What’s The Difference Between Bookkeeper and Accountant?
Overview
Starting and running a business can be challenging and exciting for clients simultaneously. Certain technical accounting issues may cause these challenges to arise, but you can resolve them by seeking assistance from an accountant or bookkeeper. Both of them are vital for your client’s business because they will do all the number crunching while your client can keep its focus maintained on business expansion.
While the two are distinct positions sometimes their work overlaps each other, giving an impression to your clients that they are the same. But your clients need to have a proper understanding of a bookkeeper and accountant. This will help in making the best use of the resources available plus will avoid a situation where clients choose bookkeepers instead of accountants. Your client will need to understand what bookkeepers and accountants do and where their expertise is required to better understand the difference.
What Does a Bookkeeper Do?
Bookkeeping is as old as trade and businesses existed and is an important part of any business. So, what does a bookkeeper do exactly to help a business run smoothly? Under bookkeeping recording of daily transactions takes place along with classification and analysis of business transactions. It is the job of your bookkeeper to tell your clients what’s happening to their finances.
Bookkeepers used to manually handle bookkeeping, but that’s now a thing of the past. These days, businesses increasingly use software solutions like Xero or FreeAgent to aid in bookkeeping. Such software solutions are increasingly being adopted by outsourcing service providers that offer bookkeeping outsourcing services to accounting firms. Your competitors are increasingly adopting these solutions as well. Essentially, your bookkeeper will process the financial transactions into the software of your choice, while also ensuring they pay all bills and receive payments.
The job of a bookkeeper is to simplify the large number of bills, receipts, and invoices into a simple log of money that comes in and goes out. Also, a bookkeeper can offer a range of additional services such as running payroll, preparing VAT returns, and preparing and filing tax returns. These additional services also cause bookkeepers and accountants to overlap in their roles.
What Does an Accountant Do?
Unlike a bookkeeper, your accountant is less concerned about recording your client’s financial activity, so what does an accountant do? It focuses on making sure your client is compliant with tax rules and regulations decided by HM Revenue and Customs. They will work less frequently unlike your bookkeepers who will work weekly, fortnightly, or monthly for updating of books. Also, your accountants may have to work on annual accounts, quarterly tax returns, or in a much more involved role.
Your accountants will work with your clients in the planned management of their company such as helping in their tax planning and making them utilise all the relevant tax advantages. They also help in maintaining the cash flow, help in financial planning, reduce costs, and plan for growth. Furthermore, accountants, who undergo extensive training, can handle complex questions from your clients better than bookkeepers. Also, they will be aware of PAYE, VAT, and accounting industry standards.
Which One to Choose Accountant or Bookkeeper?
A business requires both an accountant and a bookkeeper which are both different but important for the smooth functioning of a business. Without them, your clients will be unable to track finances and comply with tax laws and regulations. Furthermore, your clients would have to do it all by themselves which will be time-consuming and require extra training. Still, you will have to decide under which situation will the accountant be suitable or bookkeeper.
We have come up with some scenarios that will help you in making that decision.
Processing of Invoices and Other Financial Documents
Under this scenario, your clients will require the help of a bookkeeper because your accountants will not handle the task of processing invoices, expenses claim, issuing invoices as well as filing and managing financial documents. A bookkeeper will also chase client’s customers who have not yet made the payment.
Preparing and Filing of VAT Returns
Both bookkeepers and accountants can perform these tasks for your clients. Apart from that, they can also handle posting journal entries, payroll running, and other basic tax advice.
Preparing of Limited Company Accounts
Only an accountant is capable enough to prepare a limited company account. It is important to note that your bookkeeper will be unable to file corporation tax returns and calculate capital tax, business plans, or cash flow estimates. All this can be handled by an accountant.
Tax Advice
Again, it’s the accountant who has the expertise on tax laws and regulations and can give your clients informed and strategic tax advice which your bookkeeper cannot.
Do Bookkeepers Make a Lot of Money?
Bookkeeping is a respectable position in the UK accounting industry and to answer the question – do bookkeepers make a lot of money? the answer is it depends on multiple factors. Firstly, the skills and duties will determine how much a bookkeeper will earn, and secondly, in the UK the national average salary of a bookkeeper in 2023 was approximately 23, 447 pounds per year. Still, a bookkeeper’s work experience and company size will matter when it comes to salary.
Conclusion
To conclude we can just say that whether it’s an accountant or a bookkeeper both are essential for running a business smoothly. Through this blog, we have attempted to guide your clients as to under which situations, scenarios, or tasks you will require an accountant or a bookkeeper. Still, it will be difficult for them to decide due to multiple reasons such as being preoccupied with running a business, lack of time, and so on. That’s when you can guide them into making that decision.
If your clients are looking for high-quality and experienced bookkeepers or accountants and you are unable to offer it to them then don’t panic. You can choose to outsource booking or accountancy to a service provider such as Corient Business Solutions.
Our teams of bookkeepers and accountants have vast experience in multiple payroll applications such as Sage, Brightpay, Xero, Moneysoft, Earnie, Star Payroll, and several others. Our services are designed to give your clients an edge in the market, thus saving their time which they can invest in other important tasks. We can connect at your convenience on a call or online meeting where we can discuss in detail about our services.