The Bookkeeper’s role is, in my opinion, somewhat fluid and confused. The Bookkeeper is often confused with an Accountant or, at the other end of the scale, an Accounts Clerk.
While there are overlaps, these are three distinct jobs. I will attempt to explain the differences as I see them.
In a nutshell, a Bookkeeper deals with the trees, while the Accountant deals with the whole wood.
To explain this further, an Accountant’s job is to put together the numbers for the final management accounts (Profit and Loss and Balance sheet), while the Bookkeeper will be responsible for the detail which makes up those final numbers.
An Accountant will also be much more likely to be able to help with legal matters, such as setting up companies and filing returns with Companies House. They could also be experts on tax matters and how to set up your finances in the most tax efficient method for you. Similar to legal professionals, Accountants will often specialize in different areas of finance.
A good Bookkeeper is often a part qualified or even qualified Accountant and should certainly understand the principles of accounting. This differentiates him or her from the Accounts Clerk. I will move onto that role in more detail later in this article. The Bookkeeper should understand accounting principles and enter data accordingly. In a small enough business the Bookkeeper will do everything from entering sales and purchase invoices to producing the management accounts. They will certainly understand the principles of VAT and be able to produce an accurate VAT return. They should also be capable of producing a cash flow forecast and bank reconciliation. The Bookkeeper may also take responsibility for credit control and assist with budget setting.
A good Bookkeeper should also know his or her client well and understand the needs and principles of their client. They should also be able to advise on more efficient running of the finance aspect of the business. An Accountant, on the other hand, may only visit quarterly, or even annually so will not necessarily know the specific needs of a particular business. Their role is to put together the information provided by the Bookkeeper to provide a summary of the finances and therefore help the client understand how their business is doing. The Bookkeeper can also provide this service, but for larger businesses it is definitely advisable to employ an accountant to audit and file the final figures. For very small businesses or sole traders, a qualified Bookkeeper (but not an Account’s Clerk) may be able to file the accounts with Companies House or file tax returns with HMRC.
A Bookkeeper can also provide training and advice on the most suitable accounting software for a business. Many Bookkeepers are self- employed and act for more than one client. They will therefore be familiar with different accounting software packages. Help with set-up of accounts for a new business should also not be beyond the capability of a good Bookkeeper.
A well- qualified Bookkeeper can also run payroll and integrate the figures into the accounts correctly.
An Accounts Clerk’s Role is a much simpler role.
The Accounts Clerk will not necessarily be qualified in accounting procedures and will therefore be entirely reliant on the accounts package to input data correctly and an Accounts Clerk should never be asked to provide the initial set up of an accounting programme, or asked to be responsible for managing financial procedures. They can certainly be responsible for paying bills, producing invoices and chasing payments. They are unlikely to understand the principles of the Nominal Ledger and would need help coding before inputting data to the relevant accounting package. This person’s work would definitely need to be audited by an accounts professional before management accounts are produced. They may not understand the subtleties of VAT law, so really should not be employed to produce VAT returns unless they are suitably qualified to do so.
The role of the Accounts Clerk commands an hourly rate of £8 to £12 per hour, while the Bookkeeper would be looking for at least £25 per hour.
I often hear clients telling me that they will ‘keep the books’ themselves or they will ask an unqualified family member to do it. There is no problem with this as long as the client understand the principles of accounting. If not, they are asking an unqualified Accounts Clerk to input data without understanding exactly what they are doing. Sadly, this is an all too common scenario and I have been asked time and time again to sort out books which have been started in this manner, or seen small businesses pay an Accountant vast amounts of money to provide accounts from inaccurately kept books. I would urge anybody who is looking at setting up a business to at least call in a Bookkeeper to help with set up and initial training so that the (often) unpaid Accounts Clerk can at least start from an informed position.
Payroll, Bookkeeping, Credit Control Consulting for Small Businesses 