Bookkeeping

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lgarside
lgarside Registered Posts: 122 Dedicated contributor 🦉
in Chat and off-topic discussion
Hello I was just wondering if someone can tell me what bookkeeping actually involves. Silly question I know!!! If I was to do bookkeeping for individuals do you just have to keep a nominal ledger all sales and expenses etc and produce a trial balance which they then pass to an accountant for the year end p&l and balance sheet, or do you do the year end adjustments, depreciation, profit/loss on any disposal of fixed assets etc??

Also would you have to compute their tax and do a tax return with the correct depreciation adjustments etc or would you again pass this onto a chartered accountant?

If you do the accounts for say a small partnership or sole trader can you do all aspects of the accounts including the tax return, or does it have to be signed off by a qualified accountant? People seem to give you different answers in respect to this. I know some bookkeepers who literally just list the expenses and receipts and pass this onto the accountant?!?!?

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  • sharon
    sharon Registered Posts: 161 Dedicated contributor 🦉
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    Great question! ...... ... Does anybody know the answer?
  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    I would say that 'bookkeeping' is the process of maintaining the ledgers throughout the accounting period.

    This does not mean to say however that a bookkeeper would not be competent to perform year end adjustments and tax computations ready for submission to the inspector of taxes.

    For clarification accountants issue a letter of engagement which outlines the services to be given for which if I was only offering 'bookkeeping' I would highlight what this involves exactly.

    Final accounts do not have to be signed off by an accountant as at the end of the day it is the individual(s) who are responsible for their own tax return under self assesment, therefore they effectively pay any consequences. Any bookkeeper or accountant should have insurance though to cover them against mistakes made on clients accounts.

    The many who do different things are merely down to choice whether it be deemed by workload, competency or any other reason.
    Regards,

    Burg

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