Bookkeeping and accounting are closely linked but different jobs. Bookkeeping records what happened. Accounting turns those records into statutory accounts, tax returns and advice.
What a bookkeeper does
- Records sales, purchases, receipts and payments
- Reconciles bank and card accounts
- Maintains sales and purchase ledgers
- Runs payroll and prepares VAT records
- Produces monthly management reports
What an accountant does
- Prepares year-end statutory accounts for Companies House
- Prepares Corporation Tax and Self Assessment returns
- Gives tax planning and business advice
- Advises on structure, funding and major decisions
Side by side
| Bookkeeping | Accounting | |
|---|---|---|
| Focus | Recording transactions accurately | Interpreting and reporting |
| Frequency | Daily, weekly, monthly | Quarterly or annually |
| Main outputs | Reconciled ledgers, payroll, management reports | Statutory accounts, tax returns, advice |
| Typical cost | Fixed monthly fee | Annual or per-engagement fee |
Why the two work best together
An accountant's year-end work is faster and cheaper when the books are already reconciled and complete. Many small businesses use a bookkeeper monthly and an accountant annually.
Qualifications and regulation
In the UK, anyone offering bookkeeping or accountancy services to businesses must be supervised for anti-money laundering purposes, either by HMRC or a professional body. Ask any provider which body supervises them.
Which do you need?
- Just starting with few transactions: cloud software and an accountant at year end may be enough.
- Growing, with staff or VAT: a monthly bookkeeper plus an annual accountant.
- Complex or fast-growing: a bookkeeper, an accountant and possibly a part-time finance director.
Read more about our bookkeeping and payroll service, or book a free consultation.
Frequently asked questions
What is the difference between bookkeeping and accounting?
Bookkeeping records and organises financial transactions. Accounting uses those records to prepare statutory accounts, tax returns and financial advice.
Do I need both a bookkeeper and an accountant?
Many small businesses use both: a bookkeeper monthly to keep records accurate, and an accountant annually for accounts and tax returns.
Can a bookkeeper file my tax return?
Bookkeepers keep the records that tax returns are based on. Preparing statutory accounts and tax returns is normally done by an accountant.