Most people find it difficult to differentiate between bookkeeping and accounting. Though the processes and goals are similar, they do differ in their financial stages. Bookkeeping records financial transactions; then, accounting gets information from the bookkeeping records.
Bookkeeping is all about recording financial transactions, balancing ledgers, completing payroll, and checking invoices. A bookkeeper reconciles transactions, issues invoices, payroll cheques, and ensures the company’s day to day data are in order.
Accounting is the process of analyzing and recording a company’s financial transactions based on the bookkeeper’s report. An accountant analyses the company’s records, offers financial advice to the business owner, checks taxes, and tax penalties.
The difference between a bookkeeper and an accountant
Bookkeepers record financial transactions while Central London Accountants analyse and advise according to the report by the bookkeeper.
A bookkeeper does not need any formal education. They only need to know about financial transactions, and the business owner or accountant can do this role. An accountant, on the other hand, needs both formal and professional education.
An accountant analyses the financial statements and offers advice sometimes on a seasonal basis, while a bookkeeper works daily.
When to hire a bookkeeper or accountant
Incomplete business expenses: business owners mix all their documents in one file. It becomes too easy to miss out on essential payments or on matters that require urgent attention.
When you need employees to file documents needed for payroll: new staff members need their details keyed into the system. The bookkeeper prints relevant documents, files them and saves them in the payroll file.
When you need to sort the business transactions: most businesses do not record their credit and debit expenditures.
When you keep calling your accountant: most accountants in Central London work on a time basis, some once a year, others three times a year, especially during the tax period. After this period, they become financial advisers.
When your accountant is lagging at work: once the regular working hours have resumed, most employees find it hard to resume their duties; hence some laxity kicks in.
Hire an accountant when you are contemplating selling your business. An accountant will organize your financial details using the accounting software and make your business look professional.
Before buying a business: before investing in an existing business, accountants often analyze the company beforehand for any irregularities like pending debts.
Get an accountant before you get auditors. An accountant will guide you through the auditing process and even get business auditing insurance to avoid incurring costs.
Hire an accountant when the government is involved. Accountants often know the laws and regulations that can help boost your business or destroy it.
Therefore, depending on the company’s needs, the business owner can settle for an accountant or a bookkeeper. If the business owner needs the business statements recorded daily, the can opt for a bookkeeper. If the business requires financial advice from time to time, an accountant would be the best fit.
I am Daisy Bell and a pro-level blogger with years of experience in writing for multiple industries. I have extensive knowledge of Food, Fitness, Healthcare, business, fashion, and many other popular niches. I have post graduated in arts and have keen interest in traveling.