Are accountants more than bookkeepers?

Sadly the public are often unaware of the differences between accountants and bookkeepers. Beyond this they are unaware that accountants may or may not be qualified and members of one or more of a myriad of professional bodies, explains Mark Lee.

But let’s focus on the bookkeeping side of things for now. It’s a branch of accountancy and one that, in my day, you certainly had to master as part of your accountancy training. I hope that’s still the case!

There has always been scope for those who enjoy bookkeeping to focus exclusively on this area of activity. And that includes those who have not undertaken full-scale training in accountancy. There are independent bookkeepers, those who are employed by accountancy firms and those who work within larger more entrepreneurial bookkeeping practices.

When a client’s bookkeeping is in a mess some accountants will simply...

Continued...

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Comments

Is this an 'advertorial?    5 thanks

winton50 | | Permalink

It reads like you've just transcribed their press release

bookmarklee's picture

No

bookmarklee | | Permalink

I haven't and as I wrote the article from scratch I rather resent the suggestion. 

Mark

Kent accountant's picture

Different    3 thanks

Kent accountant | | Permalink

 

Hi Mark, in my opinion most clients are aware of the distinction between bookkeeping and accountancy. I expect many small businesses start out doing their own bookkeeping and then as the business grows they look to outsource this, a frequent port of call will be their accountant to ask if they can do the bookkeeping or recommend someone who can.

I don’t think bookkeeping work is easier to secure because of this – most small businesses accept that they need an accountant to help with accounts and tax especially if they trade through a limited company.

On the point about a successful practice where the practitioner is the only one doing the work I would expect £50,000 to be the absolute maximum if they want to maintain quality. Assuming £25 an hour chargeable rate, 40 hours a week then we get to around £50,000 per annum. What about admin time, business development, holidays, sickness?

I think your numbers are wrong on point 5, 5 bookkeepers may help achieve £150,000 but you’d need a lot more to achieve a £500k turnover and a £200k net profit. I would expect each bookkeeper could potentially handle say £42k of business, with around £22k of cost (salary plus overhead contribution) so £20k potential profit per bookkeeper?

The transition you talk about though is one I think many practices follow, many stop at point 2 perhaps edging towards points 3 and 4, this very much depends on the person and what they want to achieve.

 

Note – rates quoted are based on South East England. 

johnjenkins's picture

Good article Mark (no punch lines)    1 thanks

johnjenkins | | Permalink

I have to agree with Kent accountant. Bookkeepers can rarely get away with more than £15 per hour. Franchises in the Accountancy world don't really bode well for some reason. It must be that an Accountant in practice must have something special that clients can see. We have taken on apprentices who are doing AAT and it's very hard to teach them the fundementals. So making that transition from bookkeeper to Accountant is not an easy process and I don't think a franchise would work.

bookmarklee's picture

"Most clients...."

bookmarklee | | Permalink

Thanks for those useful insights @KentAccountant  although you may be underestimating what can be earned.

I think you're right when you say "most clients are aware of the distinction between bookkeeping and accountancy".  I'm not at all sure however that most start-up businesses appreciate the distinction as clearly if they have yet to engage an accountant.

Mark

Kent accountant's picture

How?

Kent accountant | | Permalink

bookmarklee wrote:

Thanks for those useful insights @KentAccountant  although you may be underestimating what can be earned.

What do you think a bookkeeper can earn and what are your views based on?

I use subcontract bookkeepers who charge £10-£15 an hour.

I have been approached by local bookkeeping firms who charge £20-£25 an hour.

I don't see how more can be earned?

johnjenkins's picture

I think responsibility

johnjenkins | | Permalink

might put off some bookkeepers making that step.

I do know of bookkeepers/pa's who are charging £20 per hour but they are confined to one particular client.

dbowleracca's picture

I know of one in te East Midlands earning £40 an hour    1 thanks

dbowleracca | | Permalink

A book-keeper I know gets £40 an hour from one of her clients, and then £20-£25 from her others. She does produce good management information but doesn't deal with tax and there are some end of year adjustments, but minimal. So, she could earn £70k a year quite easily with no staff as most work is at client premises.

I think there is a huge opportunity for book-keepers and accountants to both work very well together and each earn more whilst adding value to the client, but we need more good quality book-keepers out there and more accountants who are willing to work closely with them.

johnjenkins's picture

I find it very difficult to believe someone will pay someone £40

johnjenkins | | Permalink

per hour for bookkeeping services however good they are especially as the other clients are paying £20-£25.

There is only one way, in my view, that this could be achieved and that is a price negotiated for a particular job. That is a bit different to an hourly charge out rate.

I'm sure we can all earn £100+ per hour on some jobs but that isn't the charge out rate.

Kent accountant's picture

£40 an hour

Kent accountant | | Permalink

sounds more like an accountant especially if they are producing management information.

bookmarklee's picture

And so we get back to the question at the top of the article

bookmarklee | | Permalink

Which I might have suggested could also be set out as: When does a bookkeeper become an accountant? 

Does the production of management (accounts) information mean that the person involved could call themselves an accountant and charge more than a (simple) bookkeeper? We all know that qualified accountants will have had much broader and deeper training than even qualified bookkeepers, but where is the dividing line in the bookkeeping related work they do and what they can call themselves?

Mark

Kent accountant's picture

Still want to know - How?

Kent accountant | | Permalink

Kent accountant wrote:

bookmarklee wrote:

Thanks for those useful insights @KentAccountant  although you may be underestimating what can be earned.

What do you think a bookkeeper can earn and what are your views based on?

I use subcontract bookkeepers who charge £10-£15 an hour.

I have been approached by local bookkeeping firms who charge £20-£25 an hour.

I don't see how more can be earned?

 

Bookkeeper to Accountant (just like that)

ecirpdivad60 | | Permalink

 

As a sole trader Accountant FMAAT, providing all accountancy and bookkeeping related services, many of our bookkeeping jobs have been taken over from Bookkeepers who because of their limitations possibly as a combination of limited qualifications,lack of accountability to governing bodies, also many do not have a CPD policy or have any PI insurance have resulted in Vat investigations, Tax investigations and voluntary disclosures for past errors after we took over the jobs.

We find that many bookkeeping firms merely process purchase and sales invoices to complete vat returns.  Some take the trouble to analyse the bank payments and receipts but most do not produce control accounts,( cash reconciliations, bank reconciliations etc).  Therefore the ultimate difference is the due diligence of the accountant who has to produce final accounts from the bookkeeping records,will pay particular attention to reconciling payments and receipts with Purchase and Sales Day Books, Investigate any monthly cash differences and ensure that the proprietors drawings levels seem appropriate. 

Slickadder

johnjenkins's picture

This is just

johnjenkins | | Permalink

number crunching. There is more to being an Accountant than just putting figures together. An Accountant has to be jack of all trades master of some. Bookkeepers put the figures together, then Accountants read them, discuss them with client etc. etc. They generate business with other clients and so-on.

I've been a bookkeeper for    3 thanks

Shemiltwilliams | | Permalink

I've been a bookkeeper for over 15 years, employed and self-employed and recently got AAT and set up my own company.   I find that many businesses come to us to save money on their bookkeeping work currently done by their accountants, whom are charging £45 plus an hour, and rightly so.  I feel price should be based on experience and knowledge.   I worked closely with local accountants who don't like or wish to do the bookkeeping work themselves and recommend us and vise-versa, I don't deal with tax or statutory accounts and don't enjoy them so pass it on, giving us all what we want and enjoy.   The problem is there are different qualities of bookkeepers as with any trade / skill, the last 3 jobs we took on have been dreadful, the bookkeepers which did these jobs prior to us were purely entering information, often in the wrong places, often with no VAT or allowable expenses knowledge, which creates more work for the Accountant at year end and a disgruntled business owner.  So yes, the lines now blur between accountant and bookkeeper as we have the knowledge to put things right, do y/e adjustments and present the accountant with information requiring only putting into statutory format with tax computations.  This works well for us and I prefer to have an accountant "on-side".  Our next step is underway, I have taken on an AAT L4 mature student with no bookkeeping experience!  Mad I hear some scream, but for me it's perfect, he has the fundamental accounting knowledge and I can train and mould him to work how I want, yes I have to train him to use Sage and QB's etc.,, but I don't have to iron out any bad habits formed over the years, he has the VAT and tax etc.., knowledge so with a few months of hard training and supervision he should be good to go!  Yes profitability will drop whilst training, but long term this should generate around £40k gross, excluding payroll which is a cash cow!   I think a lot depends on the knowledge of the bookkeepers, we're asked for management accounts, cash flow forecasts, break-even etc quite often, and seem to have fallen into a "disaster recovery" area where last bookkeepers a made such a mess of things.  Some clients squirm at £25 per hour, quoting they have seen jobs advertised for £8.50 /hr, I always say it's your personal preference, but for £8.50 they often won't have insurance, MLR, ICO reg, qualifications, continuity agreements etc.     For me it's slowly-slowly, picky about the clients we take on, always run a check on them before accepting them, and if their accountant is hard to work with, strongly recommend one of my preferred ones.

Niche    2 thanks

peterhool | | Permalink

If you specialise in a specific business niche a) you can provide more value because of your specialised experience b) benefit from streamlined processing as every client has very similar money flows c) widen your service ie regulatory reporting for insurance firms etc.

The information you derive by working for a number of clients in a specific niche could give rise to many added value opportunities if you widen your thought processes outside of basic number crunching with fee rates well over £100 per hour.

 

Bookkeeping depends on    1 thanks

KJ SMITH | | Permalink

Bookkeeping depends on experience, qualifications and backing.  I have been a bookkeeper for 20 years now, in business, then practice and now both.  I charge £18 per hour and have more work than I know what to do with.  I also sub-contract from some Accountancy firms to help them out as they do me with any queries or questions I have.  I am AAT qualified although once you have this qualification it is down to an individual to keep abreast with new laws and tax regulations etc., this is where I personally choose to stay at bookkeeping level and sort advice when necessary.  I choose not to have CPD etc as I have a very large family and cannot give Accountancy my full attention.  In my mind this is the difference between bookkeeping and accountancy.

Although I have seen some awful work which people who claim to be bookkeepers have carried out!

 

A reference would be strongly advised.

Kent accountant's picture

??

Kent accountant | | Permalink

Kent accountant wrote:

Kent accountant wrote:

bookmarklee wrote:

Thanks for those useful insights @KentAccountant  although you may be underestimating what can be earned.

What do you think a bookkeeper can earn and what are your views based on?

I use subcontract bookkeepers who charge £10-£15 an hour.

I have been approached by local bookkeeping firms who charge £20-£25 an hour.

I don't see how more can be earned?

 

 

Still thinking about it Mark?

johnjenkins's picture

yer come on

johnjenkins | | Permalink

Mark you been a bit quiet lately.I'm sure you take you're laptop or tablet or iphone on hols with you - so no excuse.

bookmarklee's picture

Sorry. Nothing to think about @KentAccountant

bookmarklee | | Permalink

I note that you wouldn't engage a bookkeeper who charges higher rates and haven't been approached by anyone trying to sub-contract out bookkeepers at higher rates. As a result you don't see how more could be earned.

Fine. But there is a wider world out there and your experience does not define what is and isn't possible. Some bookkeepers are better business people and higher performers than others. Same with accountants.

Others on here have shared their views as to the rates good bookkeepers can charge and these comments inevitably reflect a range of experiences too.

As to 'how?' - Forgive me but that's for Pure Bookkeeping to say, and their promo video gives a good idea.

Mark

ps: Whilst I do attempt to engage in the comments section that follows my articles, I only do so when I have the time.  I'm sorry if that isn't always fast enough for some contributors.

 

johnjenkins's picture

@Mark

johnjenkins | | Permalink

That was a really diplomatic answer, you're not thinking of going into the treasury are you?

Kent accountant's picture

@bookmarklee

Kent accountant | | Permalink

Why can't you answer the question properly?

You have said that I'm underestimating what bookkeepers can earn.

I don't see how and have asked you to provide details which back up your comment. Have you just been taken in by Pure Bookkeeping's blurb? - mind you couldn't see where they disagreed with my calculations.

As you can't (provide a proper answer) I'll just accept that you're wrong.

 

bookmarklee's picture

'you MAY be underestimating'

bookmarklee | | Permalink

Please don't put words in my mouth @kentaccountant.

Sorry my reply doesn't satisfy you.

Kent accountant's picture

Your words

Kent accountant | | Permalink

bookmarklee wrote:

Thanks for those useful insights @KentAccountant  although you may be underestimating what can be earned.

I think you're right when you say "most clients are aware of the distinction between bookkeeping and accountancy".  I'm not at all sure however that most start-up businesses appreciate the distinction as clearly if they have yet to engage an accountant.

Mark

Not mine.

If you can't deal with people challenging your comments why do you bother posting?

It's a waste of effort trying to have a discussion with you, unless comments agree with your statements you get defensive and dismissive.

Nothing wrong with my comments I asked you to support your statement which you clearly can't.

bookmarklee's picture

We are clearly at cross purposes @KentAccountant

bookmarklee | | Permalink

And you seem to be very cross. Sorry about that.

I stand by my comment that you MAY be underestimating what bookkeepers can earn. The corollary to that statement is that you MAY not be. I have added all I can.

We each have form and reputations on AccountingWeb.  I'm happy with mine in the round thanks. I don't believe your allegations are widely shared and would be very upset if they were.

Mark

ps: I try to pay little attention to the views shared by people like you who hide behind pseudonyms. In my experience those who use their real names tend to be more circumspect in their choice of language and accusations. I have higher regard for and give more time to them generally.