Bookkeeping and accountancy play a vital role in every business…but the two are easily confused by even the most experienced professionals.
So, what is the difference between accountancy and bookkeeping and what options are available to help manage your work today?
What role do accountants and bookkeepers play?
While the two are often assumed to be carried out by the same individual (and there is a degree of overlap), there are a number of vital differences between the two roles.
In a nutshell, bookkeeping involves the initial steps in the accountancy process and accountancy follows on with key project tasks. This means that a bookkeeper is primarily responsible for the capture and organisation of key financial information for your business. Once that data is accumulated, the accountant then reviews the figures and works to interpret the information- finally presenting it to their employer and giving them several potential options to follow.
Both roles are highly specialised and essential for any successful business. And making sure that you have both elements covered is a critical part of being able to operate, scale, and address market change successfully.
What are the differences between accounting and bookkeeping?
Aside from the key differences listed above, there are several critical distinctions between accounting and bookkeeping that should be taken into consideration. This include, but are not limited to:
Guidance Provision: Selecting the right bookkeeper can help you work to capture key data that you are missing, measure and record your key business details, and capture the essential data from your financial transactions. Once that data is captured, a quality accountant will pick their way through the information to highlight the key findings that can help you make the best possible business decisions for the future. Ultimately, if you are looking for insight, call an accountant. If you need to gather your spreadsheets and data into one usable system – a bookkeeper is the way to go.
Goals and Targets: Depending on what professional you hire; they will have unique goals from the minute they step foot into your business. A bookkeeper will work systematically to acquire and sift through your paper records. They will aim to do this in a way that provides long-term benefit and – ideally – make a move to digital system where one did not exist before and check data for errors and accuracy, giving you a high level ‘as is’ view of your work. An accountant will then take this information and ‘take the temperature’ of your company’s current financial system, allowing them to cut through the fat and inform you about the current state of affairs and package the information into a digestible format for those who need to see it.
Statement Prep: Financial statements are an essential part of every business. These capture detailed low and high-level information about your company. While bookkeepers may assemble this information, the preparation of these documents is handled by your accountant and many bookkeepers will lack the ability (or professional need) to create this information. If statements are particularly important to your work, you will need to secure a professional accountant with the right accreditation and training in order to craft them at the standard you need.
Analysis and Insight: As detailed as they are, bookkeepers do not carry out any analysis as part of their role. Their skillset involves the efficient and timely gathering of correct data in a way that makes it easy to pick through or right for your unique professional needs. If you are looking to gather insights and interpret this data, finding the right accountant will allow you to access the feedback that you seek. This allows you to make a fully informed decision and mitigate any issues you may encounter in the future.
Variance: Bookkeeping has two types of variance that it is important to be aware of before you make a hire. Single-entry bookkeeping involves any income and expenses being made in a register. Double-entry bookkeeping involves initial entry in a journal, then a dedicated ledger, followed by a trail balance and financial statements. Finding an individual with the right skills for the job is essential. Accountants possess a general skillset but may have a specialisation or high level of expertise in certain areas of their work, such as balancing budgets, tax mitigation, planning loan proposals and more.
How to find the right accountant and bookkeeper?
When it comes to finding a provider to execute both roles, many companies can find themselves hitting roadblocks. While there are many highly trained professionals operating in the sector, housing and staffing costs can quickly rise when it comes to adding individuals to your payroll. Add in the risk of securing a hire, additional payments, and responsibilities, and it can be easy to see why so many businesses make the mistake of ‘cutting corners’ when it comes to their hiring.
However, many accountancy firms offer a range of outsourced options for your business, allowing you to save time and resource through a ‘fixed fee’ service. This allows you to budget a competitively priced figure each month and make use of a range of services ranging from assistance with company setup, corporation tax, payroll, self-assessment, professional guidance, and more.
This makes them an essential, no-liability resource for your business and allows the smallest or most detail-oriented large companies to address their problems head-on with cost-effectiveness and ease.
If you want to learn more about how fixed fee accountancy can help your business, our team at One Click Accountant is here to help. With many years’ experience, our teams work with you to provide the solution you need and guidance to help your business scale and optimise your approach.