What is the difference between a bookkeeper and an accountant?
Accountants and bookkeepers share many similarities. For one, they both fulfil roles that help support the day-to-day financial transactions of a business. In turn, both are essential for accurate accounts management. While bookkeeping and accountancy also require many of the same skills, individuals will have different responsibilities based on these roles.
Continue reading to find out exactly how bookkeepers and accountants differ.
What does a bookkeeper do?
Bookkeeping is largely an administrative role that involves keeping and maintaining records of the business. These duties can include:
Each time the business makes a sale, purchase, pays money out, or receives money in, it should be logged by the bookkeeper. Today, this is done in the dedicated cloud accounting software. There are also other transactions that need to be recorded such as accruals, prepayments, depreciation, journals, and more.
One of the benefits of using Xero accounting software is that this task can be done on a daily basis, so that the business owner knows their financial position up to the minute.
In the case of the former, this will mean establishing payment terms, sending invoices, and credit control. The main task in accounts payable is to ensure that all costs are recorded in the financial records and that suppliers are paid.
These reports, including the profit and loss account, balance sheet, cash flow, aged payables, aged receivables, give an up-to-date position of the business at a point in time and how it has performed in a particular period.
Bookkeepers are responsible for setting up a business’s chart of accounts, which they then use to record of transactions.
Bookkeeping requires a huge amount of attention to detail so bookkeepers must make sure they input data accurately. This is to ensure that the financial records are correct and that the reports they generate give accurate information which can be actioned.
This also avoids any consequences that can come from incorrect data in financial records.
Businesses can choose to use bookkeepers for all or just some of the tasks details above and with the use of technology, various bookkeeping tasks can be streamlined. At Jan McDermott Chartered Accountants, we offer a full bookkeeping service to give you an accurate picture of your business finances in real time.
What are an accountant’s responsibilities?
An accountant has a variety of duties. Some are statutory requirements, and some are duties that are intended to add value to a business. While the former are essential tasks that must be completed in time for various points in the business year, the latter can be completed on an ongoing basis to advance the business’s position. Accountants therefore take a broad approach when it comes to analysing and interacting with financial data. Some tasks may include:
- Advise on the position of the business: Business owners need to know exactly where they are financially to be able to make informed decisions. Using the information and reports prepared by the bookkeeper, the accountant can give a review of how the business is doing and highlight potential issues and future tax payments.
- Provide business planning advice and support: Running a business can often be difficult. Using their knowledge of the business, along with their knowledge of finance, accountants can act as trusted advisors to help the directors with decision making and long-term strategy. This is especially valuable for small and medium sized enterprises (SMEs), as they may not have a dedicated finance team within their business.
- Completing the compliance tasks: Accountants use their expertise and years of training to prepare accurate statutory accounts and all the necessary tax submissions that are required.
- Minimise taxes and maximise income: UK tax payers can arrange their tax affairs in the most efficient manner. An accountant can help with this as they have a detailed knowledge of the tax legislation and what aspects of it suit your business. In addition, extracting money from your business can be a complex area and can be costly if not done correctly.
Key differences between bookkeepers and accountants
Whilst closely linked, the main difference between accountants and bookkeepers is that bookkeepers are primarily concerned with data input, record keeping and day to day financial management. Accountants, especially chartered accountants, will possess these skills and their focus is much broader, looking at how the business is performing, planning for the future, and minimising taxes. These duties will be unique to each client, so the accountant can deliver results that are best for their business.
Experienced bookkeeping services near me
Jan McDermott Chartered Accountants offers a wide range of financial support services, including bookkeeping and accounting for SMEs. As such, we understand what the best course of action for your business will be. Our team then provides professional services on an ongoing basis at a fixed fee, thus taking away uncertainty over your business costs. Contact us today and book a consultation.