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Differences between a bookkeeper and an accountant

What is the difference between a bookkeeper and an accountant?
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    Most firms will need the services of a bookkeeper or an accountant at some point in their business. As any business expands, it becomes more likely that it will need extra financial assistance.

    Explaining the roles of the bookkeeper and accountant is one of the first requests we receive from new business owners. Many people get confused as to what role each one plays. Others believe they require an accountant when, in fact, they require a bookkeeper, and vice versa. Despite their differences, both positions deal with accounts and payments, where businesses do not want to make mistakes.

    In this blog, we will talk about the roles of a bookkeeper and an accountant and the critical distinctions between the two and offer some advice on whom you should contact for assistance with your business finances.

    What does a bookkeeper do?

    A bookkeeper’s primary responsibility is to manage your company’s financial data daily. Most bookkeepers will utilise accounting software like Xero, which can be accessed and updated by any team member. Some bookkeepers also prepare VAT returns, payroll, and Self Assessment tax returns, among other things.

    More specifically, a bookkeeper is responsible for the following:

    · Recording of purchase Invoices, receipts and other financial transactions
    · Reconciling bank accounts
    · Paying suppliers and creditors
    · Flagging up missed payments

    How often do you need a bookkeeper?

    A bookkeeper will work on your books once a week, twice a month, or once a month. This mainly depends on the size and complexity of your company and how current your financial records must be.

    What bookkeeping qualifications are essential?

    Anyone can set up as an accountant or bookkeeper, but businesses must entrust their finances to professionals.

    Although bookkeepers are not required to have an academic or professional qualification, they will usually have received training from one of the following organisations:

    · Institute of Certified Bookkeepers (ICB)
    · International Association of Bookkeepers (IAB)
    · Association of Tax Technicians (ATT)

    What does an accountant do?

    An accountant’s key responsibilities include dealing with higher-level compliance, such as filing accounts and tax returns and advising business owners on strategic management.

    A qualified accountant will also perform frequent tax planning and serve as a financial advisor, advising on cash flow management and whether or not particular ideas are financially viable for the company.

    More specifically, an accountant is responsible for:

    · Preparation of financial statements
    · Tax assessment, planning and advice
    · Corporate financial reporting and compliance
    · Preparing income tax returns
    · Preparing and filing VAT returns
    · Preparing management accounts

    Usually, an accountancy firm has a team of professionals who will provide a different level of service to the business. With WIS, you will have your dedicated client manager and a couple of accountants to help you with your accounting needs.

    How often do you need an accountant?

    An accountant will be needed to prepare items such as annual accounts or quarterly VAT returns and so will be required less frequently than a bookkeeper.

    What accounting qualifications are essential?

    The word ‘accountant’ is not a regulated title. Therefore, it is essential to look for a chartered accountant when hiring an accountant.

    They should have completed their training with one of the following chartered accountancy bodies in the UK:

    · Chartered Institute of Management Accountants (CIMA)
    · Institute of Chartered Accountants in Scotland (ICAS)
    · Association of Chartered Certified Accountants (ACCA)
    · Institute of Chartered Accountants in England and Wales (ICAEW)

    WIS Accountancy is regulated by both CIMA and ACCA, and our staff members are either entirely or partially qualified.

    What tax experience do a bookkeeper and an accountant have?

    An accountant is a financial expert with substantial experience in financial accounting. A bookkeeper is an individual who is good with numbers and managing figures.

    This isn’t to suggest they don’t have valuable experience or knowledge, but they can’t perform the same tasks as an accountant and don’t require the same qualifications.

    Should I recruit a bookkeeper or an accountant?

    The business owner must understand their individual financial management needs when deciding between a bookkeeper and an accountant:

    • Do you require assistance with managing income, outgoings, financial records, and keeping track of all the money in your company? Then you’ll need the services of a bookkeeper.

    If you require more advanced financial assistance, such as assistance with tax, or need help in completing your annual accounts, you need an accountant.

    It will be cheaper hiring a bookkeeper than hiring an accountant due to the technical nature of advanced accounting roles. This means that if you merely require recordkeeping services, you won’t have to pay for a qualified accountant. However, it’s worth noting that hiring a bookkeeper when more advanced financial tasks and processes are required to be managed would result in inadequate business support.

    Do accounting firms also offer bookkeeping services?

    Yes, some accountancy firms provide all financial services under one roof. Having an accountancy firm cover all your accounting needs helps to ensure that you have just one point of contact, and it will also save you both time and money.

    To sum up

    Consider a bookkeeper to be a financial compiler and an accountant to be a financial interpreter and advisor. A bookkeeper could help you record financial information, whereas an accountant could analyse and assist you in understanding the impact of your financial decisions.

    The role of a bookkeeper is often overseen by an accountant but never the other way around. When choosing a bookkeeper or accountant, consider whether you’d engage an accounting firm that also provides bookkeeping services or you’d keep the two separate. Consider the skills and experience they provide, as well as the overall pricing of their services.

    Next steps
    If you are seeking an accountant or a bookkeeper, or would like to discuss how we can help you, please feel free to call us on 0203 0111 898, and we will be happy to help.

    FAQs

    Is bookkeeping part of accounting?

    Bookkeeping is the process of recording your company’s financial transactions into organised accounts on a daily basis. It is an essential part of your accounting process.

    Do you need a degree to be a bookkeeper?

    A degree isn’t required. Most bookkeeping qualifications are at the diploma or certificate level.

    Can a bookkeeper be called an accountant?

    The work of a bookkeeper is usually overseen by an accountant or the small business owner whose books they are keeping. So, a bookkeeper can’t call themselves an accountant.

    What does an accountant do that a bookkeeper doesn’t?

    Accountants are a level up from bookkeepers. They can conduct bookkeeping activities, but they are more likely to prepare detailed financial statements and prepare tax returns.

    Do bookkeepers do tax returns?

    A qualified bookkeeper will be able to prepare accounts and tax returns for sole traders, as well as basic Self Assessment returns.

    Not sure if you need a bookkeeper or an accountant now? Check out these blogs:

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