This question comes up time and again so we thought it would be useful to set out how we see the two professions.
Bookkeeping is a methodical process usually occurring in monthly cycles consisting of entering transactions into journals and preparing reports. Basically it is the recording of data about your business so that accurate financial statements and accounts can be prepared.
A bookkeeper will record the financial transactions of your business and present them in an organised way. This might be electronically or manually, depending on your preference. Where applicable a bookkeeper might complete your VAT return.
A bookkeeper can spend considerable time with your business, often working at your premises. They may also provide other business related services such as credit control (chasing payments) and general administration.
The accounting process involves interpreting financial information, often provided by a bookkeeper. An accountant presents financial statements to help with decision making and to comply with the law. These will typically include income statements and balance sheets.
Whilst some practices do, accountants will not normally provide a day-to-day bookkeeping service. It will generally be your accountant that completes the year-end accounts and other formalities, with the information provided by your bookkeeper.
Your accountant will be able to advise on tax efficiency and company structure and should be your first point of reference when proposing to make ownership changes, for example.
In many cases, you will require a bookkeeper and an accountant. The key is to make sure you use the right person for the job. Both bookkeeper and accountant should be qualified, insured and ideally regulated by a professional body so that you know your business is in safe hands.
It is worth remembering that bookkeepers charge less for their time than accountants so it makes sense to use them for as much as you can. Also, make sure your bookkeeper and accountant talk to each other. This can save everyone time and ultimately reduce your costs.
Getting it right will result in regular and useful information about your business while also ensuring you comply with legal requirements for financial recording and reporting.
This is not a definitive summary of all the services provided by the bookkeeping or accounting professions. Further information can be obtained from the Institute of Certified Bookkeepers (ICB) and The Association of Chartered Certified Accountants (ACCA). Alternatively, please do not hesitate to contact us if you require any further information.