What Is The Difference Between Accountancy And Bookkeeping? By Arden Bookkeeping
One of the most common questions in business is what is the difference between a bookkeeper and an accountant and “do I really need both?” Whether Healthcare Bookkeeping or a chartered accountancy practice specialising in tech start-ups, the two roles are often seen as similar in their offering and the lines can be blurry between the two services but in reality, they both offer very different benefits to a business.
The financials are by far the most formidable part of business for any new owner just setting up and the one that causes the most worry and stress. There are countless deadlines, legal responsibilities and liabilities on a business whether you are a limited company or sole trader and having the right support there from the beginning can often be the difference between success and failure.
The majority of business owners are aware they require an accountant and think having one solves this area of their business and move on to the next without actually looking at the support and service the accountant actually provides them. If you think of a large corporate firm, they have a whole finance department dealing with their accounts – this team is made up of many different departments but, if broken down it is simply a mixture of bookkeeping roles and accountants’ roles both working together to support the company and ensure they are meeting all their legal requirements in a tax efficient and accurate way. Just because your business is not in the FTSE500 it doesn’t mean you won’t benefit from the same type of support.
If we look at both roles in more detail the accountants work with you to look to the future, plan for your growth, discuss strategy and forecasts to ensure you achieve your goals. They submit your accounts to companies house and HMRC and ensure no tax benefit is missed so you are running in the most tax efficient way. They look back across the previous year and discuss the performance, the peaks and troughs and how to avoid that in the coming year. This all sounds great right and surely all any business owner would need. But there is one vital part of that which is missing. Who is looking after the day-to-day running of the company’s financials!?!
This is where the bookkeeper steps in. Bookkeepers deal with the paperwork and the every day transactions. They enter all the information into your accounting software and handle things like your payroll, VAT, CIS and other regular responsibilities. The Bookkeeper becomes an integral part of your company, often working directly with your suppliers to resolve any issues, directly with your customers chasing outstanding monies and with you, the business owner to ensure you are claiming all the vat and expenses possible within your business. They ensure everything reconciles and you can see at any point throughout the year how your business is truly performing.
Now doesn’t that mixture of the two roles sound like a recipe for success? If we haven’t persuaded you yet here are top 5 reasons to have both for your business by Claire Bartlett, the director of Arden Bookkeeping:
- Cashflow – Cashflow really is king in your business. If you have only the accountant, this may not be looked at for months leaving you vulnerable and potentially in a position of risk as a business. Working with the bookkeeper would give you up to date information at any point throughout the year to see how your cashflow is looking and often they will spot ways to improve this throughout the year, having an immediate impact for your business.
- Constant support – Bookkeepers work closely with you; they have to dealing with the day-to-day so they are always there to ask any quick questions or share any niggling concerns with. Accountants are there to guide you through the big decisions and planning for future growth but sometimes if you just have a quick question, it can be easier and cheaper to ask the bookkeeper.
- Saves time – If you do not have anyone covering the role of the bookkeeper then that responsibility falls on you, the business owner. This often leads to errors or extra costs in lost vat or tax alongside the fact that your skillset, knowledge and passion is not in this part of the business. If you use a bookkeeper instead you free up your time to work on your business, the bit that you love and it will most likely take the bookkeeper much less time than it took yourself as their experience and knowledge makes quick work of that pile of paperwork you had been avoiding.
- An accountant’s work is only as good as the information provided. If the bookkeeping had been done by an inexperienced person all year the accountant will have to charge you for the time to resolve this and will not be able to advise and support you as they should. If a bookkeeper had generated the information this creates a seamless transition to the accountant and they can complete the work to a better quality and a reduced cost to your business! Win win
- And finally, the more eyes on your business the more likely it is to survive the future. It has been an incredibly turbulent few years for independent businesses and the more support that your business can receive to navigate the market and ensure you are working in the most efficient way can never be a bad thing. If you find a good accountant and a good bookkeeper, they will often work together throughout the year to support your business and ensure any potential issues are caught in time and resolved before any potentially fatal issues effect the viability of your business.