costs—Cloud accounting software are rented not purchased. They are normally on subscription basis which do not require a small business to invest in servers or program upfront.
- Platform Flexibility—Depend on different software providers, some cloud accounting software support both PC or a Mac, while some could only ran on particular operation system. Having it said, cloud accounting software are delivered via a web browser and typically support all popular platforms (e.g. Google Chrome, Internet Explorer or Firefox).
- Environmental Friendly—Cloud accounting software allows users store their backup documents online which could dramatically reduce paper consumption.
Risks:
- Provider Close Their Business—We had experienced a tech bubble where companies were here one day and gone the next. The same risk exists with cloud accounting software provider. It is important to choose a provider with good reputation in the market.
- Internet Required—Cloud accounting software are accessible from anywhere and anytime assuming that you have a connection to the Internet. If you find yourself without internet access, you will not have access to your accounting data.
- Security Breach—Cloud accounting software and your data both live on the Internet. Even though it is insignificant, there is still a risk that someone could gain access to your data.
Which cloud accounting software should I use?
Most of the top accounting systems are cloud-based, so you can access your account anytime, anywhere from any computer with internet access, helping you run your business remotely, whether you're home or on vacation.
Many also offer mobile apps to help you monitor key information and accomplish core tasks on the go. Some offer separate apps for employees that have limited features such as tracking time and submitting expense receipts.
Mobile app capabilities vary, so if this is an important feature for you, you'll want to ensure it has the functionality you need. You'll also want to ensure it works on your preferred platform, as some are compatible only with iOS but not Android. Some also can be used with smartwatches in addition to phones and tablets as well. Users should pick the best one according to their preference.
One of your top priorities as a small business owner is keeping a close eye on the money you bring in and payout, which is why it's critical to have the right accounting software. You need a program that helps you accomplish your daily accounting tasks – recording payments, tracking expenses, invoicing customers and reconciling transactions.
But choosing the best accounting software for your business is challenging. Each program includes a different set of features, and most offer multiple pricing plans to choose from, which also vary by feature, number of users or other factors. However, here are three main areas to keep in mind when selecting accounting software for your business:
- Costs—Would you prefer inexpensive, basic accounting software or an application that costs more but includes extra features?
- Usability—How many users need to access the software? Do you prefer a cloud-based system that you can access anywhere or simple a desktop software? Do you need it to have a mobile app? What capabilities do you need the app to have?
- Features—What do you need the accounting software to do? Do you need both accounts receivable and accounts payable tools? Which reports do you need it to generate? Do you need it to track inventory? Do you need it to include ancillary services, like time tracking, project management, and payroll?
Our professionals could definitely provide you some opinions on choosing the cloud accounting software most suitable for your business.
(1) Information from Robert Half Accounting and Finance Salary Guide 2019. All fringe benefits and employer payroll contribution (i.e. EI & CPP) are not factored into the mentioned salary.
(2) Active minimum wage as of April 2019. The rate will at least be increased to $13.85/hour by June 2019; $14.60/hour by June 2020 and $15.20/hour by June 2021.