Frequently Asked Questions
What does a bookkeeper do?
A bookkeeper primarily organises and records the day-to-day incoming and outgoing transactions of a business. These transactions include customer sales, purchases from suppliers and incoming/outgoing payments. A bookkeeper will categorise these transactions and prepare closing year-end balances for the preparation of financial accounts (which is completed by an accountant).
Diligent bookkeepers (such as us!), can also spot trends in activity and analyse comparisons with other areas, such as comparing marketing spend with sales revenue. If sales revenue hasn’t increased at least in line with marketing spend, for example, then this may justify further investigation to understand why.
We can provide you with bookkeeping services only (for example, if you already employ the services of an accountant) or both bookkeeping and accountancy services.
What is the difference between a bookkeeper and an accountant?
The role of a bookkeeper is quite restricted as described above. An accountant, however, can provide a much broader range of services, such as preparation of year-end accounts for sole traders, partnerships and limited companies, in addition to self-assessment and Corporation Tax returns and management accounting services such as forward budgeting and forecasting.
It is a legal requirement for limited companies to submit financial accounts to Companies House at the end of each accounting period. This includes an Income Statement, a Statement of Financial Position, and a Statement of Cashflows. Limited companies must also file a Corporation Tax return annually. An accountant will produce these required documents and file them on your behalf.
There is no legal requirement for sole traders or partnerships (with the exception of Limited Liability Partnerships) to produce financial accounts, but it is good practice to do so in order to know how your business is performing financially.
Often, accountants may outsource the work that a bookkeeper performs to focus on the other service areas they provide or treat this as a secondary service. We provide both services with equal importance as one service links to the other.
Do I need both a bookkeeper and an accountant?
If you are not legally required to file annual financial accounts, then you may only need the services of a bookkeeper, provided they can also submit self-assessment tax returns (and VAT returns if applicable) on your behalf. If you are legally required to file annual financial accounts, then you will also need a professional accountant to do this for you.
Some business owners use a separate bookkeeper and accountant, whilst others use an individual or firm that can perform both services, such as us.
Why should I employ a bookkeeper and/or accountant?
It is highly recommended to employ the services of a bookkeeper as they can process transactions more efficiently, liaise with HMRC directly on your behalf regarding any queries, and be able to look at ‘the bigger picture’. This will allow you to fully concentrate on the needs of your business with no distractions, whilst also obtaining additional valuable financial insights (such as analysis of transactions) that you may not otherwise have been aware of.
As described above, a professional accountant is required if you are legally obliged to file annual financial accounts. However, it is often more efficient to employ the services of an individual or firm who can perform both bookkeeping accounting services together, rather than employing these services separately.
Are bookkeepers and accountants expensive?
Many people believe that bookkeepers and accountants are expensive because they are highly skilled and qualified people who produce very detailed and accurate work to meet with legal requirements. They know the ‘ins and outs’ of dealing with financial transactions and how to classify them, in accordance with the requirements of HMRC, and often deal with complex issues.
Accountants are also responsible for producing the financial accounts of businesses for Companies House which must be accurate and timely. Mistakes made in posting transactions incorrectly or the incorrect filing of accounts and/or tax returns can be extremely costly, have potentially serious implications and are often messy to correct.
Therefore, it is imperative to have peace of mind in the knowledge that a professional bookkeeper and/or accountant is taking care of this on your behalf. Our services are competitively priced, and we will only provide those services you actually need.
What is digital cloud accounting?
Digital cloud accounting software is similar to traditional on-premises, or self-install accounting software, only the accounting software is hosted on remote servers, similar to the SaaS (Software as a Service) business model. Data is sent into “the cloud,” where it is processed and returned to the user.
All application functions are performed off-site, not on the user’s desktop. In cloud computing, users access software applications remotely through the Internet or other network via a cloud application service provider.
Using digital cloud accounting software frees businesses from having to install and maintain software on individual desktop computers, and also allows multiple users in different locations to access the same data in real-time.
Why Diligent Accounting?
Diligent Accounting offers a warm, friendly, personalised and dedicated service at competitive prices and we are truly passionate about looking after the finance side of your business. We apply the highest professional and ethical standards to our work at all times and treat your business like its our own, supporting you every step of the way.
We will take the whole burden of bookkeeping and accounting off your hands so you don’t have to worry about a thing, and we will always respond swiftly to any queries, concerns or issues you may have.