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New business owners are often told they should have help with the accounts side of their venture. But what do you need – a bookkeeper or an accountant and who does what? Until now you have probably never needed to know, nor had the desire to find out, but we outline the two roles for you here.
What does a Bookkeeper do?
A bookkeeper keeps track of the money coming in and out of business accounts daily. They record and calculate income and expenses, raise purchase invoices, make bank transactions, and create sales invoices.
Additionally, bookkeepers help with ongoing financial tasks, such as payroll, preparing for year-end tax returns and help keep the finances running efficiently.
A bookkeeper’s job ensures that the accounting system contains accurate data at all times. Supporting the overall financial system enables up to date reports to be created and invoices paid at the right time.
Some of the work a bookkeeper would do:
- Record financial transactions
- Reconcile bank accounts
- Deal with accounts receivable and payable
- Assist with tax compliance
- Prepare financial statements
All in all, bookkeeping is an essential job for any business. Having a good bookkeeper helps in making better financial decisions.
What does an Accountant do?
Accounting is the process of summarising, interpreting, and communicating financial transactions contained in the ledger account. The work of an accountant is to determine the financial situation and relate the information to the relevant authorities.
Accounting uses bookkeeping information to analyse the data and compile it into financial statements, statutory accounts and tax returns. This information helps business owners and directors to make informed business decisions.
Some of the responsibilities of an accountant:
- Manage accounting transactions
- Reconcile accounts payable and receivable
- Prepare budget forecasts
- Publish financial statements
- Handle monthly, quarterly and annual closings
- Prepare tax returns
- Manage balance sheets and profit/loss statements
- Report on the company’s financial health and liquidity
- Audit financial transactions
- Comply with financial policies and regulations
A primary goal of accounting is to provide the financial information required to business owners, managers, and investors to make strategic business decisions.
Although the two often overlap the basic differences are:
- bookkeeping is responsible for the recording of financial transactions;
- accounting is responsible for analysing and summarising the financial data.
If you think we can help with your business finances or you just want a chat about it get in touch.
Disclaimer: Information provided by Kidwells Accountancy on our website is for informational purposes only. It is provided in good faith but we make no guarantee of any kind regarding the accuracy, reliability, or completeness of any information on our site. We always recommend businesses seek independent legal and financial advice before working with us or acting on any information on our website.