What’s the difference and do I need both?
If I had a pound for every time I’ve been asked that question I’d be very rich indeed.
Since both terms are often used interchangeably and both positions are often used to cover the job responsibilities of each other, I thought it might be time to actually discuss the differences of both roles.
Bookkeepers and accountants are pretty much concerned with the same thing, albeit at different levels. You’ll need to keep a tight grip on your finances and a bookkeeper will help you with this. They typically deal with all money both incoming and outgoing, recording your business transactions and making sure your books balance. As well as this they often prepare payroll and VAT returns. Typically they’re concerned with the detail, the individual transactions. In a smaller company a bookkeeper often takes on much more and can produce management reports on a regular basis for presentation to the board.
The role of bookkeeper is very often a task for the owner in very small businesses although many tend to outsource this responsibility – the rule is: if the bookkeeping is distracting you from revenue generating activities then outsource it.
The role of an accountant is much more specific. The typical accountant picks up the accounts where the bookkeeper left off but looking more strategically at the bigger picture. They will take the information produced by the bookkeeper and use it to create reports explaining the financial position of the company. These reports are fundamental for you, the owner, to make informed decisions about your business.
Accountants often implement financial strategy and prepare the legal paperwork for things like loan requests as well as tax preparation and advice.
Do you really need both people within your organisation?
That rather depends upon the organisation. As you can imagine there’s often a grey area between the roles particularly as some accountants will also take on the role of the bookkeeper but this tends to be an expensive way for the “books” to be produced.
For a much larger business, it makes better sense to have a full time accountant on board as well as a bookkeeper as the needs would be greater and more frequent.
If your business is small, you probably don’t need an accountant full time but rather have one available for when you need financial statements made or when tax time approaches. There are many practices that offer this flexible service as well as freelance Financial Directors who can also sit in on board meetings offering expert advice as and when required.
You will however need someone to process your day to day transactions and if that is the owner of the business then you must make sure they are competent because there is nothing more costly than handing your accountant messy books at the year end.
Whatever your choice the important thing is to make sure your accounts are in order and there is no better way than the combination of both bookkeeper and accountant – a sure fire way to help a business prosper and grow financially.