Bookkeeping and accounting are key activities for almost every business, charity and public body. Both professions handle critical financial information, and provide a dedicated service to their clients. To understand the differences, it is worth taking a closer look at what bookkeepers and accountants do, and to understand when you need one and not the other.
What is a bookkeeper?
Bookkeeping is, at core, an essential financial discipline which keeps organisations running. The main role of bookkeeping is to provide detailed and accurate information about financial transactions. Working effectively as a bookkeeper requires relentless attention to detail, coupled with technical knowledge of finance, and the ability to communicate clearly with clients.
Accurate bookkeeping information gives businesses a clear picture of how they are performing, and allows them to make important decisions about running their business and planning the future. For further information, see our FAQs on bookkeeping.
Bookkeeper vs accountant
Bookkeeping provides the building blocks of accounting. The detailed financial information provided by bookkeepers feeds into the wider range of tasks and strategic advice which are undertaken by accountants. In general, bookkeepers focus on detail, while accountants look at the bigger picture for businesses.
What are bookkeeping qualifications?
There are various organisations which award bookkeeping qualifications based on dedicated study programmes. Courses are structured around different levets of qualification and can be found through:
- AAT (Association of Accounting Technicians)
- IAB (International Association of Bookkeepers)
- ICB (Institute of Certified Bookkeepers)
Bookkeeping qualifications give holders the ability to handle various levels of bookkeeping duties, either in their own right, in a bookkeeping practice or within businesses and non-profit organisations. The duration of study tends to be flexible, but is likely to be between six months for Level 1 qualifications and eighteen months for higher levels.
In conjunction with studying, experience gained as a bookkeeper either in practise or in-house is an invaluable way to develop professional skills.
When should businesses use a bookkeeper?
Bookkeepers are for many businesses the most cost effective and efficient way of managing their finances. That is particularly true for small businesses and medium sized operations.
Financial work requires rigorous attention to detail and up-to-date knowledge of reporting requirements. While it is possible to include a sound in-house team on your payroll, it can be a diversion from the main focus of a business, especially when you take into account issues such as training, team management and staff recruitment. External bookkeepers can be appointed without such complications, and can deliver a host of benefits that come from being experts in their field.
You can also be very specific about what you require from an external bookkeeper. It may be a matter of entering financial data, completing accurate bank reconciliations and financial reporting on specific topics such as cash flow, profit and loss statements and balance sheets. Such matters are exactly what a professional bookkeeper are set up to handle.
However, in addition, you may want your bookkeeper to look after issues such as filing returns to HMRC, staff payroll and benefits. Bookkeepers with the right expertise can be invaluable partners in these potentially tricky fields.
In essence, bookkeepers will not seek to run your business for you. But they will provide exceptional support for as many elements of financial management as you require.
What are accounting qualifications?
In general, qualifications are harder to come by in accounting than in bookkeeping. Accountancy qualifications are issued by;
- AAT (Association of Tax Technicians)
- CIMA (Chartered Institute of Management Accountants)
- ACCA (Association of Chartered Certified Accountants)
- ICAEW (Institute of Chartered Accountants of England and Wales)
Qualified accountants usually specialise in different fields such as
- management accounting (forecasting, cost reporting, budgets)
- financial accounting (statements for shareholders)
- tax (tax advice and reporting)
The qualification held in highest regard is that of Chartered Accountant (ACA) from ICAEW. It is the most demanding qualification to achieve, involving 15 exam modules and 450 days of practical work experience. Chartered accountants hold senior roles in business, public bodies and accountancy and advisory firms.
When should businesses use an accountant?
Whether or not you appoint an accountant, effective bookkeeping has to be in place. Accountancy firms often work in conjunction with bookkeepers to make sure they have the right financial information for the multiple disciplines that they provide. That includes signed off audits, taxation, business strategy and corporate finance, as well as specialist subject areas such as insolvency and forensic accounting.
Accountants can make a significant contribution to shaping the future of businesses, charities and public bodies. However, it only makes sense to appoint an accountant once you have a clear idea of the benefits you wish to reap from the relationship. The type of accountant you appoint needs to be appropriate for your organisation and your ambitions.
Are accountants more expensive than bookkeepers?
The answer is always likely to be a resounding ‘yes’. Accountancy qualifications are significantly more demanding to achieve than bookkeeping certification, and that is reflected in the fees charged. Chartered accountants have a similar professional standing to qualified lawyers. Like the legal profession, accountants can determine the fortunes of all kinds of enterprise. Bookkeepers are indispensable in a more down-to-earth way, and charge more down-to-earth fees.
What services are provided by AMR Bookkeeping Solutions?
Our approach to bookkeeping is professional yet friendly. We cover the essential tasks of data entry, bank reconciliation and financial reporting. We also have the expertise to handle all aspects of invoicing clients and customers, as well as managing invoices from suppliers.
Our team includes experts in filing HMRC returns (including VAT), payroll, benefits and debt management. Our senior staff also have the experience to advise on budgeting, cash flow and business growth. With the introduction of readily available financial software, our accredited experts can help businesses to select the right software packages (including Making Tax Digital requirements), and to provide training in the best way to use them.
We work directly with clients, with personnel dedicated to each account so that we are able to understand the priorities of each business. We also provide bookkeeping services to accountants and a range of other professional firms. Where there is a need for accurate, professional, personable bookkeeping services, we are on hand to help in the most effective way possible.
If you need any further advice, or would like to talk through any other bookkeeping concerns, we’re always happy to help. Give us a call, or get in touch via our online contact form, and one of our friendly team will get back to you.
