In the accounting world Bookkeepers and Accountants are to some extent intertwined as bookkeeping is part of accounting. Bookkeeping (keeping books) is the first step of the accounting process, an accountant will complete the process by analysing the information prepared by the bookkeeper.
What will a Bookkeeper do for my Business?
Bookkeepers play a vital role in the efficient running of a business, keeping an accurate and complete record of the financial transactions of the business and help maintain compliance.
By nature, most businesses generate a whole lot of paperwork, such as purchase invoices, receipts and expense claims. A bookkeeper will transform that bundle of paperwork into something orderly and accurate that will reflect the current position of the business. They will help keep the business running smoothly by maintaining a general ledger, paying supplier bills, credit control your customers, undertake bank reconciliation, record inventory and complete VAT returns and payroll.
Depending on the business requirements, bookkeeping can be undertaken more regularly on a weekly, fortnightly or monthly basis. Completing the paperwork more regularly will allow the bookkeeper to provide more up to date information on the current position of the business.
What will an Accountant do for my Business?
Accountants look at the big picture, they will use the financial information prepared by the bookkeeper and provide insights and financial advice based on that information.
Accountants have an in-depth understanding of the taxation system and requirements. They will perform audits, prepare tax returns, financial forecasting, and tax filing.
Depending on the business an accountant will generally work less frequently on the business accounts. Accountants may only look at the business books once a year when completing the annual accounts or they may work on quarterly vat returns or when dealing with cash flow forecasting.
The following table provides a comparison of some of the services offered but is in no way a definitive list and bookkeeper/accountant services may vary.
|Process invoices, receipts, payments||Prepare adjusting entries|
|Produce sales invoices & credit control||Prepare financial statements|
|Bank transactions & reconciliation||Tax returns & filing|
|Maintain and balance ledgers||Management reporting|
|VAT Returns||Financial analysis and strategy|
|Payroll||Tax advice and planning|
|Cash Flow & Reporting||Auditing|
Does a business need a bookkeeper and an accountant?
This will depend on the preference of the business owner and the size and complexity of the business itself.
A bookkeeper will keep a business well organised and help with the cash flow of the business by getting invoices out on time, tracking payment and paying bills and maintaining compliance.
An accountant will ensure that the business meets its tax obligations and assist the business with financial management to help drive it forward.
Both bookkeepers and accountants have their place in any business which is why so many businesses rely on both.