The majority of business owners may have trouble deciding who to hire between a Financial Planner and an Accountant. However, some surmise that one can do the job of the other.
Depending on the circumstances and nature of the business, you may need the services of one or the other or both. Both professionals do tend to rely on numbers and math but, notably, there are major differences.
As a business owner, you need to understand who is better between an accountant and a financial planner, for your business. To decide who to hire, you need to know the primary services each professional offers and their differences.
This is a professional who records transactions on behalf of the business, company, or organization. The accountant reports the financial statements of the business or organization to the management and issues financial statements thereof.
Inter alia, here are issues your qualified accountant can help you with:
- Tax preparation. Reports on taxes filed are issued to government institutions. The reports detail amounts paid for sales taxes, income taxes, use taxes, property taxes, etc.
- Determination of payroll needs. Prepares and processes payrolls every month and maintains the payroll data
- Breaks down policies on accounting and billing invoices to management, staff, vendors, clients or business owner
- Tax laws; accountants can make you understand bookkeeping and tax laws and how they affect you or your business
- Audit representation; an accountant interacts with both internal and external auditors in audit exercise and completion
- Budgeting and Expenditure; the accountant prepares, analyses and reviews budgets to monitor revenue, expenditure, and other accounting documents
- Growth and Strategy; the accountant advises on business growth and succession strategies in relation to taxes.
- Business structure; they develop and provide recommendations and advice on the business structure to the owner or management, including limited company formation.
- They also offer appropriate recommendations on tax shelter
- Financial statements; an accountant prepares and issues the statements to the owners or management as well as lenders and creditors. The statements include profit and loss statements, income statements, balance sheets, cash flow statements, etc.
- Accounting procedures; an accountant develops, maintains and coordinates implementation of accounting procedures in the business or organization
- Issuance of Invoices; professional engaging with clients requires professionals. With invoices, an accountant can professionally ask for payments from clients
A Financial Planner
Also referred to as a Financial Advisor, a Financial Planner is a professional who assists business owners and organizations achieve their long-term objectives. They help organize your finances and foretell the results of your investments and savings.
Different from an accountant, a qualified financial planner can help with issues such as;
- Organizing and managing finances; they assess your business or organization, tell its net worth, and identify the goals and objectives. They then advise on strategies to meet the goals and objectives of the business.
- Insurance; a financial planner analyzes the type of insurance that you need and guides you through the options
- Investment; they examine and advise on investment opportunities available and the level of investment risk
- Mortage; a professional financial planner can advise you on the type of mortgage to have and how to pay it off.
- Career Advice; you may be having plans to do a career change. A financial planner will help in assessing the associated consequences. They can also advise on compensation packages, employee stock options, etc.
- Retirement Planning; they, financial planners, can help you create a vision in your retirement and design a path towards your vision. They can also advise on the type of retirement account to use
- Estate planning; a financial planner can assess your financial circumstances before estate investment and guide on the vision. They can also discuss strategies for estate inheritance, life insurance, trusts, and other issues related to wealth distribution.
- Savings; upon understanding your financial goals and investment objectives, a financial planner can advise on how much savings to make. The savings will enable you to realize your goals and achieve the objectives.
- Economic progress; a financial planner can periodically check on you to understand your economic conditions and provide advice.
- They can advise on the future need to downsize your business or organization.
The Bottom Line
With an understanding of the differences in their roles, you can identify whose services are best suited for you.
For example, if you want to file the company’s tax returns, an account is better suited to your need as compared to a financial planner. An accountant is more of bookkeeping and tax-oriented.
Equally, if you have long-term investment plans, planning for retirement, etc, a financial planner is better suited than an accountant.
As a business owner, you may have asked yourself whether an accountant or financial planner is better. Therefore, in deciding on who is better between an accountant and a financial planner, understand what your needs are.