Bookkeeper vs accountant: what is the difference and which do you need?

What a bookkeeper does

Bookkeeping is the recording side of business finance. A bookkeeper enters every sale, purchase, receipt and payment into the books, matches them to the bank statement, chases unpaid invoices, pays suppliers on time and keeps the records HMRC can ask to see. The National Careers Service lists the day-to-day work as processing purchase and sales invoices, recording receipts and payments, reconciling bank accounts and preparing the figures an accountant needs at year end.

The method behind all of it is double-entry bookkeeping: every transaction is recorded twice, once as a debit and once as a credit, so the two sides of the books always agree. When they do not, the bookkeeper finds out why. At the end of each month a bookkeeper can extract a trial balance, which is the list of every account balance and the check that the books are in order.

In a small business the bookkeeper may also run payroll, submit VAT returns and produce simple management reports, such as who owes the business money and what cash is in the bank. In a larger company these jobs are split across an accounts team.

What an accountant does

An accountant works from the records the bookkeeper has produced. Typical accountant work includes:

• preparing the year-end accounts and filing them with Companies House
• preparing and submitting the Corporation Tax or Self Assessment return
• advising on tax, whether to incorporate, how to pay yourself, and what the business can claim
• producing forecasts, budgets and cash-flow plans
• auditing accounts where the law requires it

Accountants usually hold a professional qualification and belong to a professional body such as ICAEW, ACCA or CIMA, which takes several years of exams and supervised experience. That is why their time costs more, and why it makes sense to hand them clean, reconciled books rather than a box of receipts.

Bookkeeper vs accountant at a glance

The two roles overlap in the middle. A good bookkeeper will produce management figures an accountant would be happy with, and an accountant will often fix bookkeeping mistakes before preparing the accounts. The line that matters is that bookkeeping keeps the record and accounting explains and files it.

Which one does your business need?

Sole trader or side business, under the VAT threshold. You can do your own bookkeeping with a short course and a spreadsheet or basic software, and use an accountant once a year for the Self Assessment return, or file it yourself. The Bookkeeping Basics course covers what to record, how to keep receipts and invoices in order, and what your accountant will ask for at year end, in about six hours.

VAT-registered business, employees, or a limited company. You need bookkeeping done properly every month, because VAT returns, payroll and Companies House filings all depend on it. Either learn to do it yourself with a full course, hire a bookkeeper, or give the work to an accountant's practice, which costs more because you are paying accountant rates for bookkeeping work.

Growing business with more than one person in the office. Employ or contract a bookkeeper for the day-to-day records and keep an accountant for the year end and advice. This is the standard arrangement in small firms.

Which should you train as?

If you want to work with figures and start earning within months, bookkeeping is the shorter route. There is no legal requirement to hold a qualification to work as a bookkeeper, but employers and clients want proof that you can keep a full set of books, and a course with marked work is the quickest way to show it. The National Careers Service puts bookkeeper pay at £24,000 starting and £35,000 experienced, and much of the work can be done from home.

If you want to prepare accounts, give tax advice or sign off audits, you need an accountancy qualification, which takes years rather than months. Many accountants start in bookkeeping or accounts-assistant roles and study for their professional exams while working, so the bookkeeping route does not close the door on accountancy later.

The Level 2 Bookkeeping Course is Lift College's online course for people starting from scratch: 90 guided learning hours across six tutor-marked units and a synoptic assignment, no exams, and a certificate of achievement issued by Lift College on completion. It is a Lift College certificate course, not a regulated qualification. It starts with a 7-day free trial, and most learners finish in 3 to 6 months. Our guide to how to become a bookkeeper in the UK covers the step-by-step route, the software employers ask for and the two registrations self-employed bookkeepers need.

Can a bookkeeper do an accountant's job, or the other way round?

A bookkeeper can prepare the figures and, with experience, the draft accounts, but preparing and signing off statutory accounts and giving tax advice is accountant work, and an audit can only be carried out by a registered auditor. An accountant can do bookkeeping, and some accountancy practices offer it as a service, but you will pay more for it than for a bookkeeper. If your business is small, the cheapest sound arrangement is usually your own bookkeeping or a bookkeeper for the records, plus an accountant for the year end.

Which course first?

• You run your own small business and want to keep the records yourself: start with Bookkeeping Basics, about six hours, pay once.
• You want a bookkeeping job, or to keep books for clients: take the Level 2 Bookkeeping Course, with a 7-day free trial, nothing charged until day 8, cancel any time.
• You want to become an accountant: the Level 2 course teaches the double-entry method every accountancy qualification builds on, and the accounts-assistant roles it opens are where many trainee accountants start.

Both courses are listed on the business and finance hub.