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Tagged Bookkeeping

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Who Knows the Differences between a Bookkeeper and an Accountant?

Many people, and businesses get confused over what the terms “bookkeeper” and “accountant” mean. They often get confused by the two or believe there is no difference between them.

However, there are a number of differences in the role of each one and confusion as to what they do could cause problems for many businesses, especially if they were to employ the wrong professional for the wrong role, or neglect the importance of one of the tasks:

SEPARATING THE TWO

Whilst bookkeepers tend to be used on a day to day basis, the role of an accountant is much less frequent. A bookkeeper will keep the daily or weekly financial records of a business. S/he will record all incoming monies, outgoing expenses and invoices, and will ensure that the books match the bank accounts.

An accountant then studies those books and provides advice on the best way for the business to proceed financially. The data they assess from the books can be interpreted to consider which way the business should progress in order to maximise their profit levels.

The Role of a Bookkeeper

Many businesses, depending on their size and structure may employ a bookkeeper, either on a full time, part time or “ad-hoc” basis. The bookkeeper will look at all incomings and outgoings and enter them into a ledger, known as a book.

Bookkeepers have a number of legal obligations. They must act honestly and with good faith in order that the books are kept up to date and honestly. Their process is completed when the certified bookkeeper performs a series of final checks known as a “trial balance”. Following the completion of this step of the process, they will hand the books over to the accountant.

Bookkeeping is vital to have a permanent record, kept in a straightforward manner which can then be later examined.

The Role of the Accountant

Once the bookkeeper has finished their stage of the bookkeeping process, the role of the accountant then begins. The main task of the accountant is in the analysis and reporting of the company accounts. They will be able to see from the carefully kept books what is working and failing for the business. Accountants insight can helps the business become more successful

The accountant will also be responsible for submitted the tax return and evaluation the position on tax. This will ensure the business is legally compliant. Accountants will also try to legally minimise tax the business has to pay.

THE PROBLEM

Businesses often think they can do without either an accountant or bookkeeper. However, without the use of a bookkeeper, a bookkeeping organisation, or an accountant, the business would not be able to meet their legal obligations, could be subject to paying too much (or too little) tax and could potentially lose money as cost efficiency is a role undertaken by the accountant.

CLOUD ACCOUNTING NI PROVIDES THE SOLUTION

At Cloud Accounting (NI) we have a unique process to automate the Bookkeeping process in house in a highly cost effective manner. In other words we can act as BOTH your Bookkeeper and your Accountant. Alternatively, we can work alongside your existing Bookkeeper (either in your business or external) using an online accounting system.

Using our unique cloud accounting process, we have ‘real time’ information on hand to help you grow your profits, reduce your tax and save on IT costs. Every month, every three months, or at a frequency that’s suits your needs, we can sit down with you to discuss your business results and put forward target driven recommendations to help improve it further.

For further expert advice, message us.

 

Take Charge of Your Day-to-Day Bookkeeping

If you're just starting up in business, your accountant will have stressed how important it is to stay on top of your bookkeeping.Bookkeeping

Although other elements of your business may seem more pressing, it's essential to set aside enough time each week to ensure that your books are in order - keep putting it off and you'll quickly find that your accounts become unmanageable.

Here are five key ways to take charge of your bookkeeping.

  1. With the help of your accountant, create a calendar or spreadsheet of important tax-related dates. Place it where it's easily visible. If you have a permanent reminder of key dates you'll know what needs to be done by when.
  2. Implement a system that ensures you can maintain three sets of records.
    • cash book - keep a record of all the transactions into and out of your business account.
    • purchase invoices - keep a chronological record of how and when you pay your invoices.
    • sales invoices - again, maintain a chronological record of when and who you have invoiced, and when you get paid.

    Ask your accountant if he or she can recommend appropriate accounting software for your business. A good program will help you keep on top of all your income and outgoings. However it's essential that you receive the proper training. A badly used accounting program is much less effective than paper records and files. Either way, a good system will make your accountant's life much easier and keep your costs down. And remember if you do go down the accounting software route, make regular backups of your data.

  3. Keep your personal and business accounts entirely separate. Although you may own your business outright, if you start to use your business account to pay for private items of expenditure your accounts will be much harder to reconcile. In the event of a tax enquiry by HM Revenue & Customs (HMRC) your private bank account will be treated as a business account if you are using it regularly to make payments or bank any sales receipts there.
  4. Depending on the type and complexity of your business, try to be consistent about when you do your books. It's tempting to do them at the end of the day or week. However this is when you're likely to be most tired and potentially make mistakes. Try to do your books in the morning. The more frequently you do your accounts the easier they are to maintain.
  5. Get help and advice whenever you feel things are going astray. It's counterproductive to let your accounts get on top of you as you're more likely to make mistakes. If necessary employ a part-time bookkeeper to help you stay on track. The bookkeeper will likely prove cost effective in the longer term.

Keeping up-to-date accurate records and regularly reconciling your accounts is your responsibility. As well as making your life easier when it comes to your year end, good record keeping will also provide important financial information that will help you run your business more efficiently.

Cloud Accounting can show you how to automate bookkeeping to significantly reduce time and avoid costly errors.

CLOUD ACCOUNTING LLP

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Name: Cloud Accounting LLP
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