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What is the Difference Between Bookkeeping and Accounting Services

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As businesses grow and start to attract more customers, keeping track of the finances can become difficult. Hiring  online bookkeeping services in UK  or accounting services may be a solution to that challenge. However, do you need a bookkeeper or an accountant? Many people use the terms bookkeeping and accounting interchangeably but the truth is while they are similar and some tasks may overlap, these remain separate services and before you think of outsourcing  online bookkeeping services in UK , you should understand the difference between a bookkeeper and an accountant. Here are some of those key differences.

Bookkeeping Definition 

Bookkeeping is about daily records of transactions . A bookkeeper keeps a tally of all the daily expenses of a business as well as the money coming in. The duties of a bookkeeper however are much wider than just taking records.

Accounting Definition 

Accounting involves summarizing, analyzing, and creating reports  based on the bookkeeping records. An accountant will create concise statements about business transactions over a particular period. To get a better understanding of the two definitions, let us take a closer look at the roles they play in a business.

What a Bookkeeper Does?

This is a service that has been offered for decades. Bookkeepers kept records of early trader’s money inflows and outflows. This service continues today with bookkeepers recording daily transactions in a systematic way that is easy to read. These records will then be used by the accountant to do their job. A key duty for a bookkeeper is the maintenance of a general ledger. This document contains records of expense receipts as well as amounts from sales. Modern technology enables bookkeepers to use software like QuickBooks and Xero to keep track of all the entries made into the ledger. Whatever transaction is made by your business needs to be recorded in the ledger. This function also helps when you have to do your taxes. A bookkeeper doesn’t have to have as much training as an accountant to perform their duty, however, they may need certain principles of accounting like how to use accounting software as well as financial terms. The work of a bookkeeper can be overseen by an accountant or the business owner. Other tasks that they take on include: – Monitoring daily cash flow – Issuing invoices – Following up on payments – Making payments on behalf of the business – Handling payrolls – Preparation of trial balances – Reconciliation of bank and credit card activity – Monitoring and controlling credit card activity – Keeping nominal expense records – Handling multi-currency transactions – Handling other daily financial tasks requested by the client

What Accountants Do?

Accountants pick up from where the bookkeepers stop. They analyze the daily financial records to come up with detailed insights for the business owner to make financial decisions. Accountants can also help in the decision-making process by offering advice in different fields of finance. Some of the roles they play include: – Verification and analysis of data – Reading financial signals to help in forecasting opportunities and trends for development – Performing audits and getting tax records in order – Preparing reports like balance sheets and income statement – Guiding business owners to make the right financial decisions. Accountants can also do bookkeeping but bookkeepers cannot do what accountants do. Some businesses pay accountants to do the bookkeeping as well as accounting.

When Should You Hire Online Bookkeeping?

If your business needs to keep track of its daily financial activities, then hiring online bookkeeping services would be advised. Remember that bookkeeping is about the day to day running of the business’s transactions. It is however convenient when you hire a person or company who can do both bookkeeping and accounting. This will mean when you need reports that focus on the big picture of your business finances, then there would be someone ready to do that as well.

When Should you Hire an Accountant?

You may not need accountancy services every day. Most businesses need accountants when they need to carry out an audit of their financial transactions or when they need to make big financial decisions. Accountants can help prepare reports that give you a clear picture of where your business stands after a given period of operation. Accountants can also be important when you are preparing to present your books to the taxman. They will provide you with sound tax advice and guide you through the complicated UK tax system which many business owners find a headache to deal with.

Verdict 

Both bookkeeping and accounting services are relevant for the smooth running of a business. When you need help for short term daily financial tracking, the bookkeeper is your solution and if the need is to look at the long-term business finances, then you need an accountant. Finding a professional company that can provide the entire package would be the best option as opposed to choosing one or the other.

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