A bookkeeper keeps the day-to-day financial records, such as sales, purchases and bank transactions. An accountant usually takes those records and prepares the annual accounts and the Corporation Tax filing, and advises on tax. [1][2] The roles overlap, and HMRC's money laundering guidance treats professional bookkeeping and accounts preparation as accountancy services. [4]
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What does a bookkeeper do?
A bookkeeper deals with the records. They enter and categorise the money coming in and going out, keep invoices and receipts in order, reconcile the bank account and, depending on the engagement, prepare VAT figures or payroll records.
These records are not optional. A limited company must keep accounting records that include all money received and spent, its assets, its debts, its stock at year end and the supporting documents. [1] A bookkeeper can maintain them so the company has them ready when accounts and tax returns are due. Our guide to bookkeeping for a limited company lists the records.
What does an accountant do?
An accountant usually works from those records to produce the numbers that are filed. That includes the annual accounts, which GOV.UK describes as statutory accounts made up of a balance sheet, a profit and loss account, notes and, for most companies, a director's report. [2] It also includes the Company Tax Return, tax planning and advice. The steps are covered in our guide to preparing company accounts.
Companies often have an accountant or tax adviser file for them. GOV.UK notes that a company can give its accountant its Companies House authentication code to file its accounts and can appoint an agent to file its Company Tax Return. [3]
What are the key differences?
There is no legal dividing line between the two jobs, so the split below is a common way of describing the usual division of work, not a rule.
| Bookkeeper | Accountant | |
|---|---|---|
| Focus | Recording and organising transactions | Reporting, tax and advice |
| Typical output | Up-to-date books, reconciled bank, ledgers | Annual accounts, tax computation and filings |
| Time frame | Day to day or month to month | Mostly year-end, with some planning through the year |
| Judgement | Following the books | Interpreting the figures for decisions and tax |
HMRC's guidance on money laundering supervision does not draw this line either. It lists professional bookkeeping services, accounts preparation and signing, specific tax advice and help with tax returns together as accountancy services. [4]
Do I need both?
Some companies use one provider who does both jobs. Others use a bookkeeper for the monthly work and an accountant for the year-end accounts and tax. A company with a few transactions a month and a simple structure may need less than one with employees, VAT and stock.
Neither choice removes the company's own duties. GOV.UK says a person who authorises an agent is still legally responsible for their own tax, and that they must check the information before an agent submits a return. [5]
Are bookkeepers regulated like accountants?
HMRC's guidance says accountancy service providers, which include those providing professional bookkeeping services, must be supervised for money laundering purposes. A provider registers with HMRC unless it is already supervised by a professional body. [4]
The main supervisory bodies include the Institute of Chartered Accountants in England and Wales, the Association of Chartered Certified Accountants, the Association of Accounting Technicians, the Institute of Certified Bookkeepers and the Institute of Accountants and Bookkeepers. [4]
GOV.UK does not set a single qualification that makes someone a bookkeeper or an accountant, so asking which body supervises the provider is a sensible first check.
How do I let an accountant deal with HMRC?
A paid agent such as an accountant needs the company's authority. How it is given depends on the tax. For Corporation Tax, once authorised, the agent gains access to the company and its financial information and can update contact details. For PAYE as an employer, the agent has access to employees' personal and financial information. For VAT, the agent can discuss the VAT account, sign paper documents and view or change VAT details. [5]
What should I check before choosing?
- Which tasks are included: bookkeeping only, year-end accounts, VAT returns, payroll, tax advice.
- Whether the provider is supervised for money laundering, and by whom. [4]
- How the provider will get access to HMRC and Companies House services, and how that access can be ended.
- Who prepares and checks each filing before it is sent.
A specialist can compare what a particular company needs against what each provider offers. A review of accounting support for your business could identify whether you may be paying more than you need to.
Sources
Rates, thresholds and dates in this guide come from these sources. Check the source for the current figure.
- GOV.UK, Company and accounting records www.gov.uk
- GOV.UK, Prepare annual accounts for a private limited company www.gov.uk
- GOV.UK, Filing accounts and tax returns www.gov.uk
- GOV.UK, Check if you need to register for money laundering supervision as an accountancy service provider www.gov.uk
- GOV.UK, Authorising an agent to deal with your tax affairs www.gov.uk