New business owners ask us whether they need a bookkeeper or an accountant. The two do different jobs at different points in the month, and a business needs both jobs done. Knowing the difference helps you pay for the right service. It also avoids a large year-end bill to rebuild books that were never kept up to date.

What a bookkeeper does

A bookkeeper records your transactions and keeps your day-to-day financial data accurate and up to date. The work includes:

  • Recording income and expenses as they happen.
  • Reconciling the bank so that your books match your bank statements.
  • Capturing and filing invoices and receipts, which are the source documents SARS can ask for.
  • Managing what you're owed and what you owe (debtors and creditors).
  • Running payroll (EMP201) and preparing the numbers behind your VAT201 returns, where agreed.

Every tax number you file is built on the bookkeeping. If the bookkeeping is wrong, the tax returns built on it will be wrong too.

What an accountant does

An accountant interprets, advises and files. They use the data the bookkeeping produces to prepare your compliance work and advise on decisions:

  • Preparing annual financial statements.
  • Calculating and filing tax returns, such as the ITR14 for companies and provisional tax IRP6s.
  • Tax planning, including structure, salary and dividends, and reliefs such as the SBC rates that can save a qualifying company tens of thousands of rand.
  • Advising on profitability, pricing, cash flow and growth using your own numbers.
  • Dealing with SARS on your behalf when a verification or a technical question arises.

A bookkeeper records what happened. An accountant explains what the figures mean and what to do next. Both jobs need doing, and one firm can do both.

Which one your business needs

The answer depends on the size and complexity of your business:

  • Just starting, with few transactions: you can keep basic books yourself in a cloud tool and use an accountant for the annual accounts and tax filings.
  • Growing, with more transactions, staff or VAT registration: the bookkeeping takes more time. At this stage a bookkeeper, or a firm that does both jobs, can cost less than the evenings you spend and the errors you risk.
  • Any Pty Ltd: you need an accountant for the company financial statements, the ITR14 and provisional tax. Every company is automatically a provisional taxpayer whether it makes a profit or not.

A firm that does both keeps your books up to date in cloud software (Xero, Sage, Zoho, QuickBooks), and the same data feeds the accounting and tax work. We work this way. When one team does both jobs, nothing is lost in a handover between a bookkeeper and an accountant.

Signs you need help with your bookkeeping

If several of these apply to you, keeping your own books is likely costing more than it saves:

  • You do the books late on a Sunday evening when you would otherwise be resting or working on the business.
  • You've registered for VAT, so a return depends on accurate numbers every two months.
  • You've taken on staff, so you file an EMP201 monthly and keep the payroll reconciliations behind it.
  • You don't know whether the business is profitable this month, and you expect to find out at year-end.
  • You've had a SARS penalty, or a last-minute rush, because something was missed while you were busy.

Compare what you'd pay someone to keep the books up to date with what doing it yourself costs in time, missed deductions and penalty risk.

The cost of a year-end catch-up

Some owners leave the books all year and hand a box of slips to an accountant at year-end. They pay only once, but the total cost can be higher. The example below shows why.

Monthly bookkeeping compared with a year-end catch-up

Business A pays for monthly bookkeeping of, say, R2,500 a month, or R30,000 a year. Its year-end accounts and tax are then a quick job. Business B pays nothing during the year and hands over a box of slips. The accountant spends days rebuilding twelve months of transactions at professional rates, which can cost R25,000–R40,000 for the catch-up alone. A year later, the owner can't remember what a R6,000 EFT was for, so that deduction is dropped. Profit is overstated, and the tax bill rises. Business B also made its decisions during the year without current figures.

  • You pay accountant rates for catch-up bookkeeping.
  • Legitimate deductions are lost because the detail has been forgotten, so you overpay tax.
  • You have no current view of cash flow or profit during the year.
  • Deadlines are missed in the year-end rush, and SARS penalties follow.
  • A verification letter takes two months to answer, where up-to-date records would take an afternoon.
5 years
How long you must keep supporting records

How cloud accounting software affects bookkeeping

Manual data entry used to make bookkeeping slow and expensive. With cloud accounting, bank feeds pull in transactions automatically. Receipts are captured by photo and stored against the transaction, and VAT and payroll figures build up as you go. Keeping books up to date now costs less and takes less time. When a SARS verification arrives, every supporting document is already in the system.

Summary

A small business needs both bookkeeping and accounting done, by people who work together, throughout the year. That costs less than a year-end catch-up and gives you current numbers when you make decisions. To work out what your business needs, book a discovery call and we'll recommend a service based on your figures.