I have realised over time that many people are unsure of the difference between a bookkeeper, management accountant and a tax accountant.
Bookkeeping and accounting may appear to be the same profession as they deal with financial data and are extremely important for every business and each have their own sets of advantages. There are some striking differences between them all.
To resolve this confusion, I have listed down differences between the 3 accounting functions including definition, objective and decision making
Bookkeeping is mainly related to identifying, measuring and is responsible for the recording of financial transactions daily and accuracy is vital to the process. You will know how much your debtors owe you, and how much immediate liability monies are due out to your suppliers, HMRC VAT if registered and PAYE.
The objective of bookkeeping is to keep the records of all financial transactions proper and systematic
Management cannot take a decision based on the data provided by bookkeeping as it is inconclusive.
Newer technologies have persuaded bookkeepers and accountants to be open to the technological advancements and explore emerging software options. Bookkeepers can support their clients through this change, presenting value-added services such as payroll processing, credit card reconciliation, etc. with the help of the latest software
A management accountant makes use of the information provided by bookkeeping and is responsible for interpreting, classifying, analysing, reporting, and summarising the financial data. They will tell you about your business so you can make the right decisions to grow your business.
The objective is to produce useful information for the company’s internal use. To encourage the business owner/managers to have strategic planning, help them set realistic goals and encourages an efficient directing of company resources.
A management accountant does preparations of a company's budgets and plans loan proposals.
A tax accountant will use the management account information and able to tell you how much tax you are liable for and give you tax advice. With timely and accurate management accounts throughout the year they are better placed to give you up front tax advice prior to your financial year end.
The objective is to ensure the business owner has the correct tax advice and disclose the company’s performance and financial health. To communicate the information to the relevant authorities outside the business like HMRC and Companies House.
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