When it comes to managing the finances of any business, be that a freelancer or national company, you will most likely need the help of a financial expert: Someone who can help you manage your business accounts, prepare finances for the annual tax return, and file information at Companies House.
However, many people often become confused between using a bookkeeper vs. an accountant – as in many cases the job titles are used interchangeably. It’s a classic misconception that a bookkeeper and accountant do the same role – but actually they do two different jobs.
In order to try and clear up some of the confusion, we thought we would explain the difference between the two roles in a literal sense, and how you might use one or the other within your business.
What is a Bookkeeper?
Bookkeeping is a role that is considered to be within accounting, however it tends to be more hands-on. A bookkeeper is a person within your company who manages the recording of all of the company’s transactions. This involves monitoring and collating documentation for all of the incoming and outgoing monies, paying invoices, keeping on top of invoices which are due to be paid and paying salaries to staff members. Basically, the bookkeeper is your first point of contact regarding any financial tasks.
What is an Accountant?
An accountant works on a more strategic and analytical level than the bookkeeper. They will compile financial reports, and gather data or recommendations regarding income and expenditure. Your accountant may also be responsible for submitting your tax returns and annual accounts, and ensuring all official documents reach the right place at the right time.
At Profile Chartered Accountants we offer accountancy services to small and medium sized businesses, and offer taxation services, financial advice and consultancy regarding budget, forecasting and business valuations.
Do I need a bookkeeper and an accountant for my business?
This is a slightly more difficult question to answer as there are lots of factors which could influence your decision to use just a bookkeeper, just an accountant, or both.
If you run a small business then you may prefer to work only with a bookkeeper, especially if you are in the early stages of business growth. Alternatively, you may want to hire a bookkeeper for the day to day work and then hire in an external accountant (like Profile) at key times of the year to help with annual financial reports, where more legal expertise is needed.
If you run a large business with a large number of products and/or a large workforce, then it might be a good idea to hire both a bookkeeper and an accountant. By having all of the help you need in-house, you can work on the accounts throughout the year, which can be particularly useful in a large company, especially as preparing the annual accounts and producing the tax return can take several weeks or even months.