Finance

What’s the Difference Between Accountants and Bookkeepers?

0

If you are someone from a non-commercial background, then the terms “accountant” and “bookkeeper” may seem to have the same meaning for you.

But they are different from each other. Experlu sharing the difference between both.

Understanding the difference between a bookkeeper and an accountant is essential whether you are looking to pursue a career in finance or hire someone to manage your business’ financial records.

What is bookkeeping?

Bookkeeping is the process of regular recording of financial transactions.

Immaculate bookkeeping will provide you with quality data and financial information on which critical strategic decisions are based.

What is accounting?

Accounting is the process of recording, summarising, analysing and communicating the financial information of a business to the users of the financial statements.

Accounting helps to determine the financial position, financial performance and cash flows of the business by providing a crisp summary of its financial transactions made over an accounting period.

An accountant can perform bookkeeping functions, but a bookkeeper cannot perform the accounting functions without proper knowledge and certification.

Difference between bookkeepers and accountants:

Roles and responsibilities:

The primary functions performed by a bookkeeper are:

  • Recording the financial transactions and maintain the books of the business
  • Recording receipts, invoices, payments and general ledger
  • Managing all the payroll functions
  • Preparing and filing VAT returns
  • Reconciling the bank accounts
  • Paying attention to the unpaid invoices
  • Calculating VAT and providing basic tax advice

Accountants use a more analytical, advisory and calculative approach to perform functions like:-

  • Preparing the financial statements and determining the financial position of the business
  • Preparing tax returns and ensuring that they are compliant with the relevant laws and regulations
  • Studying and auditing the financial statement of the business
  • Acting as a tax consultant
  • Offering financial guidance to minimise cost and maximise the profit of the business
  • Forecasting future business trends to prevent risk and recognise growth opportunities.
  • Resolving accounting disparities
  • Analysing and reviewing budgets and expenditure

Frequency of work:

A bookkeeper may work on the books of the business daily, weekly, fortnightly or even monthly, depending on your needs as well as the size and complexity of your business.

On the other hand, an accountant usually works at less frequent intervals (for example- monthly, quarterly or yearly) to prepare the financial statements of your business.

Large and well-established businesses often have teams of full time accountants.

Qualifications required:

It is not required for bookkeepers to be qualified, but accreditations from the following institutes are available to validate their skill set:-

  • International Association of Bookkeepers (IAB)
  • Institute of Certified Bookkeepers (ICB)
  • Association of Tax Technicians (ATT)

On the other hand, Accountants must possess an accounting qualification from a recognised accounting body.

Accountants can complete the foundation qualification from the Association of Accounting Technicians (AAT), after which they can obtain certifications from the following globally recognised institutes:-

  • Association of Chartered Certified Accountants (ACCA)
  • Chartered Institute of Management Accountants (CIMA)
  • Institute of Chartered Accountants in England and Wales (ICAEW)
  • Institute of Financial Accountants (IFA)

Charges:

The fees of a bookkeeper may range from £12 to £35 per hour.

One way to save your money while paying a bookkeeper is to organise all your receipts and invoices in advance.

Accountants may charge you on an hourly basis, monthly basis, or service-by-service basis.

Their fees depend on various factors like the services provided, experience and qualifications, the size, complexity and turnover of your business, your business’s needs and requirements, and more.

Types of bookkeepers and accountants:

There are limited types of bookkeepers available like unofficial ‘kitchen-table bookkeeper, in-house bookkeeper and virtual bookkeeper.

On the other hand, there is a wide range of possible career routes in the accountancy sector. Some of the examples of the different types of accountants include:

  • Chartered Accountant
  • Tax Accountant
  • Cost Accountant
  • Management Accountant
  • Forensic Accountant
  • Certified Public Accountant
  • Auditor

Skills required:

A bookkeeper needs to have the following skills:-

  • Good computer and data entry skills
  • Communication skills
  • Organisation skills
  • Knowledge of the bookkeeping principles
  • Integrity and transparency
  • Problem-solving skills
  • Attention to detail

To perform complex accounting functions, an accountant must have the following:-

  • Analytical skills
  • Critical thinking ability
  • Interpersonal communication skills
  • Industry knowledge
  • Spreadsheet proficiency
  • Commercial awareness
  • Computer skills
  • Ability to pay attention to detail
  • Numerical skills

Conclusion:

The terms ‘accountant’ and ‘bookkeeper’ are sometimes used interchangeably, but there are many distinct differences between these two terms.

While a bookkeeper records the day-to-day financial transactions of a business, an accountant, on the other hand, analyses the work that the bookkeeper does to help in the decision-making process of a business.

Before choosing to hire an accountant in Canary Wharf or a bookkeeper according to your business needs and requirements, you must consider the functions and activities performed by both, along with their charges, qualifications, skills and experience.

admin

Career Networking 101: The Business Connection

Previous article

How Tax Consultancy Services Can Be Beneficial For Your Business?

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Finance