Launching a new company requires handling numerous duties, such as managing finances, monitoring expenses, and guaranteeing compliance with tax regulations.
As your company grows, engaging qualified assistance to manage these financial duties becomes increasingly essential. Two essential positions often come into play when controlling the company’s finances: accountants and bookkeepers.
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Bookkeepers and accounting professionals share the same long-term objective of assisting your company to prosper financially, but their duties are distinct.
Bookkeepers concentrate more on routine responsibilities such as recording transactions while accounting professionals offer comprehensive financial advice and tax guidance.
Table of contents
- What is bookkeeping?
- What is accounting?
- Bookkeeper vs Accountants: Choosing the right option for your startup
- How to find a bookkeeper and accountant?
- Final thoughts
What is bookkeeping?
Bookkeeping keeps track of financial activities, including sales, receipts, purchases, and payments. Bookkeepers must keep accurate financial records for generating financial statements and tax returns.
Bookkeeping tasks can involve reconciling bank statements, data entry, handling accounts payable and accounts receivable, and producing financial reports.
| Role of a Bookkeeper | |||
| Recording financial transactions | It involves data entry for all invoices, payments, and other financial activities. | ||
| Posting credits and debits | Documenting every cash inflow or outflow transaction. | ||
| Producing invoices | Developing, sending, and tracking payments you owe or owed to you. | ||
| Financial recordkeeping and management | Maintaining and managing general ledgers, subsidiary ledgers, and historical accounts | ||
| Completing payroll | Handling payroll-related duties. | ||
What is accounting?
Accounting is the process of interpreting financial data and aiding in decision-making.
Accountants use financial statements and other information to evaluate a business’s financial health, detect trends, and suggest ways to enhance profitability. Accounting tasks involve budgeting, financial analysis, forecasting, auditing, and tax planning.
Here are some of their tasks:
| Role of an Accountant | |
| Preparing and submitting tax returns | Accounting professionals play an important part during tax season. Their knowledge assists in reducing your tax liability and ensures everything is filed correctly. |
| Offering financial planning advice | In the early phases of your company, accountants may assist you in selecting the ideal organizational structure, and they frequently serve as reliable consultants in the future. |
| Assisting you in applying for business loans | Since accounting professionals have a grasp of your business’s overarching finances, having one comes in handy if a lender asks you complex questions about your business’s performance. |
| Auditing and Assurance | For new businesses looking for external financing or undergoing regulatory scrutiny, accounting professionals can audit or review the financial statements. |
Bookkeeper vs Accountants: Choosing the right option for your startup
The choice between employing a bookkeeper or an accountant depends on multiple variables, such as your startup’s scope and complexity, budget, and particular financial needs. To assist you in making the best decision, take into account the following:
Startup stage
In the initial phases of your business, when finances are relatively simple, a bookkeeper can be sufficient to handle everyday activities and recordkeeping. As your business develops and financial complexities rise, you may need to enlist the expertise of an accountant for tactical financial analysis and planning.
Cost-effectiveness
With their advanced abilities and academic credentials, accounting professionals tend to be more costly than bookkeepers.
Such costs can sometimes be reduced by their strategic financial guidance, which can positively impact a company’s financial condition. Assess your budget to determine whether the company can afford an accountant over a bookkeeper.
Regulatory requirements
If your company works in a highly regulated industry or plans to look for external financing, having an accounting professional rather than a bookkeeper on board can ensure compliance with regulatory requirements and offer assurance to shareholders or lenders.
Long-term goals
When choosing between an accountant and a bookkeeper for your startup, consider its growth trajectory and long-term goals. While a bookkeeper can manage standard financial duties, an accountant can provide planning and strategic guidance to help your firm grow and succeed.
Level of financial understanding
Assessing your level of financial management knowledge is crucial when selecting your first accountant or bookkeeper. A bookkeeping professional will suffice if you’re confident in handling numeric insights but need help in transaction recordkeeping. On the other hand, an accountant might be a better choice if you need help understanding numbers or want in-depth analysis.
Time involvement
Do you have sufficient time to manage and comprehend the vast information regarding payrolls, taxes, and transactions? Evaluation of your personal time obligations can influence your hiring choice. So, decide accordingly between a bookkeeper and an accountant.
How to find a bookkeeper and accountant?
To find a certified public accountant or bookkeeper for your startup in the UK, start by obtaining referrals and recommendations from other company owners or experts in your network.
Look into professional associations for directories of certified professionals, such as the Association of Accounting Technicians (AAT) or the Institute of Chartered Accountants in England and Wales (ICAEW).
Make use of web resources to find independent contractors and peruse client testimonials. Consult local business directories and think about working with trustworthy accounting companies that have experience working with startups and small companies.
Additionally, attend local networking events and industry conferences to connect with accounting professionals in your area. Engaging with online communities on platforms like LinkedIn or industry-specific forums can also help you find recommendations and advice tailored to your startup’s needs.
By leveraging these resources and strategies, you can find skilled professionals who can effectively support your startup’s financial management needs.
Hire Startup Accountants
Work with a UK-based accountant for tax, accounting, payroll, & EIS/ SEIS needs.
Final thoughts
The ideal option for your firm will rely on your unique requirements and growth stage. For those just starting out and needing basic financial support, a bookkeeper can offer crucial services to keep your business operating efficiently.
However, hiring an accountant can provide invaluable insights and strategic direction to help your firm advance as it grows and encounters more difficult financial obstacles. In the end, combining the two positions could be the best way to guarantee your firm’s growth and financial stability.
