What is the difference between an Accountant and a Bookkeeper? Watch our video now to find out or read the blog below.
As you can imagine, there’s a lot of overlap between the two areas.
Bookkeeping is about accurately recording the financial data in a business. An accountant then picks up that financial data and actually reports on it, and interprets it, and often then tries to make it better.
What does a bookkeeper do?
At its simplest, bookkeeping involves taking all of the records of the business and processing them into some financial software.
So, for example, a bookkeeper would ordinarily raise the sales invoices for a company, and process any purchase invoices or expenses.
A bookkeeper would then chase the debts, make sure that payments are made to suppliers, and often complete the payroll.
And, by recording all those transactions, they would put together the fundamental core of a set of accounts.
There will be a General Ledger. There would be a list of all the debtors and amounts outstanding. A list all the suppliers and amounts outstanding.
These are the figures needed to then prepare a set of accounts.
What does an accountant do?
An accountant would pick up those figures and put them into a set of accounts.
Step one would be to take the bookkeeper’s figures and actually prepare some adjusting entries that aren’t involved in the bookkeeping. These might be accounting transactions, or things where there wasn’t actually a cash movement but need recording in the set of accounts.
An accountant will take the figures and put them into actual financial statements – a detailed Balance Sheet, Profit and Loss, and a Cash Flow.
And then the accountant will analyse them – they’ll talk to the business owner about what those numbers mean and how could they be made better.
An accountant will prepare the statutory financial statements and the tax returns.
And, again, we’ll look at those to say “how can we make things better?”
An accountant will work with the business owner to fully understand the impact of all of their numbers.
Is there any crossover?
There can be a lot of crossover between the work of a bookkeeper and an accountant.
A lot of accountants do bookkeeping. And a lot of bookkeepers will prepare some of the accounts and returns.
Both are incredibly important to any business.
What we find is that a number of our clients can do the basic bookkeeping themselves, particularly with some of the software that’s out there now, like the Cloud based software.
We use a software called Xero, which is really for bookkeeping – it takes a lot of the technical side away and makes it as simple as possible for a business owner to do. You can take photos of purchase invoices to put them into accounts. If you raise the sales in Xero, you can just click go and send an email to your debtors to chase those figures. It’s absolutely great.
Where we often come in as accountants, is to pick those figures up and turn them into detailed reports, and of course, ask “what if?”. “How can we make them better?”
So that’s the difference between accountants and bookkeepers.
Of course, the other thing to note about bookkeepers is that, it is the only word in the English language with three consecutive double letters. So there you go. That’s your really interesting fact for the day.
Unfortunately, there’s nothing interesting about accountants!
If you’d like any advice, please contact us on firstname.lastname@example.org or by phone on 0151 380 8081.