Do I need a bookkeeper or an accountant?
Are you confused about whether you need a bookkeeper or an accountant to help you with your business finances? If so, you’re not alone.
The truth is, most people don’t understand the difference between the two roles and have even less idea about whether they need one, the other or both!
But knowing the difference is really important to your business because it means you can save money and cut costs.
In this blog, I’ll explain what bookkeepers and accountants do and share some tips so that you can decide what’s right for you.
What does a bookkeeper do?
A bookkeeper takes care of your day-to-day business transactions. They’ll make a record of your income and outgoings, will keep track of your expenses and invoices and chase late payers.Some bookkeepers offer payroll services too. This means they make sure your staff are paid on time and calculate tax and pension contributions. Typically bookkeepers prepare your tax and VAT returns ready for an accountant to file with HMRC and Companies House. However some bookkeepers – including me – are able to do this for you which will save you money.
What does an accountant do?
Accountants are more highly qualified than bookkeepers and charge more per hour. Although they’re qualified to do the same tasks as a bookkeeper they tend to work on a more strategic level. One of their key roles is to file tax and VAT returns which have been prepared for them by a bookkeeper. They also help businesses make long-term plans and predict future revenue. Whereas a bookkeeper will help you to record and organise your financial transactions, an accountant will examine the results to help you make operational decisions.
Bookkeeping and accountant qualifications
Did you know that you don’t have to have any qualifications to call yourself a bookkeeper or an accountant? And while that doesn’t mean an unqualified person won’t do a good job on your accounts, it could cause you a lot of problems if they do mess up? If an unqualified person makes a mistake, there’s no governing body you can report them to. That’s why, when you’re looking for a new bookkeeper or accountant, it’s really important to check they have the relevant qualifications.
Here’s what to look out for: Bookkeeper qualifications: IAB (International Association Of Bookkeepers) Accountant qualifications: AAT (Association of Taxation Technicians), ACCA (Association of Chartered Certified Accountants) and CIMA (Chartered Institute of Management Accountants).
Although I work as a bookkeeper and have an IAB qualification, I’m also AAT qualified and carry out some accounting tasks.
Do I need an bookkeeper or an accountant?
This depends on a couple of things including the size of your business, the level of support you need and the services your bookkeeper offers?
You ONLY need a bookkeeper if:
- Your bookkeeper is registered to submit tax and VAT returns AND…
- You’re a sole trader
- You have a small business with a handful of staff
- Your turnover is less that £250k a year
You need a bookkeeper AND an accountant if:
- Your bookkeeper doesn’t submit tax returns or VAT returns OR…
- You’re a limited company
- You have lots of transactions going through your accounts
- Your turnover is more than £250k per year
If you have a bookkeeper and an accountant they should work together on your accounts. When you work with me, I’ll give your accountant access to my software so that they can look at your accounts at any time. I also work closely with my client’s accountants to ensure everything is presented exactly as they want it.
How much do bookkeepers and accountants cost?
Bookkeepers charge far less than accountants. I charge £35 per hour for my services whereas accountant fees can be anywhere upwards of £80 an hour. This is why most small and medium businesses choose a bookkeeper to prepare their year-end documentation and then an accountant to file it. Of course, if you work with me, I can file your tax and VAT returns too so you’ll save even more money. I also use my expertise to offer clients advice and support each month so that they can to cut costs and grow their businesses.
How to find a good bookkeeper
When choosing a bookkeeper there are a few things you should check:
- Qualifications & insurance
- Do they have the necessary credentials?
- Are their customers happy? Do they provide a reliable service?
Are they able to submit tax and VAT returns for you or do you also need an accountant? Do they offer advice and support to help your business grow?
How I can help you?
Now you understand the difference between an accountant and a bookkeeper you’ll have a better idea of whether you need one or both. If you have any more questions I’d be happy to help. You can call me for a free no-obligation 20-minute chat about my services on 07867 129210.