Good question. My first thought was "I wish I knew the answer" and my second was "I wonder how many times I will be shot" by fellow professionals for the definition I am about to volunteer!
Bookkeepers are very skilled at putting together accounts, starting from the basic records you keep for your business. They work with the detailed financial transactions of the business to build a historic picture of how the business has performed. They are professionals and have studied to a tertiary level. If you are not going to do any formal record keeping yourself (not even spreadsheet analysis), a bookkeeper is worth considering. Some bookkeepers will be happy to take the accounts they have prepared for you and file a basic tax return for you. Some accountants employ bookkeepers so that they can offer a one-stop service to their clients.
Accountants generally have a more lengthy training and have covered a greater breadth of subjects. Whilst all accountants have undertaken similar training, their experience will have been shaped by the fields they have worked in. They may have specialisms in different sizes of business or different industry sectors. Generally they will have a deeper tax knowledge and ability to advise your business on taxation planning opportunities as well as giving general commercial advice.
Before deciding, have a think about the type and complexity of the business you are about to start up. Will you need advice about whether to trade as a sole trader, or as a company, or maybe a partnership if other people are involved with you in the start up? Will you be employing people? Or carrying stocks of goods, or manufacturing? The more of these that you have answered yes to, the more likely you are to need the services of an accountant as opposed to a bookkeeper.
Oh and by the way...Whats an agent?
If you have heard this term in conjunction with tax, it is likely to refer to the person you nominate to communicate on your tax affairs. This could be an accountant or a bookkeeper and it is possible to have more than one agent e.g. a bookkeeper registered to deal on your behalf working in partnership with an accountant, registered to deal with tax for the company.
By Alan Sealey
As we cannot be experts in every relevant subject, we would love to receive 'guest' articles that may be of interest to anyone running their own business or thinking of doing so. ADD YOUR ARTICLE