FINANCIAL LITERACY • 6 OCTOBER 2023 • 4 MIN READ

Accountant vs. Bookkeeper: What’s the Difference

Man doing some accounting work with a calculator

SECTIONS

Accounting vs. Bookkeeping

Common FAQs

The terms ‘accountant’ and ‘bookkeeper’ are often used interchangeably, but there are distinct differences. Both roles are important in managing a business’s financial records, but the responsibilities of each serve different and complementary purposes.

In this blog, we’ll answer key questions on:

What does an accountant do?
What does a bookkeeper do?
Common FAQs on this topic

Accounting vs. Bookkeeping

What does an accountant do?

Whilst anyone can call themselves an accountant, most people are looking for a certified or chartered accountant when looking to engage or work with one. A certified or chartered accountant has spent many years training, studying, sitting exams and carrying out CPD to become an expert in the accounting field.

Accountants are typically responsible for financial reporting, financial analysis, tax planning and compliance.

Financial reporting - preparing financial information which includes profit and loss statements, balance sheets, cash flow statements and more. An accountant will prepare reports for filing with Companies House (a statutory requirement), and may also prepare management accounts for use by management, investors and other business stakeholders
Financial analysis - reviewing financial information and identifying trends, anomalies, inefficiencies or opportunities. Accountants can help convey what financial data means and therefore assist with decision-making.
Tax planning - UK tax legislation is lengthy, complex and constantly evolving. Accountants stay on top of the ever-changing tax landscape in order to minimise tax liabilities for their clients while remaining legally compliant. By knowing the tax rules, reliefs and credits, accountants are always looking for ways to improve tax efficiency for their clients, and help them preserve cash for investing back into their business if they choose to do so.
Compliance - compliance with Companies House and HMRC is a key role of an accountant. All businesses have statutory responsibilities in terms of filing financial statements with Companies House and tax returns with HMRC. Accountants are responsible for correctly preparing these documents and ensuring they are filed in the right place at the right time.

For example, some recent changes include basis period reform and how the new VAT Penalty regime works, accountants can help you make the most of the new rules, and how it applies to your business.

Aside from these core areas, accountants can also provide a broad range of services related to audit, assurance and tax advisory with many accountants specialising in particular areas.

What does a bookkeeper do?

Bookkeepers focus on the day-to-day record-keeping of a business. They are responsible for maintaining good financial records which are then used by accountants for preparing financial statements, management accounts or tax returns.

Some bookkeepers will have formal education and qualifications, but it is not a necessary requirement for the role.

A bookkeeper's key responsibilities include data entry, reconciliation of accounts and managing accounts payable and receivable.

Data Entry - the key daily task of most bookkeepers. Most bookkeepers will now maintain a business’s financial records in software such as Xero, Quickbooks or Sage. The software will reflect all transactions the business has been involved in and will ‘code’ these transactions to a particular income, expense or balance sheet code. Bookkeepers are responsible for ensuring these transactions are recorded accurately and completely.
Reconciliation of accounts - Reconciling bank accounts and credit card statements is a method of checking that the record-keeping has been carried out correctly and ties back to the ‘real world’ i.e. ensuring that what the accounting software thinks the bank balance matches what the bank says the bank balance is. This process helps ensure the accuracy and integrity of the business’s records.
Accounts payable and receivable - this refers to the entities that the business owes money to (accounts payable) and from (accounts receivable). Some bookkeepers may be responsible for chasing late payers and managing payments to suppliers but this depends on the agreement between the business owner and bookkeeper. Not all bookkeepers will carry out these tasks.

Got any questions about Beany?

Chat to one of our friendly team today to get clarity.

Book a call Contact us

Common FAQs

1. Do I need both an accountant and a bookkeeper for my small business?

This depends on your business needs.

The majority of businesses need an accountant as they will likely need support in filing financial statements with Companies House and tax returns with HMRC. Meanwhile, some businesses may not require a bookkeeper if the business owner feels confident in carrying out the day-to-day record-keeping themselves, especially if the number of transactions is low.

For larger or growing businesses, having both an accountant and a bookkeeper is beneficial. An accountant will ensure you are staying compliant, minimise tax liabilities and advise on the performance of the business, while a bookkeeper will look after the day-to-day record keeping. Having both frees up the business owner to focus on running the business.

2. Can a bookkeeper perform the same tasks as an accountant?

We don’t recommend that you use a bookkeeper to carry out the tasks of an accountant unless they are also a certified or chartered accountant.

A chartered or certified accountant will have a much greater understanding of more complex financial matters. They will have undergone extensive education and training in order to perform the more complex tasks and responsibilities required to help you in the running of your business.

3. How do I choose between an accountant and a bookkeeper?

Consider what you need support with. If you’re struggling with day-to-day record keeping then you may need bookkeeping services.. In almost every case, but especially if you need support with financial statements or tax returns, tax planning or financial analysis then you should engage an accountant.

4. Are accountants more expensive than bookkeepers?

Yes. Accountants will usually charge a higher rate than bookkeepers because they have undergone more training and are able to support you with more complex work than a bookkeeper.

Accountants and bookkeepers both play an integral role in running a successful business, with each bringing a specific skill set. They complement each other, with bookkeepers handling the day-to-day financial operations and accountants supporting higher-level strategic decision-making.

Who are Beany?

We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant world.

We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.