Accountant or Bookkeeper - whats the difference?
I frequently speak with clients where it has become apparent that there is confusion over the difference between bookkeepers and accountants. Firstly let me say that accountants and bookkeepers are not the same thing. If you hire an accountant, you cannot expect to absolve yourself from doing anything finance-wise. In order for an accountant to do their job, you have to have already done the bookkeeping. Some accountants do also offer bookkeeping services, although they will usually be more expensive than a self employed bookkeeper because they can bring greater insight into your figures than a bookkeeper. Accountants and bookkeepers have different jobs and responsibilities.
An accountant’s main focus is: the preparation and filing of statutory returns to HMRC (and Companies House if required),advising on legal entity structures, giving general business and financial advice (including cashflow, forecasting and budgeting)
Bookkeepers can manage lots of different responsibilities within a small business. But the main focus is the organisation, recording and reporting of financial transactions as part of the operational life of a small business.
Here are some of the tasks of bookkeeper that will help to keep your business running smoothly:
Keeping track of daily transactions
A bookkeeper can handle the recording of day-to-day bank transactions. If the accounting software you use has daily automatic bank feeds, this is a great tool for your bookkeeper to use. When your bank statement lines are fed into your accounting software, it’s much easier to keep an eye on cashflow and it also saves on data entry time.
Sending out invoices and managing the accounts receivable (sales) ledger
Preparing invoices and sending them to clients is often the bookkeeper's responsibility. Managing the accounts receivable ledger – and chasing late payment – is also likely to be done by a bookkeeper.
Handling the accounts payable (purchases) ledger
Up to a certain amount, bookkeepers may be hired to make payments on behalf of the business. This includes payment of supplier invoices, expenses and petty cash. They would also keep an eye on due dates, and overdue purchase invoices. If they don't make the payments, they might send a report of what needs to be paid to the person responsible for making the payments.
Keeping an eye on cashflow
One of the most important tasks for a bookkeeper is making sure the company doesn't run out of day-to-day money. They can do this by watching the balance of revenues to expenses. Then they can take action or offer advice if it looks like the company needs more ready cash.
Preparing the books for the accountant
It's the bookkeeper's job to ensure that the accounts are valid and up to date when the accountant needs them. This allows the accountant to use their skills and knowledge to make business recommendations, report to the board and complete company tax returns.
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