Bookkeeper vs Accountant vs Controller vs CFO: A Comprehensive Guide for Businesses
For founders, owners, and CEOs, managing their company’s finances effectively is crucial for long-term sustainability and growth. Yet many executives are confused about the different financial roles and the necessary financial oversight needed for each stage of a business’s lifecycle.
This article breaks down the different accounting roles that a company owner may need along with some insights on the ideal time to hire a bookkeeper vs. an accountant vs. a controller, or a CFO.
The Role of a Bookkeeper: Day to Day Financial Record-keeping
A bookkeeper manages and records the company’s financial transactions, ensuring accurate and up-to-date monthly financials through meticulous transaction recording. While the bookkeeping needs of each business may differ, there are some common tasks that most bookkeepers perform.
Key responsibilities typically handled by bookkeepers include the following:
- Recording Transactions: Bookkeepers are responsible for day-to-day financial records and data entry, logging transactions such as sales, purchases, receipts, and payments. Organized records are typically updated in the company’s general ledger.
- Reconciling Accounts: Bookkeepers regularly reconcile bank statements and ensure that the company’s financial information and transactions are accurate and up-to-date including accounts receivable and accounts payable.
- Processing Payroll: Another common task handled by a bookkeeper is calculating and processing employee paychecks and payroll, ensuring timely and accurate payments along with necessary tax withholdings.
When Should You Hire a Bookkeeper?
There are some common triggers that indicate that a business is ready to bring on a bookkeeper. Here are some signs that it may be time to hire a bookkeeper.
- Your Company is in the Start-Up Phase: Bookkeepers are ideal for smaller companies and start-ups looking for some help early on to handle daily financial tasks and keep records well-organized from the beginning.
- You Have Basic Financial Needs: If a company needs help with basic tasks like data entry, paying invoices, tracking expenses, handling accounts receivable and accounts payable, and reconciling bank statements, bookkeepers can help.
- You’re Experiencing Increasing Transactions: When the volume of transactions increases and becomes too time-consuming for you to manage, or more errors show up in the books, it may be time to offload these responsibilities to a bookkeeper.
- You Can’t Keep Up with the Latest Accounting Software: Bookkeepers can manage and upkeep the accounting software you use to manage your transactions. Many are experts in accounting software like QuickBooks, Sage, or Xero.
Hiring a bookkeeper to handle these tasks can provide peace of mind, improve financial accuracy, and allow you to focus on increasing your revenue and meeting your corporate objectives.
When hiring a bookkeeper, you should consider several qualifications and credentials to ensure you find a competent and reliable bookkeeping professional. Here are some key factors to look for:
- Basic Accounting Knowledge: Understanding fundamental accounting principles and concepts are important for the bookkeeper to maintain accurate financial records for your business.
- Proficiency with Bookkeeping Software: Familiarity with accounting software such as QuickBooks, Xero, or FreshBooks to efficiently manage your financial data is critical.
- Professional Certifications: There are several certifications that bookkeepers can attain such as the American Institute of Professional Bookkeepers (AIPB) which demonstrates competence in bookkeeping and adherence to industry standards. The Certified Public Bookkeeper (CPB) is provided by the National Association of Certified Public Bookkeepers (NACPB) and validates the bookkeeper’s skills and knowledge. In addition, certification for accounting software like QuickBooks, Xero, Sage, or FreshBooks is also available and a huge plus.
By considering these qualifications and credentials when looking to hire a bookkeeper, business owners can feel confident that their company’s accounting function will be handled in a professional manner.
An Accountant’s Primary Role: Financial Data Analysis and Reporting
Where a bookkeeper adds a lot of value in transactional work like paying bills, processing invoices, and payroll processing, an accountant’s role encompasses a wide range of responsibilities, from overseeing your company’s accounting system to ensuring your business is fully compliant with its tax and reporting obligations, to helping you determine whether a cash-based accounting or accrual-based accounting method makes more sense for your business.
Below are the four main areas that an accountant typically handles for their clients:
- Preparing Financial Statements: Accountants prepare detailed financial statements such as income statements, balance sheets, and cash flow statements to provide a clear picture of a company’s financial health.
- Tax Preparation and Filing: Accountants prepare quarterly and annual tax returns, ensure compliance with tax laws, and develop tax strategies to minimize their clients’ liabilities.
- Conducting Audits: Accountants perform internal audits to ensure accuracy and compliance with financial regulations and accounting standards.
- Budgeting and Forecasting: Accountants develop and monitor budgets, manage cash flow, determine the best accounting method (cash or accrual), and provide financial forecasts to guide strategic business decisions.
When to Hire an Accountant
So how do you know when your business is ready for an accountant? It depends on the specific needs of your business, the complexity, and stage of growth, but here are some key indicators that your business may be ready for a financial accounting expert.
- You Have Complex Financial Needs: As your company grows, financial operations become more complex, requiring detailed analysis and reporting to make informed financial decisions.
- You Need Tax Preparation and Planning: Your accountant will handle your corporate tax preparation and filing and will ensure compliance with evolving tax laws.
- Accurate Financial Statements Become More Important: Your accountant can prepare accurate monthly financial statements such as income statements, balance sheets, and cash flow statements for stakeholders, investors, or lenders.
- Your Business is Experiencing Growth: If your business is growing and financial operations have become more complex, an accountant will assist with budgeting, forecasting, and financial planning to support your growth and strategic objectives.
- You’re Concerned with Regulatory Compliance: An important function of an accountant is ensuring your business is compliant with accounting standards (GAAP or IFRS) and other regulatory requirements, as well as preparing for and handling audits, either internal or external.
Undoubtedly, accountants play a critical role in a company’s financial stability and health as well as ensure compliance with tax regulations. By providing insightful analysis and strategic advice, accountants can help businesses achieve their financial goals and navigate complex financial landscapes.
When deciding to hire an accountant, there are several qualifications that are essential to consider.
- In-Depth Knowledge of Accounting Standards: Familiarity with GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) is important to ensure your accountant understands financial reporting standards.
- Tax Expertise: A seasoned accountant should have a good understanding of tax laws and regulations to prepare accurate tax returns and develop effective tax strategies.
- Proficiency in Accounting Software and Spreadsheets: Advanced skills in accounting software (e.g., QuickBooks, SAP, Oracle) and spreadsheet programs (e.g., Excel) for analysis and reporting are critical skills for an accountant.
- Accounting Certifications: There are many types of certifications for accountants, even specialized certifications for specialties like auditing, financial services, or forensics. The most popular accounting certification is a CPA license which is granted by the American Institute of Certified Public Accountants (AICPA) and validates the accountant’s expertise in tax, compliance, risk management, and other areas. The CMA or Certified Management Accountant credential, provided by the Institute of Management Accountants (IMA) is a global certification that demonstrates an accountant’s expertise in accounting, financial planning, and financial analysis.
Hiring the right accounting partner is an important decision for any business. Finding someone that you like and trust is just as important as finding an accountant that has the credentials and experience.
A Controller’s Primary Function: Financial Management and Controls
A controller oversees the entire accounting function within a business and ensures the accuracy and integrity of financial data. A controller helps the business maintain its financial well-being and supports its long-term growth objectives.
Below are a controller’s key areas of focus:
- Implementing and Maintaining Internal Controls: A controller develops and implements internal controls to safeguard the company’s assets and ensure accuracy in the company financials.
- Supervising Accounting Staff: Controllers typically oversee the accounting department, ensuring efficient and accurate financial operations and management.
- Overall Financial Governance: The controller is responsible for the financial reporting and fiscal health of the company. They ensure that financial statements are prepared accurately and in a timely manner and provide insights into the company’s financial performance.
- Managing Budgets and Financial Forecasts: Controllers develop and manage budgets and financial forecasts, helping to plan for the company’s future financial needs.
When to Hire a Controller for Your Business
A business typically needs to hire a controller when it reaches a level of complexity and growth that requires more sophistication and experience than the average accountant can offer.
Key indicators that it’s time to hire a controller include:
- Business Growth and Expansion: If your business is expanding to new locations, launching a new product, or exploring new markets, a controller can help ensure you’re prepared from a reporting standpoint.
- Establishing Controls: As your company grows, it becomes necessary to establish strong internal controls and financial processes to prevent or minimize fraud and to ensure that your financial reports continue to be timely and accurate.
- Strategic Financial Planning: As the number of transactions and complexity grow, a controller can provide an added layer of expertise to develop a comprehensive budget and forecast model and financial process to support long-term planning and resource allocation.
Once you’ve made the decision to hire a controller, it’s important to review the qualifications that are necessary to ensure the right fit for your business.
A controller’s industry experience and overall familiarity with the nuances of your business are important as are the following skills:
- Leadership and Management: Experience in leading an accounting team and overseeing financial operations are critical skills in a controller.
- Advanced Accounting Knowledge: A deep understanding of complex accounting practices, financial analysis, and reporting are required skills for a controller.
- Proficiency in Financial Software: A controller should have advanced skills in financial software systems and ERP (Enterprise Resource Planning) software.
- Internal Controls Expertise: Knowledge of creating and maintaining robust internal controls to safeguard assets and ensure accuracy and timely reporting of the company’s financials is a critical skill needed in a controller.
- Certifications for Controllers: There are a variety of certifications that a controller can attain. Many controllers are certified public accountants or Certified Management Accountants (CMA) which focuses on management accounting and financial skills, including budgeting, forecasting, and strategic planning. A Certified Internal Auditor (CIA) designation is valuable for controllers responsible for internal controls and auditing.
A Chief Financial Officer’s (CFO’s) Role: Strategic Financial Leadership
Chief Financial Officers oversee the entire finance department and act as a key advisor to the CEO and executive team, helping to shape the company’s overall strategy and ensuring that financial resources are effectively allocated to support the company’s objectives.
Below are the primary responsibilities of a CFO:
- Strategic Planning and Financial Goal-setting: The Chief Financial Officer is a senior executive responsible for the strategic financial direction of the company. The CFO develops and executes financial strategies to support the company’s growth objectives.
- Risk Management: A CFO assesses the financial risks and opportunities of the organization and develops strategies to mitigate risks and capitalize on opportunities.
- Managing Investor Relations: CFOs handle relationships with investors, communicate with stakeholders, assist in raising capital, assess the organization’s investments, and communicate financial performance and strategy.
- Overseeing Mergers and Acquisitions: CFOs lead the financial aspects of mergers, acquisitions, and other significant business transactions.
- Leading Financial Planning and Analysis: CFOs conduct comprehensive financial planning and analysis to guide strategic decisions and ensure the company’s financial stability and growth.
When to Hire a Chief Financial Officer
As your company continues to grow and the financial needs of the company outgrow the skill set provided by your controller, hiring a CFO, whether part-time or full-time is the next logical step.
Below are some areas that CFOs typically oversee:
- Strategic Growth: When your organization reaches a size where strategic financial planning and risk management become critical, a CFO will help maximize growth opportunities and mitigate risk.
- Investor Relations: When you need to manage relationships with investors, raise capital, or plan for mergers and acquisitions, a CFO will be best equipped to evaluate capital raising and investment opportunities and maximize returns.
- Complex Financial Decisions: A CFO can help develop and execute long-term financial strategies and guide your business through complex financial landscapes such as global expansion and new revenue opportunities.
Once you’ve made the decision to hire a CFO, here are some important things to look for:
- Extensive Financial and Business Acumen: It’s important that the CFO has a broad understanding of financial management, business operations, and market dynamics.
- Strategic Vision: The CFO must have experience developing and executing long-term financial strategies that support the company’s growth objectives.
- Leadership and Communication Skills: Strong leadership to guide the finance team and effective communication to collaborate with executives, stakeholders, and investors are must-have skills for an effective CFO.
- Risk Management: A CFO must have demonstrated expertise in identifying financial risks and developing strategies to mitigate them.
- Fundraising and Investor Relations: A CFO should have experience in raising capital, investor relations, and communicating financial performance and strategy to investors and stakeholders.
- Mergers and Acquisitions (M&A): Knowledge of the financial aspects of M&A activities, including valuation, due diligence, and integration planning are essential skills to have in a CFO.
Comparing a Bookkeeper vs. Accountant vs. Controller vs. Chief Financial Officer
Below is a comparison table that shows the key differences between each of the accounting roles that we discussed, as well as their primary areas of focus, key responsibilities, and qualification criteria.
It’s important to note that the needs of each business is unique, and it’s up to you as the business owner to determine the level of accounting support you need in order to achieve your company’s financial objectives. The financial functions that a CFO oversees at one organization may be the same functions that a controller manages at another similarly sized organization. Finance roles differ based on the nuances of the business and the complexity of the financials. Each role provides a different level of financial oversight, ensuring that the company’s financial health is maintained at every stage of its growth.
| Role | Primary Focus | Key Responsibilities | Required Skills |
|---|---|---|---|
| Bookkeeper | Day-to-day financial recording | Transaction entries, reconciling accounts | Attention to detail, knowledge of bookkeeping software |
| Accountant | Financial reporting and analysis | Preparing financial statements, tax preparation and filing | Analytical skills, knowledge of accounting standards |
| Controller | Financial management and control | Overseeing accounting, budgeting, and internal controls | Team management and advanced accounting knowledge |
| CFO | Strategic financial leadership | Financial strategy and risk management | Financial and business acumen, strategic vision |
| Role | Description |
|---|---|
| Bookkeeper | Primary Focus: Day-to-day financial recording Key Responsibilities: Transaction entries, reconciling accounts Required Skills: Attention to detail, knowledge of bookkeeping software |
| Accountant | Primary Focus: Financial reporting and analysis Key Responsibilities: Preparing financial statements, tax preparation and filing Required Skills: Analytical skills, knowledge of accounting standards |
| Controller | Primary Focus: Financial management and control Key Responsibilities: Overseeing accounting, budgeting, and internal controls Required Skills: Team management and advanced accounting knowledge |
| CFO | Primary Focus: Strategic financial leadership Key Responsibilities: Financial strategy and risk management Required Skills: Financial and business acumen, strategic vision |
Conclusion
Hiring the right financial professional at the right time in your business ensures that you have the necessary expertise to manage and optimize the fiscal health of your company and support its growth and strategic goals. Each accounting role, whether a bookkeeper, accountant, controller, or chief financial officer, plays a critical part in different stages of your organization’s journey.
If you’d like to learn more about our outsourced accounting, controller, or CFO services, reach out to the accounting experts at AURA for a complimentary consultation.