There is sometimes a lot of confusion as to what the difference is between a bookkeeper and an accountant. Albeit there may be some similarities and some accountants offer “Bookkeeping” as a service there are some very clear differences that you should be aware of.
The bookkeeper will be accountable for the day to day finances in your company. This can include things like:
Payroll – Running payroll is probably one of the most important tasks to complete (well it certainly will be to your employees). Nowadays it isn’t a particularly difficult task as there are many software systems out there to support this but if you get it wrong you could have some very angry employees!
Invoicing – How else would you get paid from customers? Bookkeepers generally generate invoices and communicate direct with your customers. Again they will generally use bookkeeping systems to perform this. In addition to this, if customers are not paying their invoice within the terms agreed, then the bookkeeper will generally give them a gentle nudge to pay it.
Retaining receipts and preparing VAT – Depending on the size of your business there could be a lot of leg work involved with this. Retaining receipts for company spend (including employees expenses) is a really important but painful task. The bookkeeper will generally ensure they have a clear process to ensure they get all this information but also have a reliable mean to retain these for audit traceability as you never know when the tax man will want to pay a visit!
Preparing initial financial statements – The initial groundwork here is completed by the bookkeeper and information handed over to the accountant in order to complete tax returns etc.
So now we have an indication of what a bookkeeper does, what does an accountant do for us? Here are some examples:
Taxation Advice and Planning – Your accountant is key to give you the right level of advice in order to plan for tax. This will include keeping you legit and legal but also giving you some guidance on where you potentially could save tax. Relationship between accountant and company is key here to ensure there is a good level of transparency and that the accountant is fully aware of your future plans and investments where they can give you some good advice. There are many Central London accountants that are available to help and support here.
Corporation Tax Submission – Someone needs to communicate with HMRC and usually that someone is and experienced accountancy firm such as www.gsmaccountants.co.uk. They would be delegated by you to speak direct to HMRC about any business relating to your company – which sometimes can be confusing therefore the accountant knowledge is crucial. The accountant would be accountable to prepare and submit your company tax returns on time.
Auditing – You are likely at some point to receive a letter from the HMRC to review your accounts (and ensure everything is legal and accurate). Your accountant will pre-audit your accounts to ensure there is no surprises and hopefully everything runs smoothly.