Do I Need A Bookkeeper Or An Accountant?
Posted on 14th February 2022
Something you may have considered yourself and to be honest you’re not alone. It’s not always obvious which way to go and for some businesses, they need both a bookkeeper and an accountant.
Both perform financial functions within a company, are part of the accounting process, and work to the same objectives yet there are differences. In simple terms, a bookkeeper performs the record-keeping part of the process while an accountant interprets the data and presents the financial status of the company.
To keep your business running smoothly and remain on top of your financial obligations, you should give some thought as to what level of support you need. But let’s start by exploring some of these differences between the roles.
A bookkeeper provides regular financial management
On a day-to-day basis, a bookkeeper will keep your financial information accurate and up to date, known as record keeping. This can be for a sole trader, a limited company, or a partnership. They can give you a quick view of how your business is performing at any stage in the year and their tasks would include:
Record all your financial transactions - money coming into the business and the money going out of the business.
Process sales invoices and purchase receipts
Reconcile bank and system balances
Input the data into an accounting software package such as Xero and Quickbooks.
Prepare and file VAT returns
Manage your payroll function for staff and contractors
Records are updated regularly which ensures you always have an accurate financial picture of your business. It also means you don’t have to spend a significant amount of time at the end of your financial year, compiling the information you need to submit your year-end accounts.
An accountant analyses and presents the data
Once you have all the information, an accountant can interpret the data to identify any variations and trends. Producing reports to help you with planning for the future of your business and look at ways to make you more tax efficient. Other activities include:
Summarise then analyse the financial information and present the data in an understandable format. This would include quarterly and annual returns but will also cover budgetary forecasts based on current performance.
Support you to meet your legal/regulatory obligations in the form of tax and accounting deadlines, this includes completing your income tax returns.
Make adjustments in any given period based on accruals, prepayment,s and stock control.
Provide financial expertise so you can understand what are the best financial decisions for your business. This would relate to what you spend, earn and highlight some of the most efficient ways to operate.
The data a bookkeeper has compiled is vital to enable an accountant to do this part of the job. It’s the difference between collating the information you need efficiently and translating the data to improve your business.
How does the relationship work together?
An accountant will work alongside a bookkeeper. If you think of it in terms of how a doctor and nurse operate within a hospital. The doctor provides the clinical lead and will diagnose any health problems then prescribe the right medication. A nurse will administer this medication and look after the day-to-day well-being of the patient. Both work in partnership to deliver results.
Depending on the size, job roles, and needs of your business, you may only need a bookkeeper or an accountant but for some, you will need both. How much of the financial process is covered by you or your team will dictate the level of support you require.
This sort of expertise you can use as and when you need it but it’s a good idea to build a good working relationship whatever you decide. Whoever you use needs to be close to your business and understand every aspect. It will save you time and money in the long run but more importantly give you a good understanding of your finances for your continued success.
Have you worked with a bookkeeper or accountant or both, what are your experiences and what would you recommend?
Tagged as: Accountant, Allowable Expenses, Automation, Bookkeeper, Bookkeeping, Business account, Business Plan, Cashflow Forecast, Financial Management, Healthy Business, Making Tax Digital, tax, Working Relationship
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