Do you need a bookkeeper or an accountant?
Do you need a bookkeeper or an accountant? What’s the difference between the two? And which one is best for you.
It’s not uncommon for businesses to think they need an accountant to help them with their accounts. This isn’t always the case and could cost more money when a bookkeeper is licensed and qualified to complete the exact same task. Therefore, understanding the difference between the two could save you some money.
Whats the difference between the two?
Bookkeeping is based on accurately recording the day to day accounts of a business. Whereas accounting involves interpreting and reporting on that data. Ultimately the roles of bookkeepers and accountants will overlap.
The term bookkeeper is sometimes underestimated. Like their counterparts bookkeepers who are part of a governing body must demonstrate their aptitude and maintain their professional development. This means that whenever you engage a bookkeeper who is licensed, you can be assured they are highly trained, professional and abide by rules as regulations as set out by HMRC.
What can a bookkeeper do?
Whilst the common misconception is that you need an accountant to file your accounts, a bookkeeper could also do this for you. Both Accountants and bookkeepers can do the following;
It is important to note that a bookkeeper and accountant must be licensed to carry out each of the associated services. More so, it is important to check that your bookkeeper or accountant is allowed to offer these services from their governing body such as the Institute Of Certified Bookkeepers, AAT, CIMA or ACCA to name a few.
What can an accountant do that a bookkeeper can't?
The real difference becomes apparent when a company reaches the audit threshold. After this point the accounts of a company must be completed by a Chartered Accountant. A bookkeeper can still prepare the day to day accounts but the accounts preparation and submission will need to be completed by a Chartered Accountant.
What is the audit threshold for a company?
The audit threshold from 01st January 2016 is reached when either of the below three milestones apply;
- An annual turnover of 10.2 million
- Assets worth more than 5.1 million
- More than 50 members of staff on average
Firstly it’s important to note that an accountant is not the same as a chartered accountant. Secondly, engaging a chartered accountant who will command a premium for their time to undertake work that a bookkeeper can do would cost considerably more. But ultimately, by understanding what your bookkeeper is capable of and comfortable doing will undoubtedly save you time and money.
In conclusion, if your business does not meet the audit threshold you may benefit from using a bookkeeper.