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
||Financial analysis and strategy
||Tax advice and planning
|Cash Flow & Reporting
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.
You’ve gotten over the hurdle of starting your business, you’re established now and in the main things are going great, however you never realised how much paperwork there would be, never mind the admin of all the accounts on top of that.
Didn’t you start your own business so you could spend more time doing the work you love? Helping people create new things, providing great products and unrivalled service? So why is it that you are struggling to find the work-life balance, launch that new product, develop your team and more? Be honest, are your accounts and bookkeeping taking more time than you ever thought they would?
If this is the case read on ….
1. Bookkeeping software isn’t a substitute for Experience
Software adverts make it sound easy to deal with your accounts yet nothing replaces knowledge and expertise. Are you able to set up your software correctly? Get this step wrong and you could be in big trouble as your software could be miscalculating your taxes!
Qualified Bookkeepers have the knowledge and expertise, are aware of legislation and filing deadlines? Think about it, you wouldn’t contact a bookkeeper for a hair appointment so why tackle your accounts if that’s not your thing.
2. Your books are not up to date
When you fall behind with your paperwork, your accounts stop reflecting the actual position of your business. That makes it harder to understand profit, cash flow and accurately gauge the health of your business.
Once you fall behind it is increasingly unlikely you will ever get caught up – if you don’t have the time to keep it up to date, how can you find the time to catch up! Let’s be honest spending evenings dealing with your accounts are going to take a back seat when the dog is sat there wagging its tail ready for their walk
3. You haven’t billed your customers and have overdue invoices
The minute you get too busy to bill your clients, your cash flow will suffer and you could even miss billing someone altogether. Your clients won’t pay you without an invoice and without money in the bank how will you pay your staff and your suppliers?
Billing your clients regularly and undertaking credit control is vital – keeping control of outstanding debt should enable you to take care of your bills and overhead expenses.
It’s just like being on the beach, the regular tide in of customers paying, the regular tide out of your supplier and expenses payments – no hat or sun screen required!
4. Your bank statements haven’t been reconciled
Checking your bank balance on your phone does not give you a clear picture of how much money you have. It doesn’t tell you how much money your customers owe you, how much money you owe your suppliers or highlight any errors in your accounts.
It’s important to keep your reconciliation up to date and connecting bank feeds in accounting software now allows for this to be completed daily, if you have the time. This will give you an instant view of your financial position – assuming of course everything else has been done!
5. No time to grow your business
There are only 24 hours in the day and as a business owner you are constantly juggling the work-life balance. Every hour you spend on your accounts is an hour lost on selling your products or services, developing business opportunities and client relations.
Get your work-life balance back on track – keep a log of how much time you spend on your accounts per week, then calculate how much that time is worth to you. Outsourcing is a cost effect way of dealing with your bookkeeping to enable you to grow your business.
If any of the above sounds familiar and you wish to find out more, please use the link below: