As your business grows and evolves you will undoubtedly find yourself thinking about whether you need a bookkeeper or an accountant to help you. But do you have a full grasp of what services each can usefully provide?
Starting up a business in Essex, Hertfordshire or London you may have had an initial relationship with a certified accountant, to provide legal advice on the structure of your entity and set up your company. That accountant may then have remained on board to provide ‘bookkeeping services’, but at what might seem like a high ongoing cost.
To avoid those inefficiencies, you may have gone down the route of hiring a freelance bookkeeper for a few hours a month, only to be let down if they moved on and left your books in an incomplete mess, with incoherent and missing paperwork.
So, as your business expands and you get to the point where you just can’t do everything yourself any more, what’s the best way to avoid the insecurity and potential confusion of that kind of freelance bookkeeping arrangement, but also the inefficiencies of over-utilising an accountant?
What services does a bookkeeper provide?
Unhelpfully, the terms bookkeeper and accountant are often incorrectly interchanged – and there can be overlaps in the roles, which can also vary according to the size of the business engaging them.
The simple way to look at it is to think of your accountant as providing the strategic financial overview, while the bookkeeper underpins this with the ‘day-to-day’ hands-on recording of all your financial transactions.
Contracting a professional AAT Qualified bookkeeper for a short period every month will ensure you have an accurate, reliable and up to date picture of your financial transactions. They will keep an eye on your banking ins and outs, overall business cashflow; they will prepare and send your invoices, and make invoice payments on your behalf.
Having a bookkeeper chase your overdue payments can save you a lot of time and money in the long run, as can having them manage the process of credit checking potential new customers. And their organisational role can extend to expenses management, and HMRC compliant payroll provision, as well as filing your quarterly VAT returns.
To facilitate all this, they can help implement accounting software to meet the scale of your requirements, providing training to you and your staff to access financial information. Their expertise will steer you towards the safe ground of having a systemised bookkeeping approach that you can happily stick to.
If you’re starting from scratch in terms of buying in bookkeeping services, then having a professional on-site a few hours to start with, or days a month as you grow, will help you set up and streamline all the necessary business procedures to keep up to date with all your sales, purchases and payments.
Getting to grips with bookkeeping in your business? Our recent blog 3 Common Bookkeeping Mistakes and How to Avoid Them is really helpful.
Do businesses need an accountant as well as a bookkeeper?
With an up to date picture of the financial state of your business accurately provided by your bookkeeper, where does the expert accountant fit in? In a healthy business environment, a symbiotic relationship exists between the two, especially if their services are outsourced to the same bookkeeping and accountancy practice.
The accountant allows you to see the bigger picture, building upon the information provided by the bookkeeper, with strategic financial analysis and interpretation of the management accounts.
A good accountant acts like a Chief Financial Officer (CFO) to a growing small business, helping you keep your finances in overall order, and set your annual budgets – while giving you strategic advice on investment opportunities and potential expansion. They provide a company board with professional reporting on the financial health of the business, and their expertise can be worth its weight in gold.
They will also prepare and take control of your Annual Return submission, and keep the business finances in overall order. But none of the above can happen without the bookkeeper – and the ongoing work they do to keep your company’s books in first-rate order.
So you may have an increasing need for both a bookkeeper and accountant on your team as your business grows. Their exact roles will vary depending on the size of your business, and its stage in the growth cycle.
Finding an accountancy and bookkeeping practice that you can allocate all your financial tasks to efficiently across the board can be the perfect starting point.
About Oscar Fairchild:
Oscar Fairchild (incorporating Redwood Clarke since 01.09.18) is an Association of Accounting Technicians (AAT) qualified accountancy & bookkeeping practice with offices in The City of London and Billericay, Essex. Offering a wide range of services including Self-Assessment Services, Annual Returns, VAT Returns, Credit Control, Payroll, Auto Enrolment Pension and Management Account services to high growth businesses across London, Essex and Hertfordshire.