Do I need an accountant or a bookkeeper (or both)?
Well obviously I’m going to say that you need a bookkeeper! Seriously though, although we’re often wrapped up into the same category, accountants and bookkeepers have very different roles, and you may find that your business requires both.
A bookkeeper handles the day-to-day financial transactions of a business. We carefully record transactions, send invoices and make sure bills are paid on time. Also, because we are heavily involved in the day-to-day finances of your business, we can provide more immediate financial overview, as well as regular reporting to help you with your decision making.
An accountant tends to be more of a year end sort of thing, and if you are a limited company then it generally makes sense to use an accountant to prepare and submit your year end accounts. It is possible to complete and submit your accounts yourself, but the rules and requirements can be complex so if in doubt take advice.
There are some situations where you legally need to use an accountant, for example if your turnover is over £10.2 million.
To understand how bookkeeping and accounting work in relation to each other, think of bookkeeping as your daily oral hygiene and accounting as your yearly trip to the dentist. If you invest a little time each day into looking after your teeth, your dental visit will be fairly routine. You’ll get a quick check up to make sure everything’s in order and with no cavities or gingivitis you’ll be sent on your way. Now, imagine you haven’t been brushing or flossing. Dealing with those cavities and inflamed gums will cost you a lot in dental fees. You could have saved a fortune by keeping things in order over time.