Bookkeeper v Accountant, which is right for you?

The decision depends on what size of business you have, your turnover and what you want from the service. Before you decide which one you need for your business let’s look at the different responsibilities for each role.

Bookkeepers are responsible for recording the daily financial transactions of a business such as tracking all income and expenses, payroll, receipts, invoicing, bills and liaising with customers for outstanding payments. The fundamentals of bookkeeping involve data entering of all such transactions whilst ensuring all records are up to date. A bookkeeper needs to ensure that the correct data is entered into the accounting system, databases and spreadsheets in order for financial reports to be run and of course bills paid in a timely manner.

The role of bookkeeping, as with many other professions, is changing rapidly and there were concerns that with the advancement in technology the jobs of bookkeepers would become redundant but that is definitely not the case, and if anything, the role is evolving.

An accountant on the other hand, is primarily concerned with compliance at a higher-level including filing tax returns and accounts. Strategically, an accountant may advise the directors of a company about the business structure. Additionally, accountants are qualified to advise about the financial consequences of previous business decisions and the potential financial implications of future business decisions. Accountants also provide specialist tax advice, prepare complex self-assessment tax returns, advise on cash flow management, calculate corporation tax returns and capital gains tax and prepare limited company accounts.

The frequency of when the services of accountants and bookkeepers are required varies and this can determine which one you need. A bookkeeper is required more often than an accountant and will usually work on your books on a weekly, fortnightly or even a monthly basis. How often you need to use a bookkeeper will depend on factors such as how up to date you want your financial records to be and the size of your business.

A business normally needs the services of an accountant on a less frequent level and they are often engaged to work on quarterly VAT returns or annual accounts. They may also be used on certain projects such as preparing a business plan or financial forecasting.

Accountants will specialise in different fields and have experience from working in certain business sectors. It is important that if you decide that you need an accountant then select one that has experience of working with your type of business and within the sector that you operate.

New start-ups would probably opt for a bookkeeper over an accountant and with today’s software accounting packages allowing businesses to keep all their financial records, some would choose neither but that would be a mistake.

If you are a sole trader and your business is not VAT registered, then a bookkeeper will be the practical choice for you. Or, if your business, like most, starts off small and evolves you can start with a bookkeeper until the need and time arrives when you need an accountant.

However, if you have a limited company you need an accountant to prepare your corporation tax returns and annual accounts. It will be beneficial if the same accountant looks after the VAT and PAYE as well. Some businesses may require the services of both an accountant and a bookkeeper.

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