Did you know that bumblebees and honeybees are different insects? Okay, not entirely different, but each has their own unique characteristics and functions.
The same can be said for bookkeepers and accountants. Whilst both work in the same arena and admittedly, their work can overlap, they each have their own respective set of responsibilities.
We look at what defines each and where they differ to help you understand how each can benefit your business.
What does an accountant do?
The role of an accountant is an extremely analytical one, taking data and business records to produce reports and give insight. They help guide decision-making and provide financial advice to business owners and managers.
This role can be done in house or as an outsourced, external resource.
An accountant will take all the nitty-gritty financial details and pull them together to provide the business with one comprehensive, complete picture. This invaluable insight can then influence and help focus cash flow health, budget management, recruitment, and business development.
As part of their involvement, accountants are also an additional layer (a cushion, if you will) between a business and HM Revenue & Customs, managing deadlines and communications on the business’s behalf.
Typical responsibilities of an accountant include:
- Analysis of accounts and financial records
- Carrying out audits
- Guiding on and/or making financial decisions for the business
- Fulfilling financial records (such as tax returns)
- Providing information to steer business growth
- Generating detailed financial forecasts
- Meeting with clients
- Risk analysis
- Budget advice
- Dealing with insolvency
- Representing clients in front of HMRC
What is a bookkeeper?
Bookkeeping is the process by which a business owner tracks financial transactions, manages income and outgoings, and runs the necessary financial reports and returns.
To ensure this is done professionally and accurately, a business owner might decide to employ a qualified bookkeeper (outsourced or internal) to take ownership of the tasks involved.
Doing so also can also reduce the strain paperwork and admin puts on you personally. A bookkeeper can free up the time of a business owner significantly so that they can concentrate on other areas that will drive growth and development.
A bookkeeper is responsible for dealing with things like:
- Financial data input
- Recording and monitoring transactions
- Creating detailed financial reports
- Reconciliation of data (making sure everything adds up across the board)
- Managing repayments
- Drawing up invoices
- Chasing debtors and late payments
- Fulfilling bills
- Preparing tax returns
- Paying in any cheques that are received
- Maintaining accurate business records
- Managing payroll (in some businesses)
What are the differences between accountants and bookkeepers?
Both roles are rooted in finance management and the two titles are commonly used interchangeably by externals. However, bookkeepers and accountants shouldn’t be considered one and the same.
Bookkeeping is sometimes referred to as a subset of accounting as it provides the informational foundations and sound structure from which an accountant can do their best work. Think of it like a relay race, whereby a bookkeeper will pass the baton on for the remainder of the race.
FYI: an accountant can take on the role of a bookkeeper, but a bookkeeper cannot be considered an accountant until they have received the necessary certification.
Do you need an accountant and bookkeeper?
Taking all of the above information into account, the answer to this question really depends on your personal requirements for the business.
As you will now know from digesting the definitions in this article, an accountant and a bookkeeper bring different things to the table.
So, in an ideal world, with wiggle room in your budget, having both onside is a great position to be in. That said, it isn’t 100% necessary to have a bookkeeper and an accountant – if there is a choice to be made.
Now we’ve cleared that up, you’ve no doubt got a million more tax and business finance-related questions on the tip of your tongue, right?
Well, that’s exactly what our free Ask a Tax Question tool is here for! Put your queries to us and our experts will provide you with the answers.