If you are a small business owner or manager of a small organisation your time is precious. As your business grows you inevitably come to realisation that you need some financial support and expertise. However it’s easy to feel that there’s a lot of jargon about. Here Kate McGreevy one of our experienced bookkeepers talks you through the difference between a bookkeeper and an accountant.
The distinctions between accounting and bookkeeping are subtle yet important to understand when deciding what are your business requirements.
Although these are job titles sometimes used interchangeably, Bookkeepers and Accountants are different positions and I will explain the role of the Bookkeeper and the Accountant in small business finances.
What do bookkeepers and accountants do?
Bookkeeping is the first part of the accounting process. As the name suggests, a Bookkeeper keeps your books in order and focuses on recording and organising financial data, managing day-to-day paperwork and processing it into a computer system such as Xero or similar.
An Accountant performs a other tasks and focuses on the bigger financial picture, analyses the information provided by Bookkeepers. There are different kinds of accountant (which we’ll cover in a future blog post) some carry out audits, others generate financial statements and or help you plan for the future and look at your business needs.
Some Bookkeeping and Accountancy tasks overlap so if you use both make sure they are able to work together well.
However, Accountants typically have higher qualifications and are more expensive it is important to ensure that all tasks are performed by an appropriate specialist. A bookkeeper can’t do certain accountancy tasks while using an accountant for bookkeeping may cost you more and they won’t necessarily be specialists in bookkeeping tasks.
What’s involved in bookkeeping and accounting?
Here’s a split of the duties that each will typically do. Note that some tasks can be performed either bookkeeper and the accountant.
| Task | Bookkeeper | Accountant |
| Processing Purchase and Sales invoices | Yes | No |
| Processing Employees Expenses claims | Yes | No |
| Document Control, Filing | Yes | No |
| Credit Control | Yes | No |
| Bank Account Reconciliation | Yes | Yes |
| Journals | Yes | Yes |
| Preparing and Filing VAT Return | Yes | Yes |
| Prepare and run Payroll | Yes | Yes |
| Prepare Sole Trade accounts and self assessment returns | Yes | Yes |
| Prepare Limited company accounts | No | Yes |
| Corporation Tax Returns | No | Yes |
| Calculating Capital Gains Tax | No | Yes |
| Prepare complex self assessment tax returns | No | Yes |
| Prepare Management Accounts | No | Yes |
| Prepare Business plans and advise on business structure | No | Yes |
| Prepare Cashflow Forecasts and advising on financing | No | Yes |
| Provide Basic Tax advice | Yes | Yes |
| Provide specialist tax advice | No | Yes |
Should I hire a bookkeeper or an accountant?
When asking yourself should I hire a Bookkeeper or an Accountant, think about what you sort of financial help you need.
Do you need support managing income, outgoings, recording finances, payroll, and VAT returns as well as keeping track of all the money within the business on a regular basis?
Then you need a Bookkeeper.
Do you need more advanced financial support, like help with tax, HMRC and business advice, all alongside record keeping?
Then you need an Accountant, although the right accountant for you may depend on exactly what you need.
Holy Brook is proud to have strong expertise in both Bookkeeping and Accounting available to our clients. If your needs would be better met by another specialist we’ll always let you know, and may even be able to suggest someone.
Of course if in doubt feel free to get in touch with us, and one of the team will be happy to arrange a conversation