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What are the responsibilities of bookkeepers

Bookkeeping is crucial for a business, whether it’s a sole trader, partnership, limited company or a charitable organisation. Bookkeeping is the practice of keeping records of all financial transactions that take place. Income and expenditure are recorded accurately so that a business owner can get an accurate picture of their financial health at any time. Initially, a sole trader may keep track of income and expenditure, but as the business grows it will possibly become too much responsibility. HM Revenue & Customs cracks down on business owners who don’t maintain accurate and sufficient business records, issuing penalties if it isn’t satisfied.

The main responsibility of bookkeepers is to keep official records of income and expenditure of the business, so that end of year accounts can easily be completed. There are additional duties of a bookkeeper which must be completed to ensure accuracy and compliance with HMRC. Receipts, invoices and payments have to be processed and are usually the responsibility of a bookkeeper, while the completion of VAT returns and invoices for HMRC may also be required. All financial filing and paperwork is the responsibility of a bookkeeper, including checking the company’s bank statements to ensure accuracy.

Although a bookkeeper and accountant are frequently confused as being one and the same, they are completely separate and are responsible for different tasks in the running of a business. While a bookkeeper will concentrate on recording financial data on a day to day basis, including income, purchases and sales, an accountant will use the data collated by bookkeepers and create financial statements. There are two methods used for bookkeeping; the double and the single entry methods. The double entry system is much more complex but also ensures greater accuracy, suitable for a larger company. Smaller businesses often use the single entry bookkeeping system, recording income and expenditure. The double entry system consists of a method which records credits and debits, using two ledgers within the books. All entries for credits and debits of a transaction must balance. The single entry system very often consists of a simple journal that records income and expenditure.

Bookkeeping is usually a full time job and for many businesses, this is an added responsibility which they have neither the time nor knowledge to deal with. Outsourcing to a professional company is usually the most cost-effective solution for a business, ensuring compliance with HMRC and other agencies.

For many companies operating in the UK– especially smaller businesses with just a few employees – changes to PAYE legislation can create confusion during the initial days of introduction. Reputable bookkeepers will have all the necessary information about new services, making compliance with any changes brought about much easier. By outsourcing to a bookkeeper, businesses are able to reduce the risk of being unaware of changes in legislation and, ultimately, can avoid receiving a penalty from HMRC for poor record keeping and other discrepancies. Outsourcing is a cost-effective solution for businesses, saving valuable resources, including time and money.