Which is best?

The way business is done today is not the same it was ten, or even just five, years ago. Business is online, highly dynamic and competitive. As a business owner, you have a lot more hats to wear, less free time and need to be able to rely on real-time, accurate information. Your accountant should understand that and be able to support you in those challenges.

 

The purpose of this article is to help you understand traditional accounting and how it differs from online accounting services. We’ll look at the benefits and how an online accountant can help you navigate the complexities of modern business ownership.

 

Bookkeeper or an accountant?

Firstly, let’s look at the difference between an accountant and a bookkeeper. Many people often wonder what the difference between the two are. A bookkeeper oversees the daily cash flow and transactions of a business. They record and organise the financial data of a business, completing activities such as invoicing, payroll and bank reconciliations. 

 

On the other hand, an accountant takes the data compiled by a bookkeeper and analyses, interprets, and presents the data to all stakeholders. They also ensure your ongoing tax obligations are met. An accountant can help you take things to the next level with services such as financial forecasting, budgeting, tax planning, cash flow strategies, and business advice.

 

What does an online bookkeeper do?
An online bookkeeper manages all of your daily financial administration, but virtually. Instead of you needing to hand in boxes of paper receipts and keep journal entries, an online bookkeeper relies on innovative bookkeeping software to make your life easier and keep your finances up to date.

 

What is an online accountant?
Similarly, an online accountant provides you with their services remotely and embraces cloud technologies. A good online accountant will make use of leading accounting software, like Xero and Hubdoc to put financial information at your fingertips and provide you with a much higher level of ongoing support. Let’s take a deeper look.

 

Difference in services

Traditional
Historically, the role of the business accountant has been limited to tax accounting and basic bookkeeping and compliance. You’d only speak to your accountant to set up your business registration and then again when it was time to take care of your Business Activity Statement (BAS) or your Pay As You Go (PAYG) requirements. 

 

At the end of the financial year you’d expect them to prepare your financial statements and lodge your annual tax return. You’d then take those financials and study them yourself to draw some conclusions and set goals for the coming year.

 

Online
In comparison with an online accountant, the question isn’t about whether they can take care of your bookkeeping, tax and accounting requirements, but how they do it.

 

A good online accounting firm, like Prosperity Accountants, will make use of innovative accounting software that seamlessly feeds into your daily business operations, providing you with real-time data and greater flexibility and efficiency. 

You don’t need to wait till the end of the financial year to get insights into your performance. An online accountant is proactive and can give you regular advice to help you run your business, instead of going it alone.

 

Difference in software

Many traditional accountants use modern accounting software very sparingly, typically limited to Xero or similar platforms. The cost of this software is often put on the business owner, without much training in how to use it.

 

Conversely, software is a foundational aspect of providing online accounting and bookkeeping services. These tools seamlessly integrate into your existing business platforms and relay key financial information to ensure records are accurate and up to date for you to review. 

There’s no more collecting paper receipts for example. By using mobile solutions such as ReceiptBank you can scan and upload your documents on the go and your online bookkeeper can receive and capture them in the moment.

 

Other software such as Xero and Hubdoc can connect to the tools you use in your business. As an example, if you run an ecommerce store on Amazon and receive online payments via Stripe, or if you run a brick and mortar restaurant and handle payments via tap and go and other methods, these tools can timeously record and reflect those transactions.  

 

That data is then available to you within their reporting dashboard, often in the palm of your hand via a mobile app. You have better access to the financial position and performance of your business and can make better decisions.

 

With an online accountant like Prosperity Accountants, this software is included in your monthly package and full support is provided to make sure you understand it and get the most out of these tools.

 

Difference in advice 

For many traditional accountants, their services end with tax preparation. Advisory services are seen as an optional client add-on charged out at hourly rates. This group of accountants are not proactive and won’t be thinking of your business unless you contact them for something. 

 

For modern, online accountants, business advisory services are part of the package. We understand the challenges you face running a business and the critical nature that finances play. On-going, regular support is essential to your success and growth. We’re not just your accountant, we’re your sounding board and council.

 

Difference in communication 

Historically, to speak to your accountant you’d have to schedule an appointment a few days or weeks in advance. Many accountants are notoriously bad at returning phone calls or emails which can make communication frustrating and cost you time.

 

Being online speeds things up and keeps communication alive. Besides traditional methods like email and phone calls, you could visit your accountant’s website and book a time in their calendar, or chat to them online.  Some online accountants go as far as setting up whatsapp groups with their clients and are always available to them. 

 

Online accountants are typically more comfortable with automation software and digital tools that go a step further providing you with regular tips, updates, advice and alerts throughout the year.

 

Difference in record keeping

Historically, the onus would be on you to collect and store all your financial records, invoices, payments, receipts and deliver them to your accountant so they could update your books. This means that there’s always a lag in your financial information and you don’t have up-to-date data. Some traditional accountants still make use of older filing systems, and carry out their services on paper.

 

When everything is online, your records are stored digitally, meaning a greater level of accuracy and, more importantly, quicker access to financial information.

 

Difference in your growth

Relying on traditional accounting methods may start to pose a problem as your business grows. As you grow, so too do the number of transactions that need recording, the need to manage cash flow better, manage payroll, budget accurately, the need for reliable financial data, and sound business advice to guide you through the process.

 

With a cloud-based online accounting service, growth is more manageable and scalable. Transactions and their records continue to feed back into your online bookkeeping system without any concern. You have better access to your financial information as well as online support from your accountant.

 

Difference in fees

Possibly the most appealing difference between online accountants and traditional accountants is the fee structure. Traditionally, the model has been to charge you large, once-off fees when work is required, such as lodging BAS and end of year tax and financial statements. Any additional services such as business advice is charged hourly, usually at premium rates.

 

At Prosperity Accountants, we offer you a fixed weekly fee, that’s affordable and a lot kinder to your cash flow. Take a look at our AccountsPRO package for more info on pricing and what’s included.

 

Grow with an online accountant

To grow a successful business in today’s environment you have to embrace technology and be forward thinking. At Prosperity Accountants, we’re doing just that and are committed to helping our clients succeed using the innovative accounting tools available to them. We support you on your business journey with online accounting, bookkeeping, tax and advisory services.

 

Book a discovery call with us to discover more about how we can help you run a more profitable business.