Bookkeeper or accountant? They both work in the finance profession and provide vital functions for businesses but do they do the same thing or are they different?
Knowing whether you need a bookkeeper or accountant can be confusing. After all, although there are some significant differences in their roles, there is also a lot of overlap in the services each offers.
Here we’ll discuss the differences between both and help you better answer the question of whether you need a bookkeeper or accountant.
What is a bookkeeper?
Traditionally, bookkeepers recorded and kept all financial transactions of a business in books – hence the name.
Today, many bookkeepers still fill a similar role of handling and processing the day-to-day financial transactions of a business as well as payroll, VAT returns, year-end accounts and making sure that the business finances are running efficiently.
This is fundamental work required before further processing or more in-depth analysis can take place by other members of a finance team or an accountant.
Over the last decade in particular, the bookkeeper profession has evolved to provide a greater variety of services to small businesses and individuals. Many bookkeepers are now qualified to also do self-assessments, corporation tax and management reports in addition to other daily bookkeeping tasks.
Bookkeepers tend to charge less than accountants for the same work, so for small businesses or those not requiring specialist areas, a professional bookkeeper may be the way to go.
Businesses qualify as a small entity provided they do not exceed two or more of the below criteria:
Annual turnover of £10.2 million
Gross assets of £5.1 million
Average number of 50 employees
Bookkeeper professional bodies
Just as with any professional vocation, bookkeepers are regulated by professional bodies. When you’re considering a bookkeeper, it’s a good idea to check that they’re registered with one of the following or an equivalent professional body.
What is an accountant?
An accountant focuses on the bigger financial picture and this level of financial management requires more qualifications than a bookkeeper. Accountants do many of the same day-to-day duties as a bookkeeper including processing of financial transactions, payroll, VAT returns and year-end accounts. However, the big difference is that an accountant can take it a step further by interpretating the data and forecasting future trends.
Like some bookkeepers, accountants can also be qualified to do self-assessments, corporation tax and management reports. Unlike bookkeepers, they are not limited only to small businesses. Furthermore, accountants can be qualified in a range of specialist services such as auditing, tax planning and inheritance tax.
Accountants will tend to charge more than bookkeepers and especially in areas that only an accountant is qualified to do. If you have a large company that requires auditing or you require specific services like tax planning, then an accountant is what you will need.
Accountant professional bodies
Like bookkeepers, accountants are regulated by professional bodies and it is always wise to check that they’re registered with one before you engage their services.
Do you need a bookkeeper or accountant?
If you are an individual or have a small business, then a professional bookkeeper with the right qualification should be able to meet the vast majority of your needs at a lower cost than an accountant.
If you have a large company or you require specific needs such as auditing or inheritance tax, then it is likely you will require an accountant. Depending on the size of your business, you may also require a bookkeeper to act in a supporting role to your accountant.
Of course, neither all qualified bookkeepers nor all accountants will have the same levels of experience, skills or expertise – so do a little research to find someone who’s the right fit for you and your business.
Lava Sky Accounting was founded by a Professional Bookkeeper with over 10 years’ experience in finance. We are licenced with the Institute of Certified Bookkeepers and hold the highest level of qualifications offered. We can offer a wide range of services for individuals and small businesses so book a free consultation today to see how we can help you.