No business gets far without sound financial infrastructure. Up-to-date and accurate payroll, bookkeeping and accounting practices help set the foundation of a successful business. So, it is important to understand the difference between payroll and bookkeeping and how, along with accounting, they contribute to your financial health.
Software has simplified parts of the process, but it has not fully automated bookkeeping, payroll, and accounting tasks. Whether it’s an error preparing payroll payment register summaries or distributing payslips, any glitch can throw financial records off, so it’s important to hire the right expert.
Although many bookkeepers do payroll, by no means are all bookkeepers payroll experts. At Visory, we have a separate payroll team taking over these responsibilities.
In this guide, we’ll go over the basics of payroll, bookkeeping and accounting. We’ll outline the tasks each may do, and the role each plays in your business.
What Does a Payroll Expert Do?
Payroll is the process of verifying and distributing payments to employees at the agreed rate and in accordance with designated award rates. The process might appear straightforward and easily automated, however, it’s an easily tangled process that can require skilled financial experts as well as Human Resources to ensure it is completed without issue.
The tasks that a payroll expert completes may vary slightly depending on if you’re outsourcing payroll or hiring in-house. It also depends on the details of your service agreement. However, these are a few of the common tasks and responsibilities.
- Make sure all payroll transactions get processed efficiently and at the correct times
- Calculate, collect, and record data to manage and track payroll information and balance sheets
- Compile summaries of earnings, deductions, disabilities, taxes, benefits, leave, and non-taxable earnings for financial statements, audits, and more
- Resolve payroll discrepancies
- Follow regulatory payroll policies and procedural operations for compliance
- Manage PAYG withholding
- Reconcile payroll tax
- Set up single-touch payroll
- Note total gross award rates of the payment register YTD report
- Contribute to superannuation funds on behalf of employees
- Implement ad hoc operational and financial reporting as required
To keep payroll accurate, businesses need to collect and confirm employee details like those listed below.
- Have confirmed employee details
- Legal name and address
- Date of birth
- Tax file number
- Start (and termination date) of every employee
- Details of account they want used to receive wages
- Track pay details such as allowances, gross wage, hourly award, etc.
What a Bookkeeper Does
Bookkeepers manage many of the everyday financial needs of a business, from tracking cash flow and reconciling your accounts to updating your books and creating standard financial reports.
Although bookkeepers are not the same as accountants or payroll experts, occasionally, a bookkeeper may perform some payroll or accounting tasks. Although, it is important to note that performing actions like lodging a tax return requires additional certification, such as becoming a BAS agent. If you’re considering hiring a bookkeeper, consider what types of tasks you need and their area of expertise.
Here are a few common tasks bookkeepers may handle.
- Pay suppliers, vendors, subcontractors, etc.
- Produce, record, and track invoices for provided services or goods sent to clients
- Bank reconciliations
- Document customer receipts
- Prepare financial reports like balance sheets
- Manage accounts receivable and payable
- Track depreciation
What’s the Difference Between Payroll and Bookkeeping?
Although a bookkeeper may complete some payroll functions, the two roles are different. Now that we’ve covered each in detail, let’s look at how they differ.
In their most basic form, payroll and bookkeeping are different because they manage different functions within an organization.
- Payroll: The process for paying and managing award rates to staff.
- Bookkeeping: The day-to-day management of the company’s finances.
Accounting is also sometimes used interchangeably with payroll and bookkeeping. It is key to understand these differences as well, especially if you are considering hiring an expert to help you with your business finances.
What an Accountant Does
Accountants are advisers who produce financial reports and offer financial advice. They prepare tax returns and ensure taxes get paid on time and properly. So that the business is stable, accountants evaluate operations and recommend best practices, spot issues, and develop solutions to help the organisation run more effectively.
Here is a brief list of many tasks an accountant might be responsible for daily.
- Ensure the accuracy of the company’s accounting tax records
- Make sure any financial transaction complies with relevant laws and regulations such as the Corporations Act
- Prepare, report, and maintain important financial reports
- Put together tax returns and see that taxes get paid properly and on time
- Offer counsel on revenue enhancement, cost reduction, and profit maximization
- Assess forecasting and risk analysis
Why You Need Payroll and Bookkeeping Experts
An error in your financial records can impact your entire operation and knock the business off its game. A skilled bookkeeper can help you strengthen your business acumen, whether that be choosing the right bookkeeping software or analysing your financial data to identify areas of growth.
With Visory, you can be confident that your bookkeeping and payroll system is efficient, effective, and agile.
As professionals, we know small errors turn into large problems so we scrutinise every line to ensure accuracy.
Whether you are an international enterprise or a growing business, managing payroll and bookkeeping on your own can feel like a daunting task. Visory’s team of experts understands the differences between payroll and bookkeeping and can help you assess what your business needs. If you’d like to learn more about identifying the best ways to improve back-office practices, contact Visory today.