Bookkeeper vs. accountant – what’s the difference?
Here at Adams Accountancy, we are often asked ‘What’s the difference between a bookkeeper and an accountant, so here we are to give you our views on the key differences and similarities and guidance on when you need one or the other.
Are bookkeepers accountants?
Bookkeepers may also be accountants but you do not need to be a qualified accountant or bookkeeper to offer bookkeeping services. Many excellent bookkeepers are qualified by experience which means you need to do your due diligence when you’re looking to hire a bookkeeper. Ask for client testimonials as proof that the bookkeeper has a good knowledge before working with them.
What do bookkeepers do?
Bookkeepers look after the day-to-day financial transactions of a business. Common tasks include creating and sending client invoices, chasing up overdue accounts, inputting expense receipts and reconciling bank accounts. A bookkeeper should also be able to correct bookkeeping errors and make journal entries to move amounts around in your accounts if necessary. Some bookkeepers will also offer payroll and VAT return processing.
What do accountants do?
Accountants are responsible to producing the business financial statements – balance sheet, profit & loss and cash flow statements. They will also handle your Corporation Tax return, annual accounts and income tax self-assessment returns. Some accountants offer additional management reporting each month to help you make better financial decisions.
Do I need an accountant and a bookkeeper?
If you are happy to do your own transaction recording of invoices, receipts, stock and so on, you may not need a bookkeeper. If you have a limited company, you’ll need an accountant to submit your Corporation Tax return as this can only be done using specific software. You could choose to do your own self-assessment tax return and bookkeeping if you are a sole trader and your business is straightforward.
As you grow, you may find you need to hire a bookkeeper for a few hours a month or week to keep on top of all your transactions. Product based businesses often have a greater volume of transactions so could benefit from bookkeeping support. If you aren’t confident handling your business finances, it makes sense to have a professional look after it for you, so this is when you may need both an accountant and a bookkeeper.
Here’s a comparison of the key differences between a bookkeeper and an accountant:
GCSEs or equivalent
Optional: professional qualification e.g. ICB
|Professional qualification e.g. ACA, ACCA, ACMA
|Basic accounting knowledge, data entry, attention to detail
|Advanced accounting knowledge, problem solving and analytical skills
|Recording day to day transactions, credit control, reconciliations
|Analysing data, financial/tax advice, preparing tax returns
|Supports accounting function
|Financial analysis, planning and strategy
What can go wrong if I do my own bookkeeping and accounting?
There are some very common errors we see when business owners have tried to complete their bookkeeping themselves. A few of these include not separating personal and business banking, not keeping backing documents and making double entry errors when keying in data.
We also see errors on self-assessment tax returns that lead to misreported profits. When this happens you might pay too much tax and have to claim a refund or even worse, not enough tax and end up with interest penalties and fines. It’s also common for business owners who do their own tax returns to fail to claim the right allowances, reliefs and deductions which means you pay too much tax.
How do I choose a bookkeeper or accountant?
The most important part of any relationship that deals with finances is trust. You must trust that your bookkeeper or accountant knows what they are doing and has your best interests at heart when giving financial advice.
The best place to start when you’re looking for a new bookkeeper or accountant is to get personal recommendations from family, friends or other business owners whose judgment you trust. Look at online reviews on Google, Trustpilot or Linkedin. Set up a meeting, face-to-face if possible, to talk to the accountant or bookkeeper about your business and how their services can meet your needs. Trust your gut about which one feels right for you.
How much does a bookkeeper cost?
Bookkeepers hourly rates vary from around £15 to £20 an hour. Many bookkeepers offer monthly packages of a set number of hours for small business who want to keep a tight control on costs.
How much does an accountant cost?
Accountants usually package up their services for business owners so the service includes preparing and submitting the tax returns and the annual accounts and may also monthly reporting. Costs can vary considerably but you can check out our prices to give you an idea.
Whether you need a bookkeeper or an accountant, we can help
Adams Accountancy offers comprehensive bookkeeping and accountancy services. We have an excellent reputation locally for being the best accountant in Dartford and surrounding areas. Give us a call on 01322 250001 for a free chat about your business and how we can support you to greater success.