,

The differences between bookkeeping and accountancy

Bookeeping

Many people and businesses for that matter get confused over what the terms “bookkeeper” and “accountant” mean, often getting confused by the two or believing there is no difference between them. However, there are a number of differences in the role of each one and confusion as to what they do, could cause problems for many businesses, especially if they were to employ the wrong professional for the wrong role, or neglect the importance of one of the tasks:

Separating the two

While bookkeepers tend to be used on a day to day basis, the role of an accountant is much less frequent. A bookkeeper will keep the daily or weekly financial records of a business. S/he will record all incoming monies, outgoing expenses and invoices, and will ensure that the books match the bank accounts. An accountant then studies those books and provides advice on the best way for the business to proceed financially. The data they assess from the books can be interpreted to consider which way the business should progress to maximise their profit levels.

The role of a bookkeeper

Many businesses, depending on their size and structure may employ a bookkeeper, either on a full time, part time or “ad-hoc” basis. The bookkeeper will look at all incomings and outgoings and enter them into a ledger, known as a book.

They have a number of legal obligations as they go about this in that they must act honestly and in good faith so that the books are kept up to date and honestly. Their process is completed when the certified bookkeeper performs a series of final checks known as a “trial balance”. Following the completion of this step of the process, they will hand the books over to the accountant who will then begin their process.

The vital importance of bookkeeping and the reason why many businesses opt to have an approved bookkeeper working for them, on any basis, is that they have a permanent record, kept in a straightforward manner which can then be examined.

The role of the accountant

Once the bookkeeper has finished their stage of the bookkeeping process, the role of the accountant then begins. The primary task of the accountant is in the analysis and reporting of the company accounts. They will be able to see from the carefully kept books what is working and failing for the business, what the business can maximise and what they should stop doing to remain successful. The accountant will also be responsible for submitted the tax return and evaluation the position on tax to remain legally binding but minimise the amount the business has to pay.

The problem

One of the main problems regarding accountants and bookkeepers is that businesses think they can do without either one. However, without the use of a bookkeeper, a bookkeeping organisation, or an accountant, the business would not be able to meet their legal obligations, could be subject to paying too much (or too little) tax and could potentially lose money as cost efficiency is a role undertaken by the accountant.