Both a bookkeeper and an accountant play crucial roles in managing a business’s financial records, but their responsibilities and scope of work differ. Here’s how:

Bookkeepers: A bookkeeper primarily focuses on the day-to-day tasks of recording financial transactions and supporting business owners in understanding their financial position throughout the year. Their tasks typically include:

• Recording and reconciling transactions: This includes sales, purchases, receipts, and payments.
• Managing accounts payable and receivable: Ensuring the business knows who it owes money to and who owes money to the business.
• Maintaining ledgers and journals: Keeping records up-to-date and compliant with regulations.
• Preparing financial reports: Generating regular reports to give business owners a clear view of their financial status.
• Submitting tax returns: Handling VAT Returns, CIS Returns, and Self-Assessment Tax Returns.

Accountant: An accountant handles more complex financial tasks and is required for regulatory aspects of reporting, particularly for limited companies. Their responsibilities include:

• Preparing year-end financial statements: Accountants prepare and file these statements with Companies House and submit the Corporation Tax Return to HMRC.
• Financial audits: Larger limited companies are required by law to have their financial records audited. Accountants conduct audits to ensure compliance with accounting standards and legal requirements.
• Strategic financial advice: Offering expertise on budgeting, forecasting, and financial planning to help the business grow and remain financially healthy.
• Preparation of reports for shareholders and directors: Compiling detailed reports for key stakeholders in the company.
• Handling complex transactions: Accountants manage intricate financial activities such as mergers, acquisitions, and restructuring.

Summary:

For a sole trader, a bookkeeper can handle everything from monthly transactions to tax returns and business reports.

For a small limited company, a bookkeeper can manage all the financial record-keeping and reporting tasks, but an accountant is needed for preparing and filing the company’s year-end financial statements and handling more complex regulatory requirements.