One of the biggest misconceptions in the financial world is that bookkeepers and accountants are the same thing. Yes, they both can help businesses of all shapes and sizes by providing them with valuable advice on how to handle financial matters, and yes, they both do have tasks which overlap, but they are in fact two very separate roles.
What do bookkeepers do?
The role of bookkeepers is to organise and maintain the day-to-day running of your finances. This can range from processing invoices, receipts, payments and transactions to providing credit control e.g. keeping an eye on which clients have been paid and chasing those that haven’t.
Similarly, they are key to other aspects of your business:
- Processing and maintain your business payroll system
- Preparing financial statements (the initial parts)
- Reconciling accounts and preparing reconciliation reports
- Paying invoices that your business owes
To put it more simply, bookkeepers ensure your business finances remain up to date and in order by maintaining your financial information. This information is then passed onto your accountant whose job is to provide you with more detailed financial advice and support.
What do accountants do?
You could say accountants are the next step up from bookkeepers as they take the information supplied by bookkeepers and then analyse it. From here they are able to create reports that they can use to give you professional, in-depth and detailed financial advice.
On top of this, accountants also have a thorough understanding of tax, the tax systems and its requirements. Many actually choose to specialise in a particular aspect of accounting so that they can effectively translate any changes in rules and inform you on how they may affect your business.
Alongside advising you on your tax liabilities, accountants also provide advisory and analytical support in the following areas (depending on what parts of accounting they have chosen to specialise in):
- Raising funds, investments and assistance in other financial services
- Corporate planning and compliance
- Pension advice and planning
- Financial management advice
- Plus many more services
Do you need both?
This depends on you, your own personal preferences and how complex the financial status of your business is.
For instance, if you have got a large business, then it may be wise to hire a bookkeeper (either as an employee or on a freelance basis) as they can ensure that your business stays up to date and organised. From dealing with your invoices, paying bills and tracking payments, to maintaining cash flow; they can help to keep your business on top.
Accountants are also invaluable as they can help you to save on your tax bill; make sure you fulfil your tax obligations, and attain a healthy profit. In fact, by analysing the financial nature of your business and understanding its value, they can help you to drive your business forward.
In other words, both can bring value to your business!
So if you are interested in giving your business the financial support and advice it needs to remain profitable, then we recommend adding both to your team.
Alternatively, if you’ve got a natural passion for numbers and have got the time to maintain your own accounts; then enrolling onto an online bookkeeping course can help make this passion a reality.