What is the difference between a bookkeeper and an accountant?

I often get asked this question so I thought I would try and clarify it a little.

While there is some overlap, essentially a bookkeeper is the first part of the accounting process, and will focus on the recording and organising of financial transactions and data. Bookkeepers keep an accurate track of the money coming in and out, managing day-to-day cash flow, and ultimately preparing year end accounts and filing tax returns. By doing this, bookkeepers also gain an intimate knowledge of your business and can therefore often advise you and help to keep the business finances running smoothly and effectively. And as most bookkeepers are often very open to technological advancements, they can help you to embrace new technologies and explore emerging software options for your business as well.

Using that bookkeeping data and information, an accountant will analyse it, interpret it and focus on the bigger financial picture, perhaps giving you some tax advice. And with that data, both accountants and bookkeepers can assist in generating forecasts for your future business needs, along with Managment Accounts.

And by staying on top of your company's finances and indeed understanding them, you can make more balanced business decisions, based on that accurate and up to date information. For instance there will be many times when your bank balance looks particularly healthy, but there may be big bills yet to pay, maybe tax returns. Bookkeepers can keep you well informed of such occasions.

It is so important not to overlook bookkeeping as a crucial and integral accounting service to help move your business forward. Good business requires having all your business financial information at your fingertips much more frequently than the traditional once a year chat with your accountant!