Negosentro.com | An Essential Comparison between Bookkeepers and Accountants: Which is Best for You? | One of the essential questions many business owners ask bookkeepers and accountants (and accounting firms) is what the differences are between them. Essentially speaking, what is the role of a bookkeeper, and what is the role of an accountant? Most of us are understandably confused about the two and what they can actually do for a business. But if you are contemplating hiring either an accountant or bookkeeper, what can you expect from both? Here’s an essential comparison between bookkeepers and accountants, and which is best for you.
The role of a bookkeeper
The role of a bookkeeper is clear; they process whatever financial transactions the business has and they keep a record of them in a software system (like Xero, for instance, with which www.kenbellaccounting.co.uk is an expert). The bookkeeper keeps the financial transactions in check, and they can be responsible for paying bills as well as invoicing customers and contacting them for payment. All business enterprises will produce a lot of paperwork, from purchase invoices to receipts as well as expense claims, and a bookkeeper can take care of this paperwork so it is accurate and organised. Some of the better bookkeepers can also prepare a company’s VAT returns as well as prepare the payroll and create and file tax returns.
The role of an accountant
An accountant, on the other hand, can deal with compliance at a higher level, such as the filing of accounts as well as tax returns, and they can also give advice on financial and strategic planning and management. Some accountants can offer tax planning so a business owner can minimise their personal tax and business tax liabilities, and they can also advise on the management of cash flow.
The main differences between the two
Many accounting firms will have bookkeeping services, of course, while some bookkeepers work alone. It is really up to you what you choose to work with, depending also on the kind of business you have and its size. But there are other differences between the two, which are outlined below:
- The frequency
Bookkeepers can keep track of your books on a weekly basis or twice a month, or they can also do so monthly. The frequency of the service will depend on your business’ size as well as its complexity, and it can also depend on how you would like your financial transactions and records to be updated.
Accountants can work less frequently than bookkeepers. You can rely on them for your VAT returns every quarter or your yearly accounts. You can also involve them in more specialised projects, such as working on a business plan or creating a forecast for your cash flow.
- The duties
There are also certain duties that both can do, but there are some duties which only one or the other can do. For instance, bookkeepers often process invoices for purchasing and they can also process your expense claims, while accountants don’t often take care of this. Bookkeepers can also file and manage your documents as well as contact your customers for payment, whilst accountants won’t usually be assigned to this. Meanwhile, only chartered accountants are often adept at preparing corporation tax returns, preparing and calculating capital gains tax, preparing accounts for limited companies, and preparing business plans as well as making forecasts on cash flow.
You can, however, rely on both for posting journal entries, running your payroll, preparing and filing VAT returns, and preparing tax returns.