Tradermate is proud to deliver reliable and cost-effective bookkeeping for trade businesses and sole traders. However, people often ask us the difference between bookkeeping and accounting.
So, in today’s article, we decided to answer that question in our usual jargon-free way! Read on to find out more.
What’s the difference between bookkeeping and accounting?
Firstly, we’ll start with the short answer! As bookkeepers, we look after daily and monthly transactions. Meanwhile, accountants get involved more when it comes to end-of-year accounts.
Now, here’s the long answer!
Work we complete as bookkeepers:
As bookkeepers, we look after the daily and monthly transactions. We post expense invoices and receipts to Xero using Dext or Hubdoc (these two platforms allow our clients to send photos or PDFs). Then, we reconcile the bank/credit card payments to those receipts and invoices, ensuring we correctly allocate the expenses in the accounts. E.g. Fuel to ‘travel expenses’ and paper to ‘stationery’, that kind of thing.
We can also raise sales invoices. Then, we reconcile bank receipts against the correct invoices your clients have paid. We keep track of overdue invoices and can send copies or call customers to remind them and request payment.
Payroll – We can process monthly payroll and post monthly payroll journals, meaning the correct allocation of payroll expenses, such as PAYE and pensions.
We check through various accounts at the end of each month to find anomalies and correct them.
We also create, review, and submit VAT returns and monthly CIS returns for clients through the HMRC portal in Xero.
Finally, if required, we can produce and send monthly reports to our clients, like Profit and Loss.
Work your accountants complete:
Accountants run the year-end accounts, manage corporation tax computations and submit the accounts to HMRC.
They may also file confirmation statements annually on a client’s behalf, as well as any forms for changes in shareholding. The accountant tends to be the registered keeper of the statutory books and records. They also audit accounts for accuracy and provide tax and tax planning advice.
We often talk to our clients’ accountants to help them plan for their year-end work. We will run through certain checks and then inform the accountant we’ve completed them. For example, we’ll reconcile the Xero bank balances to the actual bank statements. We’ll check and clear out anything posted to the suspense account. We’ll look at what balance sheet accounts we need to reconcile and do that too (PAYE liability, VAT liability, that sort of thing). Then we let the accountant know what work we’ve completed and send them any working papers we’ve kept showing our workings and checks.
Benefits of using a bookkeeper:
Apart from the obvious benefit of allowing you to concentrate on your core business and generate a greater income per hour, there are some other financial benefits to working with a bookkeeper.
Using a company like Tradermate to outsource your bookkeeping means you don’t have to cover recruitment fees, holiday or sick pay. However, you still have a team available to do the work and provide the information you need to run a successful and more profitable business.
The difference between bookkeeper’s and accountant’s fees.
It’s a little-known fact that anybody can trade as a bookkeeper or an accountant without being qualified, which is quite frightening.
However, at Tradermate, Claire is a Chartered Accountant and Lee and Katherine are Qualified Bookkeepers. We charge £30 – £35 an hour.
Depending on their level, an accountant could be between £125 and £175 per hour. Some accountants offer bookkeeping services, some outsource bookkeeping work, and others don’t offer it at all.
In our experience, an accountant will charge their client less for their accounts when they know a qualified bookkeeper maintains the books.
We hope that’s answered the question, ‘What’s the difference between bookkeeping and accounting?’ And if we’ve convinced you that using a bookkeeper will enhance your business (because it will!), contact us for more information on how we can help.