In the financial world, the terms ‘accountant’, ‘bookkeeper’, and ‘tax adviser’ are often used interchangeably. However, though these are all names for tax professionals, their roles and responsibilities are quite different.
What Does a Bookkeeper Do?
As suggested by the name, a bookkeeper is concerned with ‘keeping books’; as such, some of their duties can be seen to overlap with an accountant’s, as bookkeeping is vital to financial management.
Bookkeepers can be crucial to the smooth running of a business. They are responsible for maintaining a precise picture of a company’s (or individual’s) financial transactions. They do this by logging payments and receipts, as well as ensuring that payments are made and received at the correct time. Whereas an accountant won’t often be concerned with the day-to-day running of the business, instead focusing on quarterly or annual accounts (as well as strategy and financial planning), a bookkeeper will work on their customers’ accounts on a regular basis (weekly, in some cases). The volume and frequency of their work depends on the scale and complexity of a client’s business dealings.
Common tasks include:
- Recording of receipts, invoices, and inventory.
- Issuing and chasing invoices.
- Paying suppliers.
- Processing payroll.
- Monitoring petty cash transactions.
What Does an Accountant Do?
Whilst a bookkeeper’s range of responsibilities is relatively small, an accountant is concerned with the whole financial picture. It’s crucial that an accountant has up-to-date, accurate financial records to work with (like those provided by a bookkeeper), but they are more concerned with classifying and summarising the data so that meaning can be extracted from it.
As well as performing analysis and preparing reports and tax returns, accountants can produce projections on profitability and cash flow. Furthermore, an accountant is well placed to advise a business owner on tax strategy, financial forecasting, and general business planning. Additionally, as accountants encounter a variety of professionals from different industries on a regular basis, they’re often uniquely positioned to connect clients with useful business contacts and trusted service providers.
In addition to dealing with higher-level compliance, accountants can also choose to specialise in a variety of related areas (such as auditing or management accounting).
Common duties include (but are not limited to):
- Preparing quarterly management accounts and year end company accounts.
- Calculating VAT liabilities.
- Filing returns (Corporation Tax, VAT, etc.).
- Corresponding with the relevant authorities (HMRC, for instance).
- Advising on business structure.
- Preparing business plans and cash flow forecasts.
Bookkeeper or Accountant: Which is Best for My Business?
Whilst keeping one’s own books up to date was once a relatively complex and unappealing business – not many people have time to sort through reams of paperwork, after all – the introduction of digital and cloud-based bookkeeping software has meant that many business owners prefer to keep their own books (or to share access with their accountant, who is then able to keep an eye on things in real time).
For the majority of companies, therefore, working with an accountancy firm that also uses digital bookkeeping software is the best option (IBISS & Co work with clients through an award-winning online accounting package that incorporates ‘Iris’ and ‘Kashflow’, for example).
Moreover, if you are considering expanding your operation or have any questions, it is highly advised that you enlist an accountant. For example:
- Is your business evolving – might you be moving to new premises or taking on additional staff?
- Are you considering pursuing outside investment?
- Are you concerned about compliance?
- Do you have any queries regarding tax or require specialist advice?
If you answered ‘yes’ to the above questions, you will require a more comprehensive service than a bookkeeper could provide, and it’s highly recommended that you seek advice from an accountant or tax adviser. Do be aware that accountants and tax advisers are not the same thing, which slightly complicates matters, but we will be covering this in more detail in our next blog – stay tuned!
The IBISS & Co team comprises chartered certified accountants and chartered tax advisers, ensuring that no matter what kind of business you run – whether you’re in manufacturing or marketing, and whether your company is big or small – there is a suitable tax expert ready to assist. Contact us today for frank, friendly discussion and a no-obligation quote.