What’s the Difference Between an Accountant and a Bookkeeper?

What’s the Difference Between an Accountant and a Bookkeeper?

I’m a business owner and I need help with the numbers. Should I hire an accountant or a bookkeeper? When we encounter this question, we always respond in the form of another question: What, specifically, do you need your ‘numbers person’ to do? While some of the responsibilities of a bookkeeper and an accountant can overlap, they play very different roles within a business. Here are some of the key differences between a bookkeeper and an accountant: Why should I hire a bookkeeper? Bookkeeping is the first part of the accounting process, which involves organizing all the raw numbers data of the business into reports for the accountant. A bookkeeper pays bills, invoices customers, maintains the checkbooks, and may also manage payroll. These processes record accurate transactions of sales and expenses. Essentially, he or she manages the documents which are the basis for your financial statements. Generally, bookkeepers are more affordable than accountants, and usually have either a two-year associate’s degree or no formal education. A self-taught bookkeeper is not necessarily a bad thing, so be sure to keep a couple of things in mind when searching for the right fit: Consider their work history. While no formal education might be a red flag at first, a bookkeeper with 20+ years of gainful employment is likely a solid option. Ask for references. If you can easily find companies that recommend a bookkeeper’s work, you’ve likely found a great future asset for your team. What size businesses has your potential hire worked with in the past? Finding someone with experience in a similarly sized business, or a similar industry as...
Notice 2019-07 Creates a Safe Harbor for Rental Income

Notice 2019-07 Creates a Safe Harbor for Rental Income

When the Tax Cuts and Jobs Act signed into law in 2017, the act brought changes to both personal and business income taxes. We developed a comprehensive guide on the TCJA and offered more details on the Qualified Business Income Deduction (QBDI) in 2018, but questions still remain on some of the finer details, particularly with rental properties. In a competitive rental market like the Madison area, you’re likely wondering if your rental property income qualifies for the coveted 20% tax deduction. The IRS recently clarified and issued some guidance on whether income from real estate rental activities was “Qualified Business Income” (QBI). Notice 2019-07, a new proposed revenue procedure, provides a safe harbor under which rental real estate will be treated as a trade or business solely for the purposes of Section 199A. This proposed revenue procedure would apply to tax years ending after December 31, 2017. The new notice, however, does not apply to self-rental situations, where a business pays rent to a related party entity which is owned by the same business owner(s). We’ll outline some of the core details from the IRS notice and how to qualify, below. [Related: A Comprehensive Guide to the Top 8 Provisions of the Tax Cuts and Jobs Act]   Qualifying for the Safe Harbor Taxpayers looking to utilize Section 199A’s deduction must hold the rental property directly or through a disregarded entity. They must also treat each rental property as a single activity or elect to treat all similar rentals as a single activity. The choice is either a “one or all,” meaning you must combine all similar rentals,...