04 Jul What is the difference between a bookkeeper and accountant and why does your business need both?
I sometimes liken my job to that of Chandler Bing from Friends. My family and friends know I do something with numbers but no one is quite sure exactly what it is that I do! Those that do stab a guess at what I do, 9 time out of 10, refer to me as an accountant.
I have many hats at Organised You, but one that I, and some of the team members wear regularly, is that of a bookkeeper.
There is a key difference between bookkeeping and accounting. Put simply, bookkeeping is record keeping, on a daily, weekly or monthly basis. Accounting is the interpretation of that data, usually on an annual basis, turning it into self assessments, VAT returns, projections and forecasts.
Bookkeeping involves the time consuming tasks of recording expenses, mileage, and payroll, reconciling invoices and searching for transactions – the things most business owners don’t really enjoy or have time to spend doing. It is, however, a key component to building a successful business.
Regular bookkeeping means you know what is going in and what is going out of your business. It allows you to assess your financial situation at any point in time, make informed decisions regarding business opportunities and to monitor your expenses. It will reduce your stress at year end, with up to date figures ready to hand straight to the accountant, potentially saving money when it comes to their fees.
One of the most important things bookkeeping will do for your business, is spotting a problem before it becomes a real issue. If your sales drop off, or expenses go up, monthly bookkeeping reports will flag this to you when it happens, giving you time to look into the reasons, work on a plan to get back on track and implement changes. Relying solely on year end accounts to see how you are doing financially, may mean that this kind of issue isn’t spotted until much further down the line, when it may have already had a detrimental affect on your business bottom line and could be harder to resolve.
If you’re like most of our clients and just want to get on with the job you’re good at, then you may find that having a bookkeeper is time and cost effective. Done well, it will have a positive effect on even the smallest of businesses.
We pride ourselves in offering a very personal bookkeeping service at Organised You, with regular client contact and finance meetings where required to review the financial information and provide help where it’s needed. If you’d like to chat to us about our services and what we could do for your firm, please don’t hesitate to get in touch.