Did you know you can save some 20% on your tax liabilities by effectively managing your taxes? Well, according to the new section 199A of the IRS, that’s possible! And with the right finance professionals (think controllers and accountants!) and tools by your side, you can reap this benefit and others and easily optimize your company’s financial health.
Struggling to find out if your business can benefit from a controller or an accountant? You’re not the only one confused between these roles! They have a good mix of similarities and differences. Understanding these differences is important when you get down to making some smart decisions about your business’s financial operations especially when key operations like tax management are involved.
Read along for a thorough understanding of how controllers and accountants differ and how to choose between the two.
What is a controller?
First up, a controller is a senior finance manager who can oversee all the accounting departments in your organization to make financial operations management a breeze for you and other stakeholders.
Controllers actively participate in cost accounting and internal reports so you can get information and suggestions for strategic decision-making. Their expertise and understanding of Generally Accepted Accounting Principles (GAAP) help businesses like yours with compliance and financial reporting accuracy.
If you look at larger companies, controllers manage teams of accountants, trainees, or assistant controllers there directing day-to-day activities and guaranteeing adherence to financial policies. That’s not all, they prepare comprehensive financial records and reports that can inform you as a business owner and other executives about the company’s performance. For example, if your company has a revenue target of $1 million, the controller will monitor progress and adjust strategies to meet that goal.
What is an accountant?
Next, an accountant is a person who focuses on the day-to-day financial operations of your business. Accountants can maintain accurate financial records, prepare tax returns, and ensure compliance with legal regulations for your business as accountants work closely with financial managers and also give you important data for making decisions.
For example, when you look at tax accountants, they’re the ones who specialize in tax management so they can help you deal with complex tax laws and optimize your tax strategies. With years of experience in accounting practices, they ensure that your company meets all regulatory requirements while maximizing potential deductions.
Learn more about pre-tax deductions and post-tax deductions.
After a brief overview, let’s now explore the two roles and their differences in depth.
Key differences between controllers and accountants
If you want some help with managing your business’s finances, both controllers and accountants can be of great help to you. However, they serve different purposes and have unique characteristics.
Education
When it comes to controllers, they usually have advanced degrees like an MBA or accounting qualifications, along with certifications such as CPA or Chartered Financial Analyst (CFA). These credentials show that they’re experts in their field when it comes to navigating complex financial landscapes. For example, a controller’s grasp of GAAP is key for keeping your financial reporting accurate and compliant. If you’re preparing for an audit, having a knowledgeable controller can save you from some serious headaches and costly mistakes.
Now, accountants might have similar educational backgrounds, but they often specialize in areas like tax preparation or auditing. They typically hold a bachelor’s degree in accounting or finance. If you need someone to tackle your annual tax returns, a good tax accountant can help you maximize deductions and make sure you’re following all the tax laws.
Job scope
Next up is the job scope. Controllers have a big-picture view: they oversee the entire accounting infrastructure of your organization. They manage daily tasks while also diving into strategic planning and policy development. For instance, if you’re launching a new product line, your controller will analyze the financial implications and help create a budget that aligns with your company’s goals.
On the other hand, accountants are more focused on the nitty-gritty details. They handle specific tasks related to financial reporting and compliance. This includes maintaining financial records, preparing reports, and ensuring that all transactions are accurately recorded. So, if you need monthly financial statements to see how your company is doing, an accountant will make sure those reports are spot-on and delivered on time.
No wonder a recent survey by AICPA and CIMA shows that more than half of accounting and finance professionals (60% to be specific) reported that they see themselves as finance business partners.
Experience and expertise
When it comes to experience, controllers typically have several years under their belts in senior-level accountancy roles. That means they have a solid understanding of financial operations and can analyze complex data and make strategic recommendations to drive your business forward. For example, if cash flow is tight, a controller will suggest ways to adjust your inventory levels to free up some cash.
Accountants might not have as many years of experience, but they’re skilled at handling detailed financial tasks. They often work under the guidance of a controller or another senior manager, which helps them gain valuable insights over time and they manage daily transactions expertly to comply with relevant laws and regulations.
Data vs. information handling
Now let’s talk about how each role handles data. Controllers focus on turning raw data into actionable insights that can drive your business strategy. They analyze trends and prepare internal reports that inform executive decisions, essentially transforming numbers into stories that guide your company’s direction. For example, if sales are dipping in a particular region, a controller can help you figure out how to adjust your marketing strategies to boost performance.
On the other hand, accountants primarily manage data entry and ensure accuracy in financial records. Their role is crucial for keeping your company’s financial information reliable, but they usually don’t dive into interpreting this data for strategic purposes. Instead, they lay the groundwork that allows controllers to perform their analyses effectively.
Client and employee relations
When it comes to client and employee relations, controllers are often in the spotlight. They interact with senior management and stakeholders, providing insights that influence high-level decisions. Strong communication skills are a must for controllers. They need to convey complex financial information clearly, especially when presenting findings from internal reports or discussing budgetary needs with executives.
On the flip side, accountants typically engage more with clients or employees about specific transactions or compliance issues. For example, they might explain tax implications to clients or help employees with their expense reports. While these interactions are crucial for maintaining relationships within your company, accountants usually don’t get involved in the strategic discussions that controllers do.
Financial reporting
Now let’s talk about financial reporting. Controllers are responsible for producing comprehensive financial reports that reflect your company’s overall performance. This includes balance sheets and income statements. They ensure these reports comply with GAAP standards and provide valuable insights into your company’s financial health. For instance, if you’re considering taking out a loan for expansion, the controller will prepare the necessary financial statements to present to lenders.
Accountants play a supportive role in this process. They prepare detailed reports focusing on specific areas like tax liabilities or departmental budgets. While they may assist in compiling data for the controller’s reports, they typically don’t present this information to stakeholders.
Having gone through the differences, let’s now see which one you need for your company or whether you need both.
Do you need a controller or an accountant for your business?
Deciding whether you need a controller or an accountant really depends on the size and needs of your company. Here’s a fuss-free way how you can figure out when each role is right for you.
When to hire a controller
If you run a larger organization with extensive financial operations, you need a controller. They will oversee the entire accounting infrastructure and ensure everything aligns with your company’s strategic goals. Controllers manage accounting departments and provide oversight on financial reporting, budgeting, and compliance.
For example, if your company plans to expand in the next few years, a controller will help shape the financial strategy and provide insights that influence high-level decisions.
When to hire an accountant
If you’re the genius behind smaller businesses or startups, having an accountant will suffice for now. They can manage your day-to-day transactions, prepare taxes, maintain compliance with regulations, and handle all your daily financial operations like bookkeeping, tax management, and financial reporting, ensuring accuracy in your financial records and adherence to GAAP.
For instance, if you need help filing taxes or keeping track of expenses, an accountant can efficiently handle those tasks. Moreover, as your business grows and its financial operations become more complex, you can bring on a controller to enhance your strategic financial management.
Final thoughts
All in all, both controllers and accountants are vital for managing the accounting and handling your company’s finances but serve different functions. Now that you’ve understood the differences between the two, you can make informed decisions about your financial leadership structure.
If you want to perfect your accounting processes further and help the people you get on board for finance management, add Synder to your digital tool mix. It’s an innovative finance management solution that can connect all your company’s sales channels and payment gateways into one ecosystem. Plus, it can automatically organize the way data lands into your accounting system so you can have a single source of truth for your business’s financial records.
Sign up for a 15-day free trial of Synder or book your spot at a Weekly Public Demo and join nearly 5,000 businesses already using Synder daily to enhance their financial operations!
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