Are you wondering whether your small business needs a bookkeeper or an accountant but have no idea what the difference is? We’re not surprised. If you look up their job roles, you’ll find it hard to distinguish the difference between bookkeeping and accounting.
Bookkeepers and accountants have a role in managing and organising financial data for businesses and individuals. While their responsibilities sometimes overlap, they are certainly not the same profession. Bookkeepers focus on organisational aspects, while accountants tend to analyse and advise.
In this blog, we will explore the key difference between bookkeeping and accounting, helping you decide which profession is most suited to your business. We’ll explain their individual roles in greater detail and list the benefits each one can have on your business. This way, whether you’re a small business owner looking to get a helping hand or a larger limited company requiring a full suite of support, you will have the right information to make the best decision for your business.
At Archimedia Accounts, we are professional accountants who specialise in every aspect of accounting and bookkeeping, from organising and maintaining financial records right through to creating a strategic tax plan that can save your business a significant sum of money. With over 30 years of experience, our experts will be there to help push your business in an upward direction.
Keep reading to find out all you need to know about accounting and bookkeeping, or get in touch with one of our professionals for expert advice.
Are bookkeeping and accounting the same?
While bookkeeping and accounting are similar in the sense that they both handle crucial financial information for companies and individuals, they are not the same role. However, they can create a powerful duo when used together to develop a robust financial strategy.
So, let’s take a little look at how these two financial roles differ.
Bookkeeping focuses on recording financial transactions such as orders, refunds, sales and transfers daily. It is a largely managerial role. Accounting, however, is much more analytical. It offers financial insights to company managers based on facts obtained from certain bookkeeping records (this is where they come hand in hand).
Since bookkeeping is the initial step in many accounting practices, a bookkeeper’s and accountant’s duties, at times, overlap.
Functions of bookkeeping
The functions of a professional bookkeeper are quite simple (though the tasks may not be). They are simply there to ensure that your business records are well-organised and readily available when needed.
By regularly updating records and recording financial transactions, a bookkeeper will put your business in the best position to make important financial decisions and prepare you for any challenges your business may face.
Here is a list of duties you would expect your bookkeeper to carry out:
- Organise and maintain the general ledger to keep track of all financial transactions
- Carefully record all financial activities and daily transactions
- Prepare financial statements
- Keep track of revenue growth as well as costs for rent, electricity, and office supplies
- Process invoices for any products or services provided
- Keep subsidiaries and records in order and balanced
- Calculate and process payroll
What financial data do bookkeepers work with?
In order to effectively maintain your business records, bookkeepers will need access to various pieces of financial data from within your business. This can include income, expense receipts, assets owned by your business, financial debts and bank statements.
For an effective and efficient process, many bookkeepers will often use professional bookkeeping software to keep all records and information accurate. This enables you, as the business owner or manager, to access your important information wherever and whenever you need it.
Functions of accounting
Now, accounting takes the efforts of bookkeeping just one step further. The function of a professional accountant is to ensure your business is making sensible financial decisions and running in the most efficient way possible. It helps you get a better understanding of your performance and cash flow.
They will often use the data collected by bookkeeping to further analyse and implement advanced financial strategies for better cost savings and long-term success.
Here are some of the main accounting tasks you would expect from your accountant:
- Analyse financial reports and financial data
- Create reports, conduct investigations, and prepare financial documents such as tax returns, income statements, and balance sheets
- Provide data for projections, industry patterns, and growth prospects
- Advise the company owner of the financial implications of their actions
- Provide comprehensive tax planning advice
- Provide expert guidance on the legal structure of a business
What financial data do accountants work with?
Typically, accountants will require similar, if not the same, financial information that bookkeepers use to ensure a thorough service. Accountants will also need more in-depth data, such as the financial statements that bookkeepers prepare, to be able to conduct a thorough analysis and provide the most useful advice. This is why the two roles work well together.
Since the bookkeeping process involves maintaining records and generating financial statements, good bookkeeping can lead to excellent accounting, as the accountants will have a solid foundation to work with.
What is the difference between a bookkeeper and an accountant?
While bookkeepers and accountants have different professions, they both share the ultimate goal of helping you improve your financial situation. Their roles, responsibilities and qualifications differ.
A bookkeeper lays the foundation for the accounting process by keeping track of your accounts so you can see how much money is coming into and out of the business and where it comes from. They do this by recording and managing financial transactions and preparing financial statements. Ultimately, bookkeeping is the bare necessity of a business to ensure it has all documents and records in order to stay fully compliant.
An accountant, on the other hand, provides a more in-depth analysis of the bookkeeping information, giving you a strategic insight into your finances. By going beyond the day-to-day, an accountant will delve deeper into financial information to prepare detailed reports that guide your business decisions. They will also be available to ensure you are well-advised when facing complex challenges and financial audits.
Both professions necessitate basic know-how of accounting. Bookkeepers aren’t required to have any particular qualification (though it is strongly advised), whereas the level of certification needed to become an accountant is a whole other level. Bookkeepers lacking adequate qualifications cannot be recognised as accountants, yet accountants may be regarded as bookkeepers.
Benefits of having a bookkeeper
When it comes to setting your business up for success, the support of an experienced bookkeeper can really make a difference. If you are fed up with piles of paperwork, receipts, and notes scrawled on the backs of envelopes, chances are you will benefit from some efficient bookkeeping support.
Having a bookkeeper can be beneficial for your business in many ways:
- Make more informed decisions with added financial clarity
- More time to spend growing your business
- Less stress when it comes to compliance as your records will be in perfect order
- Make better cost savings due to financial efficiency and knowing where your money is spent
- Peace of mind knowing your records are in the hands of an experienced financial professional
Benefits of having an accountant
To keep your business moving towards its goals, you’ll need more than the basic number crunching. Having the support of an experienced accountant can give you the strategic input needed to understand your finances on a higher level.
Accountants can provide many benefits for your business:
- Long-term business success with strategic financial planning that goes beyond the basics
- Fewer fines and worries as accountants will take care of HMRC deadlines and complex returns
- Prevent financial challenges before they’ve even happened
- Safeguard your business against potential financial pitfalls
- Smooth running business operations thanks to effective business planning support
- Confidence to secure future funding and investments
Speak to Archimedia today for bookkeeping and accounting support
At Archimedia Accounts, we are a dedicated team of experienced accountants who provide businesses with friendly and professional advice with a personal touch. Ultimately, we want to help your business continue moving in the right direction – putting you in the best financial position both now and in the future.
We offer a wide range of bookkeeping and accounting services to businesses of all sizes, helping them strive towards their financial goals. Whether you are looking for a streamlined record-keeping process or a full suite of accounting support, our experienced team will ensure you get more than the basics.
Get in touch today to learn more about our bookkeeping and accounting services and find out how our experts can completely transform how you manage your finances.