Many first-time business owners, and even some experienced ones, believe that all accountants are bookkeepers and all bookkeepers are accountants. That’s simply not true. In the UK, accountants and bookkeepers perform different duties and serve different purposes. If you’re unfamiliar with these different roles, this guide can help you understand bookkeeping and accounting practices so that you can decide on the right financial expert for your business.
Accounting vs Bookkeeping
In the world of business, accounting provides a platform for keeping track of income and expenses. It involves long-term organisation and reporting, and it’s the type of financial service you want to retain if your company is growing rapidly or planning for major business changes.
On the other hand, bookkeeping is the short-term organisation, recording, and reporting of income and expenses. Bookkeeping is used to maintain accurate financial records that allow you to make better business decisions.
Which One Do You Need?
As mentioned, accounting and bookkeeping are different services that serve different purposes. Before determining whether you need an accountant or a bookkeeper, you must ask yourself several questions.
1. Do You Want to Focus on Short- or Long-Term Goals?
As mentioned, accounting is the long-term organisation, recording, and reporting of income and expenses. It offers your business the financial foundation you need to develop a long-term strategy.
On the other hand, bookkeeping is an essential step toward building this foundation. It allows you to take care of short-term business needs and record your financial information so you can use it to your advantage.
If you want help developing a long-term strategy and business plan, you will probably need an accountant.
If you want to track your income and expenses and analyse your reports in order to make more informed decisions in the short term, you will probably need a bookkeeper.
2. Do You Want to Focus on Income or Expenses?
While bookkeeping primarily deals with income and expenses, accounting services often focus on a business’s net profit and cash flow. If your business revenue is low, you will use your bookkeeping services to make sure you’re spending your money wisely.
As your business grows and revenue increases, you can rely more on your accountant to make sure you’re maximising your profit.
3. Are You Looking for a One-Time Service or Ongoing Support?
Accounting services are typically long-term, depending on the needs of your business. Bookkeeping, on the other hand, is used for short-term financial management. An accountant will help your business make long-term business plans, but they will also offer bookkeeping services if you need them.
4. Can You Handle the Paperwork Involved?
If you’re not very tech-savvy, an accounting service is a better option for you. Over time, accounting can become a complicated process as you build your financial reports and track your business revenue.
Bookkeeping services are the best choice if you prefer to keep things simple and stick to basic bookkeeping and record-keeping.
5. Is Your Business Cash Flow Positive or Negative?
You will need an accountant to look at your business reports to see if your company has positive cash flow. Bookkeeping, which helps you maintain accurate financial records and data, is essential if you have a negative cash flow and need to keep track of how you spend your money.
Conclusion
As you can see, bookkeeping and accounting services are different financial services for different business needs. If you need to maintain accurate financial records, bookkeeping is the best way to do so. If you want to make informed business decisions, accounting services are the way to go. They’re both essential, and you don’t have to choose just one. You can have both bookkeeping and accounting services to ensure your business is ready for anything.
Why choose between accounting and bookkeeping when you can have both services and even more? Accountants247 Urmston provides accounting and bookkeeping services and beyond. Our team will also perform tax efficiency reviews, provide expert advice, and use the latest bookkeeping software to ensure accuracy and efficiency. Reach out to us today to get a quote on our services.
