Here at See No Bounds we have been working along side Bookkeepers and Accountants for a while and there was this burning question that was sat on our mind. What is the difference between a bookkeeper and an accountant?
So we put it out to our members and Rich Beale of Bookeeping 4 U was fast to reply. And so, here is his take.
Of Bookkeeping 4 U
We are often asked this question, so I thought I would write an answer to clarify it.
In simple terms a bookkeeper manages the recording of the ongoing financial transactions of a business.
But what is a financial transaction? It is a record of a product or service that a business buys or sells and all the business spending and income that goes through the bank. Recording all these transactions on a regular ongoing basis is the minimum requirement for all businesses. In fact it is the law in the UK, regardless of size, to keep a record of all financial transactions. This is known as Bookkeeping.
The term ‘Keeping the books’ goes back to the days before computers and calculators when all transactions were recorded on larger physical books known as ledgers.
As well as recording financial transactions, there are other bookkeeping requirements that some businesses need to complete including VAT calculating and reporting to HMRC, payroll for employed staff, stock control, credit control, tax returns and other industry special tasks. These tasks are now usually completed on accounting software such as Xero and Quickbooks.
Some smaller businesses complete their own bookkeeping but many employ the services of a qualified bookkeeper who are regulated by an official body, such as the International Association of Bookkeepers (IAB) or the Institute of Certified Bookkeepers (ICB) and also by HMRC.
So what can an accountant do that a bookkeeper can’t? An accountant’s main role is deal with Limited Companies that have a high-level compliance such as filing Corporation Tax Returns and accountants also give strategic business advice on the management of businesses. Good accountant’s will also conduct regular tax planning to minimise the tax liabilities of the business and its directors, and providing advice on cash flow management if relevant.
An accountant is also qualified to a higher standard and will usually only have contact with a client once a year, whereas bookkeepers work on a weekly or monthly basis.
So, bookkeepers work closely with the business owner on a regular basis; completing all tasks required by sole traders including VAT and Payroll and accountants concentrate on compliance and tax advice for larger businesses and Limited Companies.
Well we think that cleared up the basic concept of “What can an accountant do that a bookkeeper can’t?” And, it is interesting how there is two different business types that work in complete synergy with the end user. So many times a business seems disengaged with the account that work within their organisation and that relationship is so important. At the same time maybe the relationship is not the issue. Maybe its the link that joins them up that is missing.
Rich we would like to thank you and Bookkeeping 4 U for your insight and explanation.
If you are reading this and need to ask more questions. Rich can be found in The Hub, His Hub listing and his website. You can also connect with him directly via LinkedIn.
