Are you debating hiring an accountant or bookkeeper? Here we will discuss all the things
you should know about these two roles to help you decide which one suits your business
needs the best.
Using an accountant or bookkeeper is so important for your business. They are able to take
care of the numbers and financial side for you, allowing you to have more time to focus on
the growth of your business. As a business owner, it is vital to have a strong support
network around you. Accountants and bookkeepers are usually considered to be at the top
of the food chain when it comes to key professional service providers. However, many
people are under the misconception that these two roles are the same. Although a lot of the
work that they do crosses over, there are still some important differences to note. So, let’s
talk about them.
What Is Bookkeeping?
Bookkeeping is the practice of recording financial data and transactions and then classifying
them. Bookkeepers are professionals that ensure you can see the details of all your finances
and transactions. Nowadays, the majority of bookkeeping is done electronically using
bespoke systems such as Xero. The bookkeeper will process data from your bank statements
and put it onto the software, whilst also ensuring that bills are being paid and that
everything is in order.
To put it simply, bookkeepers will turn a big mess of receipts, invoices and bills into a virtual
log that is easily understandable and much clearer to look at. There is also a wide range of
other services that bookkeepers are able to provide, including the preparation of tax returns
and payroll. Those additional services are where bookkeeping and accounting can overlap,
and both are likely to be external to your company.
What Is Accounting?
Accountants analyse financial data that is given to them by bookkeepers and then verify
and report the results. It can also be defined as identifying, recording, measuring, and
communicating financial information. They also prepare documents such as balance
sheets, income statements and profit-and-loss statements. Accountants ensure that your
business is fully tax compliant and reports necessary obligations. In short, accountants
handle all the financial information that pertains to your business.
Accountants are extremely versatile, as they can assist you with a long list of different
financial activities. The reports that accountants produce can help you get a complete
picture of where your business stands financially, which is so beneficial to know for many reasons, especially as it can help you decide your aims for the business's future and its
growth.
The Advantages Of A Bookkeeper
A lower cost. Hiring a bookkeeper is often cheaper than hiring an accountant. However, the specific cost will usually come down to the amount of documentation you need and possibly how much time it will take the bookkeeper.
They will help you to notice any cash flow issues. As bookkeepers handle the day-to-day recording of your finances, they will be very clued up on your income and spending habits. Therefore, they will have a trained eye and will easily notice any cash flow abnormalities that could arise.
A straightforward view of your finances. It is an accountant’s job to provide you with a detailed analysis of your financial data, however, bookkeepers can give you a direct view of your business's financial standing.
The Advantages Of An Accountant
They will save you lots of time. An accountant can take care of your business's most important obligations such as tax advice and meeting deadlines. Accountants are highly aware of the latest tax rules and regulations, allowing you to not have to worry about that side of the company, so you can spend more time focusing on the business itself.
They can benefit the growth of your business. An accountant can be a great source of advice in terms of managing your business expenditures, as well as accounting for your losses. Because of this, you can easily make informed decisions based on premeditated risks.
Their valuable expertise. Accountants generally would have been through more training than a bookkeeper. An accountant can also be classed as a bookkeeper, but a bookkeeper cannot be considered an accountant. Accountants can offer more expertise in areas such as tax and investments.
The Breakdown – Which Is Right For Your Business?
Some of the key tasks that accountants can perform but bookkeepers cannot include
preparing limited company accounts, filing corporation tax returns, and preparing cash flow
forecasts or management accounts. Accountants also can give you specialist tax advice.
However, if you just need someone to help you process invoices and other financial
documents, then it might be a bookkeeper that your business needs.
The preparation and filing of VAT returns can be done by either an accountant or
bookkeeper. Another task that both will be suitable to do is running the payroll.
To Conclude
Whether you decide to go for an accountant or bookkeeper, we recommend ensuring that
whoever you hire is qualified to do what you are looking for. Anybody can call themselves
an ‘accountant’ or ‘bookkeeper’ without certification, so it is important to check client
references and do your research on the company.
We wish you luck with your decision and we hope we have made it a bit easier for you!
Thank you for reading; please check out our other articles as they may help you on your
business journey.
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