Accountant or Bookkeeper: What’s the difference?
A bookkeeper handles the day-in-day-out financial record keeping and reporting – the details of your business. An accountant specialises in the interpretation of financial information provided by bookkeepers to recommend financial options and decisions about a business entity – the bigger picture of your business. Accountant specialisations include: taxation, financial planning, business advice and consulting.
What is Bookkeeping?
A bookkeeper is a person who records the day-to-day financial transactions of an organisation. A bookkeeper is usually responsible for keeping the financial records on a day-to-day basis. This may consist of accurate recording of purchases, sales, receipts and payments in your accounting software by managing your supplier, customer and general ledger details. They bring the books to the trial balance stage.
A quality bookkeeper can also act as a watch-keeper on your accounts. They can offer timely information and relevant management reports that help the business owner respond quickly to; changes in their finances, markets, staffing, compliance requirements and other opportunities or threats to the business.
Once the annual accounting period ends and the ledger accounts are closed to produce a trial balance, it can be handed over to an accountant to generate the annual tax statements and reports.
What is an Accountant?
An accountant is familiar with the typical financial statements ie P&L account/income statement, trading account, balance sheet, cashflow etc. They may prepare the P&L statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
In the simplest term, a bookkeeper keeps the detail of books (detail) while the accountant looks at the big picture. They are trained and skilled in taxation rules and tax law interpretation.
What’s the difference between a bookkeeper and an accountant?
Bookkeepers are the ‘keepers of the purse’ – the people who record transactions into journals and ensure that the numbers are available at the end of the month for an accountant to prepare formal financial statements. A bookkeeper is the administrator, and they may also process payroll, pay invoices and ensure that invoices are sent out.
There are 8 steps in the bookkeeping cycle. In small and medium companies the bookkeeper may complete all the steps in the cycle, but usually once the transactional data has been recorded and reconciled, it goes to the accountant for year end processing. They will take the data entered by bookkeepers and prepare annual financial statements and tax returns.
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