For somebody who doesn’t work in finance, it can be difficult to distinguish the difference between accounting and bookkeeping, as there are some administrative areas that can overlap depending on the structure of a business and how many employees it has working in its finance department.
However, while bookkeepers and accountants share common goals, they do support your business in different stages of the financial cycle.
Bookkeeping is more administrative, recording financial transactions. Accounting is more subjective, giving you insights into your business’s financial health based on the information provided by bookkeepers.
If you’ve ever wanted a clear definition between accountancy and bookkeeping, keep reading.
What is a Bookkeeper
Bookkeeping is a legal requirement for all businesses of any size to carry out, and it refers to the recording of the financial transactions of a business, whether a sole trader, a partnership, or a limited company.
A bookkeeper will record all transactions either manually or within an ERP system like XERO and keep copies of all invoices, receipts and evidence of these incomings and outgoings.
The role of a bookkeeper will include:
- Recording financial transactions
- Posting debits and credits
- Producing invoices
- Preparation of financial statements (balance sheet, cash flow statement, and income statement)
- Maintaining and balancing subsidiaries, general ledgers, and historical accounts
- Completing payroll
What is an Accountant
An accountant has expert knowledge surrounding taxes and accountancy. A business needs to consider more than just the in’s and out’s calculated by a bookkeeper, the right accountant will guide and act as financial business partner, ensuring all allowable expenses are claimed and all decisions are tax efficient to not only the business but the owners, directors, and partners.
The role of an Accountant will include:
- Preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded in the bookkeeping process)
- Reviewing company financial statements
- Analyzing costs of operations
- Completing income tax returns
- Aiding the business owner in understanding the impact of financial decisions
Designated Accountancy Services
All business owners want to have complete control of their business finances and have an up-to-date view of their financial performance. Our team of Designated accountants are experts who work with you on a flexible basis, whether you need support one day a month, one day each week or more.
Designated is a Xero Bronze Partner and our finance team are Xero certified advisors, trained by Xero to deliver you the best financial support.
Do you wish you had answers to questions like these?
- How much tax will I need to pay next year?
- How much profit did we make last month?
- What do you mean by Tax Digital?
- Am I managing payroll in the most effective way?
If so, then our Accountancy services may be your solution. Read about all our services in our Accountancy brochure.