What Are the Differences Between Bookkeeping and Accounting?
Bookkeepers and accountants both play important roles in business. Often, these roles can overlap, with many people confusing and conflating the two. Although both work with financial data and create financial reports, there are still some crucial differences.
Most importantly, bookkeepers are in control of recording information, while accountants are responsible for analysing and interpreting the data. In this post – the second in a 6-part series on bookkeeping – we’ll explore the differences between the role of the bookkeeper and that of the accountant.
How do bookkeepers help businesses?
So what exactly does the bookkeeper do?
The role of the bookkeeper focuses on balancing books and finance management. Day-to-day tasks involve checking invoices and updating financial records. The main aim? To keep track and stay organised by recording financial transactions.
Bookkeepers must keep accurate records to ensure businesses are completely above board. These reports help them spot any discrepancies and understand expenditures such as inventory, invoices and cash flow.
The role of the accountant
So, where does the accountant come into the equation?
The role of the accountant is to analyse and interpret financial data. By using their analytical skills, they ensure businesses remain successful and 100% compliant with everything from taxes and credit control to budget comparisons.
The daily tasks of accountants can vary from accounting, auditing, tax and also consulting. Using their expert knowledge and training they can assess financial information, which can then be used by businesses to understand periods of either loss or profit. This helps management in the long run.
The main aim of the accountant is to understand and interpret the financial transactions for a business. With this, they can then provide accounting information to not only the business owner, but also to bankers, HMRC and potentially even prospective investors.
Two distinct roles
You might still be wondering how the bookkeeping differs from the role of an accountant. Put simply, the bookkeeper is in charge of identifying, measuring and recording transactions. The aim of this is to keep things in order and ensure that all records are well-organised and up-to-date.
Accountants, on the other hand, build upon this information. Qualified accountants have a higher level of expertise which means they are in a better position to understand and effectively communicate the financial data to the business owner.
Using the financial records from the bookkeeper, the accountant will interpret the data and use it to examine the bigger picture. They will then use this information to help business managers make wider performance and financial decisions.
The bookkeeper is essentially a very important cog in the whole business process.
The best of both
At UWM we are a friendly team of Leeds accountants who also offer high-quality and watertight bookkeeping services to help keep your numbers in check. Whether it’s bookkeeping or accountancy support, our precise and dependable services ensure you have a tailor-made strategy designed to fit the unique needs of your business. Get in touch today to see how we can help you.