Do I Need an Accountant or a Bookkeeper?

If you currently find yourself pondering on whether to hire an accountant, bookkeeper, or both, that’s completely normal. Let’s face it, to the average person defining the difference between a bookkeeper and an accountant is like naming the differences between a frog and a toad. For most people they’re all too easy to mix up.

Apologies to any herpetologists reading this – we love you.

But whilst bookkeepers and accountants do share common ground, their roles start and end at different parts of the same journey. It’s understandable if you’re unsure which route to go down. We’ll look at what each entail, their main similarities and differences, and which one could be the best option for your business.

What does a bookkeeper do?

Think of bookkeeping like a diary or journal. It’s essentially a record of every transaction that takes place in your business. A bookkeeper’s job is to record your financial transactions accurately and consistently, and to make sure things like customer payments are up to date.

When receipts and paperwork are piling up, a bookkeeper will help you take care of the clutter and turn it into something a little less overwhelming (and a lot more presentable).

It’s all about recording data while keeping the cogs of your business moving, and making sure everything is available in an orderly fashion ready for your accountant to review.

Your bookkeeper can also process payroll for you, and deal with other financial administration such as credit control or issuing refunds.

This can be done using paper records, but bookkeeping software is becoming far more common with Making Tax Digital on the horizon.

What does an accountant do?

An accountant’s main task is to ensure your business is fully compliant with its tax and reporting requirements, whilst saving you as much money as possible. Have you ever found yourself wanting to claim tax relief on your expenses, but choosing not to in case you get it wrong and end up in HMRC jail? You’re not alone. That’s why accountants are important.

Your accountant will make sure your business claims for every allowable expense, which in turn helps reduce your tax bill. They’re also by your side to help with vital business decisions.

They can have a look at your finances and give you advice based on what your business can afford, and perhaps more importantly, what it can’t.

What are the main differences between an accountant and bookkeeper?

Bookkeepers take raw data and organise it into something consistent. Accountants use these records to look at the bigger financial picture for you and your business.

How do I decide between a bookkeeper and an accountant?

It completely depends on your business and what you need help with.

Some accountants will offer a bookkeeping service, or even bookkeeping software which they can use to collaborate with you. This could be a much more cost-effective way to manage your finances.

Can I do my bookkeeping and tax returns myself?

Yes, you can! You’re completely free to manage your own bookkeeping, and of course you can complete your own tax returns.

Accurate accounting records are essential to a company’s sustainability, so we’d advise you to set up and use a robust bookkeeping system. It’ll be much easier to manage cashflow and meet your financial obligations if you do.

Think of bookkeeping as the heart of your business, keeping cashflow pumping, and your finances in check. Every business can benefit from practising good bookkeeping habits.

Do I need both a bookkeeper and an accountant?

If you’re looking to reduce costs, then you might consider using bookkeeping software and giving your accountant access. If you do some research on software, you’ll find some come with free Live Chat support which can be useful if you need help to get going.

To make life easier (and save yourself a lot of time) good bookkeeping software includes features to help you automate lots of tasks so that they’re easier to manage, and there’s less chance of accidentally making mistakes. For instance, with recurring invoices, bank feeds, and simpler reconciliation.

We won’t bother being subtle – Pandle does all of these things and more. Our boss likes it if we mention this from time to time.

If you want to grow your business, an accountant is brilliant for looking at the bigger picture and setting goals to help you succeed. If you’re not looking to expand and want to focus purely on managing your business and getting the finer details spot on, a bookkeeper may be more useful for you right now.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.