Posted March 11, 2020
What is the Difference Between Bookkeeping and Accounting? Can a Bookkeeper Prepare Accounts?
Quite regularly we’re asked what is the difference between bookkeeping and accounting? In this blog post, Sarah Greenwood, Whitesides Accountant and Chartered Tax Advisor explains the key differences.
Accounting and bookkeeping are terms that are often used interchangeably, but what really is the difference?
Bookkeeping is the process of collating and recording all the transactions that the business undertaken. A bookkeeper will record the sales, purchases and bank transactions, often in specific software like Xero or Quickbooks and file the paperwork either as a soft-copy within the software or in files.
Accounting builds on the bookkeeping, it takes the transactions and summarises them into meaningful data that can be analysed to assess the performance of the business, financial and management reports will be prepared by the accountant.
Management decisions cannot be made based on the bookkeeping alone, but they can be made from the reports that the accountant produces.
So, can a bookkeeper prepare accounts?
Bookkeepers and accountants will generally have different areas of expertise, experience and qualifications. In general, if you want help and support with bookkeeping then you should use a bookkeeper and if you need accounts preparing you should instruct an accountant. Some bookkeepers may offer to prepare accounts and tax returns for sole traders and basic self-assessment returns but if you are a limited company you should look to instruct an accountant to prepare your accounts.
If you are looking for finance either for your business or a mortgage on your own residential property, the lender will often ask for an accountant’s certificate. Many lenders will specify that this is signed by an accountant with a relevant qualification which a bookkeeper may not hold.
At Whitesides we have both bookkeepers and accountants in our team who are here to help you. They ensure that both your bookkeeping and accounts are completed accurately and by the person most qualified to undertake the work.