Protea Bookkeeping Accounting

What are the differences between a Bookkeeper, a Management Accountant, and a Tax Accountant?

Many of our clients ask us why we talk about bookkeepers, management accountants, and tax accountants, and not just accountants.

A bookkeeper keeps track of all your daily financial transactions and assists in keeping your business organized. Receiving and paying bills, issuing invoices, categorizing expenses, taking inventory, and reconciling bank accounts are some of the daily and weekly tasks that form the core of a bookkeeper’s responsibility.

A management accountant leads the effort to provide insight into your business’s financial performance. Drafting budgets, tracking actual performance against budget, reconciling balance sheets creating cash flow forecasts, and performing inventory costings are among the duties of a management accountant to assist you in making decisions for your business.

A tax accountant provides a very specific service to calculate your taxes, minimize your chance of an audit, and guide your strategy, particularly when acquiring or selling a business or investing in assets, to minimize your potential tax liabilities.

Read About Protea Bookkeeping Services

Bookkeeping is More Than Just Crunching Numbers

While bookkeepers do a fair amount of data entry and receipt tracking, the heart of the process is labeling expenses, indicating which suppliers you paid and how much, as well as keeping a record of receipts. Your bookkeepers may also do double duty in payroll and work to prepare and issue invoices.

Even though bookkeeping work can be notably detailed, bookkeepers can be the foundation of surviving an audit. Business deductions are a huge IRS tax audit trigger. They set off alarms, which can be silenced with legal and meticulous record keeping.

What a Tax Accountant Does

Accountants perform a variety of accounting functions and are typically certified by national and professional associations. Accountants must a have a four-year college degree in accountancy. And additionally, depending on their specialty, they may have to spend up to a year earning a certification in their home state.

Tax accountants provide specialized tax advice. They calculate tax liabilities and provide strategies for legally lowering their clients’ tax liability. Business tax accountants typically have advanced degrees and help their clients with high-level strategic financial decisions.  Senior-level tax accountants take more of a theoretical approach to their clients’ overall tax strategy, helping with business plans, individual financial plans—trusts, etc.—with the goal of taking full advantage of the tax code.

What does your business need: a Bookkeeper, a Management Accountant or a Tax Accountant?

In our opinion, small businesses such as wineries need all three, and should seek specialists in each field.  Tax Accountants and Management Accountants can do your bookkeeping, but they are over-qualified, and you would be paying too much, as bookkeepers are the least expensive.  However, bookkeepers need oversight, and a good management accountant can oversee and check a bookkeeper’s work to ensure accuracy, and then provide additional insight (that a bookkeeper isn’t trained to furnish) into your business to help you make better financial decisions.

Tax accountants are typically more expensive than management accountants, and their focus is on creating an accurate tax return that will minimize your tax liabilities and risk of an audit.  They are more focused on providing an accurate report to the government than on developing recommendations for you to operate your business more efficiently.  Management accountants are focused on helping you operate your business.

Protea Financial is Your Outsourced Bookkeeping and Management Accounting Services

We match our solutions to the needs of the customer. Do your bookkeepers need extra help during end-of-year closeout?  Is your tax accountant asking you to assemble better financials in order to reduce the time they have to spend preparing your return?

Protea Financial can support you with everything from bookkeeping services, order processing and inventory tracking to handling management accounts and tax schedules in order to support your tax accountant prepare your year-end financial statements. Protea’s goal is to provide, at costs below the market average, timely, accurate, and high-quality financial information on which a business can act.

We can work with you to provide an evaluation and find the best solution for your business.

FAQ Section: Choosing Between Bookkeepers, Management Accountants, and Tax Accountants

  1. Why should I consider hiring a bookkeeper, management accountant, or tax accountant?

    Each financial professional plays a distinct role in managing your business finances. A bookkeeper handles day-to-day transactions and maintains financial records, while a management accountant provides insights into business performance and aids decision-making. A tax accountant specializes in tax preparation and minimization strategies.

  2. What tasks does a bookkeeper typically handle?

    Bookkeepers are responsible for recording daily financial transactions, managing invoices, categorizing expenses, and reconciling bank accounts. They ensure accurate financial records, which are crucial for regulatory compliance and decision-making.

  3. How does a management accountant differ from a bookkeeper?

    Management accountants focus on analyzing financial data to provide insights into business performance. They create budgets, track actual performance against forecasts, and assist in making strategic decisions based on financial analysis.

  4. What services does a tax accountant offer?

    Tax accountants specialize in tax planning and preparation. They calculate tax liabilities, identify deductions and credits, and develop strategies to minimize tax liabilities while ensuring compliance with tax laws and regulations.

  5. Why does a small business need all three types of financial professionals?

    Small businesses benefit from the expertise of bookkeepers, management accountants, and tax accountants. Bookkeepers maintain accurate financial records, while management accountants provide insights for strategic decision-making. Tax accountants ensure compliance with tax laws and optimize tax outcomes.

  6. How can a management accountant complement a bookkeeper’s role?

    A management accountant can provide oversight and analysis of a bookkeeper’s work. They ensure accuracy in financial reporting and offer additional insights into business performance and financial strategy.

  7. What distinguishes a tax accountant from a management accountant?

    Tax accountants focus primarily on tax-related matters, including tax planning, preparation, and compliance. In contrast, management accountants analyze financial data to support decision-making and strategic planning for business operations.

  8. Is it cost-effective to hire all three types of financial professionals?

    While each professional has unique skills and responsibilities, small businesses can benefit from outsourcing these roles as needed. Bookkeepers offer essential record-keeping services at a lower cost, while management accountants and tax accountants provide specialized expertise when required.

  9. How can Protea Financial assist with bookkeeping and management accounting needs?

    Protea Financial offers tailored solutions for bookkeeping, management accounting, and tax preparation. Whether you need assistance with day-to-day transactions or strategic financial planning, Protea Financial provides cost-effective services to support your business’s financial success.

  10. What sets Protea Financial apart in providing financial services?

    Protea Financial prioritizes timely, accurate, and high-quality financial information to empower businesses to make informed decisions. With a focus on affordability and expertise, Protea Financial offers comprehensive solutions to meet diverse financial needs.