Financial sector experts sometimes gets confused about the difference between a bookkeeper and an accountant. So it's no wonder business owners get the two mixed up. We thought, as a respected Sussex Bookkeeping firm, we'd make the whole thing as clear as possible for our readers. Here's which is which, and what each does.
The first thing to note is this: bookkeeping overlaps with accountancy. In fact bookkeeping is a subset of accountancy.
What is bookkeeping?
Bookkeeping is about keeping neat books in a business context, the first step in the accounting process. A bookkeeper takes responsibility for keeping accurate and complete records of every single financial transaction a business makes. It's a complex mechanical process involving collecting, organising and collating essential data but it isn't about analysing the numbers.
A bookkeeper uses logic and excellent organisational skills plus a suite of common sense procedures to record each and every transaction, every day. Then they tally it at the end of the day / week / month. But there's more. They can also send invoices out for you, record incoming money, invoices from suppliers and inventory, pay suppliers, process your payroll and record petty cash transactions.
Why does it matter? A tax return is an annual thing. But current, accurate financial records are a vital year-round resource. As a business it's important to know exactly where you stand from a financial perspective on an everyday basis. You need to know your records are right, in real-time, because when you don't you can't make sensible, fully-informed business decisions.
Bookkeepers play a vital role in running a business efficiently and effectively. If you don't have a record of all your payments and receipts, it's very difficult to control your cashflow. You can't control what you don't understand.
What, exactly, does a bookkeeper do?
Creates balance sheets and spreadsheets
Makes cash flow summaries
Provides concise, accurate information for your accountant
Supports you with ESCL and ONS reports
Some also provide support with Payroll and VAT
See our blog feature, for more specifically on What Do Bookkeepers Do?, for more information on this subject.
What is an accountant?
Accountants focus on the big financial picture. Their work affects the entire accounting process, building on the base information provided by a bookkeeper to analyse, classify, summarise, interpret and report back. In effect they add meaning and texture to raw data.
An accountant will interpret the data in an effort to forecast the financial future and spot areas where efficiencies can be made. They do it via good financial accounting, management accounting, tax accounting, auditing and other related services.
Which do you need, and when?
In smaller organisations the bookkeeper and accountant are often the same person. In big businesses they tend to be separate people, the same in accountancy firms.
Your accountant might farm out your bookkeeping to an internal or external bookkeeper. You may as well go direct to a bookkeeper and keep the fees low - there's no need to pay accountancy-level fees for a bookkeeping service.
Any questions about bookkeepers in Sussex?
Feel free to ask us. We're always happy to talk to people about their bookkeeping needs.