Bookkeepers vs. Accountants: What’s the Difference?

When you're running a small business, it can be tough to know who to turn to for help with your finances. The terms "bookkeeper" and "accountant" are often used interchangeably, but there are some key differences between the two.

Bookkeepers are responsible for the day-to-day financial tasks of a business. This includes things like recording transactions, reconciling bank statements, and paying suppliers. Some Bookkeepers can also help with payroll and VAT returns.

Accountants, on the other hand, provide more complex financial services. This includes preparing and filing tax returns, conducting financial audits, and providing strategic financial advice. Accountants can also help with business planning and budgeting.

Although there is some overlap between the work of accountants and bookkeepers, most business owners can benefit from using both a bookkeeper and an accountant to manage their business’ financial affairs.

Which One Do You Need?

If you're just starting out, you may be able to manage your finances yourself. But as your business grows, it's a good idea to hire a bookkeeper or accountant to help you keep up.

A good bookkeeper will often work the hours you need, so for example, you can start with a few hours a month and increase this as needed. Bookkeepers should be able to process financial transactions and settle invoices much quicker than you might be able to. In turn, freeing up more time for you to focus on running other areas of your business.

An accountant is great to use at any point in your business journey.

If you are just starting out your business, an accountant can provide advice on how you should structure your business, the best ways to extract profits from your business, and provide input on your business plan.

Once your business is established, accountants can provide advice on all sorts of matters, such as business expansion or tax matters relating to asset acquisition. Accountants are also a useful port of call when it comes to any tax-related queries you may have.

Accountants can also advise as to whether your business should register for VAT, and relevant tax reliefs or deductions that your business can claim.

In summary, it’s best to go to a bookkeeper when you need help with the administrative side of your finances and to reach out to an accountant when you need more technical advice, or when your business starts getting larger.

If you prefer to have all your service providers under one roof, there are also accounting firms that offer bookkeeping services, which can make things easier by providing a single contact for all your financial needs, while also making sure that the bookkeeping and accounting teams are working together.

How to Find the Best Bookkeeper or Accountant for You

When choosing a bookkeeper or accountant, it's important to look for someone who is qualified and experienced. You should also make sure that they are a good fit for your business and your budget.

When choosing an accountant, they should have completed their training with one of the UK’s chartered accountancy bodies and will have the initials ACA, ACCA, ICAS or CIMA as recognition of their qualifications.

Overall, when deciding which bookkeeper or accountant to hire, think about their qualifications and experience, but also consider factors such as their cost, their reputation, and whether they have experience working for clients in your industry.

Equally, if you’re having trouble finding a good accountant or bookkeeper, ask around and see whether other small business owners use anyone that they would recommend.

In Summary

The best way to determine whether you need a bookkeeper or an accountant is to look at the needs of your business and the type of financial assistance you need.

If you’re struggling with keeping up basic financial recording and often find it difficult to manage your invoices, payment cycles, or daily transactions, then it might be time to get a bookkeeper on board to help. Equally, if you’re looking for more technical advice, or need help completing your annual accounts, then an accountant can step in and assist.

Often, businesses find that they will need to enlist the help of both a bookkeeper and an accountant at some point during the business’ life.

At VN Accountancy we are proud to offer both services. Please get in touch to discuss which service(s) are best suited to your business and see if we are the right fit for you!