We often get asked what’s the difference between a bookkeeper and an accountant. In this blog we explain the keys differences.
What does a bookkeeper do?
Bookkeeping is the first part of the accounting process, so the work of a bookkeeper and accountant overlaps.
Bookkeeping is predominately about supporting the business on a regular basis. This will be sending out invoices, reconciling bank accounts, uploading receipts and matching expenses.
An important task is to ensure the businesses financial software, such as Quickbooks or Xero, is used and managed correctly. This will include keeping the software up to date.
More experienced bookkeepers can help with payroll and filing of VAT and self-assessment returns.
What does an accountant do?
An accountant is familiar with all the areas covered by a bookkeeper, their job is to take a ‘higher level’ view of your business.
In practical terms this means business strategy and financial planning. Including cash flow management, forecasting and navigating tax liabilities, all in addition to preparing your annual accounts.
The extensive experience and qualifications accountants have mean they are a great asset to a growing business. Your accountant can help to create practical steps that will drive your business forward financially. Also, offering advice and making introductions to other key contacts.
Are accountants and bookkeepers qualified to look after my business?
Unless chartered or qualified with another professional body, anyone can call themselves an accountant. Even if they have no professional training or qualifications to back it up. Where does that leave you if your accountant makes repeated mistakes, has provided dodgy advice, or has even broken the law?
If you’re using an unregulated accountant you’re at greater risk of missed deadlines, indiscrete practice and mistakes on reporting. All of this can result in extra hassle for you and unnecessary fines. Equally, it can lead to your company building a poor reputation, which can be just as damaging to your business in the long run.
Make sure you use someone who is qualified for what they are doing. If you don’t, you risk paying for bad advice and could find you and your business in a financial mess.
A Chartered (ACA) or Certified (ACCA) Accountant has to undertake years of training to get their qualification and must maintain annual professional development to stay up to date. They are bound by a code of ethics and professional standards, and will have professional indemnity insurance.
Make sure you look for the relevant professional letters after someone’s name. You can ask them what qualifications they have to cover yourself and your business.
Bookkeeping qualifications are more accessible and the most popular are AAT (Association of Accounting Technicians) and IAB (International Association of Bookkeepers). Make sure your bookkeeper has some level of qualification so that you can be sure you are in good hands.
Should I have an accountant or a bookkeeper?
This comes down to what type of business you have, and what plans you have for future growth.
If your business is well established and straightforward then a bookkeeper will help you keep on top of your admin and paperwork. Your bookkeeper can help and keep your business running smoothly.
They will be able to help by recommending ways to ensure your process are robust, efficient and operating in the best way. Their experience will mean you and your team don’t waste valuable time on the business financial administration while you could be generating income.
Bookkeepers usually charge an hourly rate and will work with you to decide how often they should work on your books. This will depend on your individual requirements and the size of your business.
How could an accountant help my business?
Chartered accountants have spent many years training for their qualification and can give expert advice on tax matters. Your accountant can advise on trading legally, as well as helping your business to remain successful and solvent.
If you’re a new business, getting the advice of an accountant at the start will be crucial. Your accountant can advise on raising finance and minimising taxes that may come too late if you wait.
Do you have an established business? Your accountant can help put processes and strategies in place that can help you grow and expand your business. Putting processes in place can prevent cashflow issues further down the line.
To qualify as chartered, your accountant would’ve had to carry out work for a range of clients across a variety of industries. Building business awareness and strong personal judgement, they’ll most probably have gained experience working with businesses that are high-performing to those under financial pressures.
Give us a call if you would like to talk more about what might be best for you and your business.