What is the difference between accounting and bookkeeping?
Bookkeeping and accounting are both essential for businesses and overlap in many ways. The key difference is that bookkeeping tends to be more administrative – keeping track of each individual transaction and recording every penny spent or earnt. Think of it as the day-to-day stuff, tracking what goes in and what goes out.
Accounting is bigger picture – it’s about analysing the financial data and using it to plan and forecast.
Accounting is also about reporting and presenting data. That can be for internal use (to help with strategy), for compliance purposes (tax returns for HMRC), or to attract investors (or buyers if you plan on selling your business).
What exactly does a bookkeeper do?
Depending on the complexity of the business, a bookkeeper’s role will vary. A bookkeeper will usually track business expenses, record transactions, reconcile bank transactions, and maintain your financial records.
Other duties may include creating and sending invoices, taking care of credit control, managing your payroll, generating expense reports, overseeing accounts receivable and accounts payable, updating your bookkeeping software and assisting with tax returns.
If you are a small business, a single individual may be able to take care of all the above. However, larger businesses may need a team to take care of the different finance roles.
Can you do your own bookkeeping?
There is no legal requirement for businesses to use a dedicated bookkeeper. Many small businesses manage their own books or delegate it to a member of their team. Larger companies might hire an in-house finance person or outsource to a freelance bookkeeper.
However, with the many complexities of the construction industry, large firms find it more beneficial to work with a virtual finance team, such as Empowered by Cloud.
Rather than having one individual with a general knowledge of different finance functions, you have a team of people, each with specialist knowledge.
We ensure your accounting system and accounting software are effective and efficient. And as well as taking care of your core accounting functions, we provide proactive support to help you grow.