Know you need help with your business finances but are not sure if you need a bookkeeper or accountant? In this article, we will explain the difference between bookkeeping and accounting and help you decide which service is most appropriate for your business.

If you are a Sole Trader, Freelancer or small business with a few employees then bookkeeping services will cover your needs and generally be the most cost-effective solution for you. Your bookkeeper will be able to advise you on financial issues such as (payroll, general bookkeeping and VAT returns). If you are a larger company which needs full management of your finances (and financial analysis), an accountant will be more suited to you.

The above is a quick and easy way to determine if you need a bookkeeper or accountant. If you need more information on the differences between the two or are interested in price comparisons, read on.

Bookkeeper vs Accountant Comparison

What a bookkeeper can offer you:

What an accountant can offer you:

  • Preparing and filing tax returns
  • Tax planning
  • Less frequent communication (likely only during tax season)
  • Help with applying for business loans
  • Specialist tax advice
  • In-depth financial analysis

It becomes clear that you only need an accountant if you are a larger business or start-up looking for support with business loans, managing your financial situation and filing tax returns.

A bookkeeper on the other hand is more flexible and useful to smaller businesses. Bookkeepers cover a wide range of services suitable to individuals (sole traders) and small businesses with a few employees.

By hiring a bookkeeper you can save time and focus on your business whilst they handle your payroll, pension schemes and other boring tasks that take you away from your business!

Is a bookkeeper or an accountant cheaper?

Every company is different. Some will charge hourly rates, whereas others will only offer fixed-price monthly packages.

Generally, a bookkeeping company will be more affordable than an accountant. Think about whether you need the same support each month (in which case a fixed-price monthly package may be a good idea) or if you only need help on an irregular basis which may mean you are better off paying an hourly rate only when you need it.

The safest approach would be to find and speak with a few local companies and compare quotes from them for the work you need. Cost is not always the most important metric as other aspects such as reviews should play a factor in your choice too.

Outsourcing your bookkeeping vs hiring in-house

Once you have decided to seek help with your business finances, you might consider the option of hiring an in-house staff member to handle this for you around the clock.

This idea may sound great, having a staff member solely dedicated to your business finances, but consider the overhead and costs associated with this decision.

Once you hire a staff member, you are responsible for their salary, pension scheme, holidays and much more. This is a large financial commitment to make when the option of outsourcing to an external team for a fraction of the cost is available.

On the other hand, you can outsource your bookkeeping or accounting to a team for an hourly rate or on a monthly fixed-price package and that is your only cost. You don’t need to cover any holidays, pensions or anything else for your outsourced team.

The reality is you will benefit from the same financial expertise at a fraction of the cost and commitment by outsourcing to a bookkeeping company.

Is this company right for me?

When deciding on hiring any company (not just a bookkeeper or accountant) you need to decide whether they will be a good fit for your business. Consider:

  • Do I want to work with a smaller, local company with a personal touch?
  • Do I want to pay hourly or a fixed monthly fee?
  • How much support am I going to need?
  • How often will I want to be in contact with the team?
  • Do they provide all the services I need?
  • Do they have experience in my industry?

These are a few of the points you may want to consider when evaluating your options.

Should I hire a bookkeeping company for my small business?

Often business owners will try to handle their own bookkeeping (pensions, self-assessments, payroll) and whilst you likely can do it yourself, should you?

Probably not. The time spent managing your bookkeeping is all time that you are not spending on growing your business and servicing your clients. Not to mention the time it would take you to learn to properly manage your own books, then next month, you get to do it all again!

In reality, it is cost-effective, less stressful and the right business to hire out your bookkeeping services to a specialist team who can support you through the process and handle all the legwork.

By hiring a bookkeeper from the start, you take out any risk of making mistakes and avoid opening yourself up to fines and penalties. You also ensure that your bookkeeping is organised and handled properly and build that relationship so you can lean on your bookkeeper if you have any questions or concerns.

If you are still unsure, try it out yourself and see what works for you or consult with a bookkeeper and find out what the process really entails.

Ready to hire a bookkeeper?

So, you’ve been through all the information and have made the smart decision to hire out your bookkeeping and save yourself time, stress and frustration?

You can seek out a bookkeeper on Google, consult with your friends who run their own businesses and have bookkeepers or you can cut out all that effort and work with us. We are always open to taking on new businesses and supporting them with their bookkeeping, regardless of your current situation.

Get in contact with us today for a free consultation!