Is there a difference between bookkeeping and accounting?
If you’re starting a business for the first time, finance and money can be confusing. Starting up, you’ll probably be offered a lot of help and additional services like bookkeeping and accountancy. But aren’t they the same thing?
Although bookkeeping and accounting both play a part in the finances of your business, they’re quite different.
Accounting vs bookkeeping: what bookkeepers do
Bookkeepers are exactly what the name suggests. A bookkeeper will manage the day to day financial transactions in a business and use accounting software to track your incomings and outgoings as they happen. A lot of business owners, particularly small businesses, choose to do this for themselves. To be a good bookkeeper you’ll need a keen attention to detail as well as keeping up to date records. However, if you decide you do need a little help in that department, there are plenty of people out there who can help.
The benefit of outsourcing your bookkeeping is that a good and experienced bookkeeper will also be able to help you learn about and understand record-keeping requirements, cashflow forecasting and best practice when it comes to keeping your finances in order.
Accounting vs bookkeeping: what accountants do
Think of an accountant as more of an advisor to your business. An accountant looks at your business’ finances as a whole and will interpret data into information and insight that’s useful for your business. They can help you prepare any financial reports and statements that you might need to file to Companies House, as well as work on strategic planning to help you grow your business by making the most of any financial opportunities or schemes.
If you’re comfortable using online accounting software then you can probably do your accounts yourself, however subscribing to an online software subscription doesn’t gain you access to the breadth of knowledge (compliance, the law, objective business advice) using an accountancy firm will traditionally have.
Which one do I need for my business?
One thing most people don’t know about accountants is that they can help you with much more than just the numbers. As part of their advisory role to your business they can offer advice on compliance, making sure you’re operating within the law and fulfilling any regulatory requirements your business might be obligated to follow.
Find out more about what an accountant can do for your business here.