What Does an Accountant Do: Role, Types, and Skills Required
Understanding your finances is vital to successfully running a small business, and it can also be helpful for personal money management. An accountant is responsible for reviewing and analysing financial documents and helping clients create effective financial strategies based on these findings. They may take on various roles, from preparing taxes to ensuring compliance with all laws and regulations and identifying areas of excess spending.
We’ll explore some of the basic tasks of accountants, as well as the different types of accountants and the skills they require. Then we’ll look at current accounting trends to see how new technologies have influenced the accounting process.
- An accountant reviews and analyses financial accounts for businesses and individuals.
- Their roles may include preparing tax documents, audits, and reviewing expenses.
- Accounting is divided into public and private sectors, with a variety of specialisations.
- Accountants need a mix of technical skills, knowledge, and communication skills.
- Automation and new technologies can make accounting more straightforward and more accurate.
In this article, we’ll cover:
- What is an Accountant?
- What Does An Accountant Do?
- Types of Accountants
- Important Accounting Skills
- What Are the Current Accounting Trends?
- Frequently Asked Questions
What is an Accountant?
An accountant reviews a business’s or individual’s financial data to help them manage their financial health. They can have various responsibilities, including collecting and tracking expenses and revenue from financial operations, preparing financial information for tax returns and other compliance needs, or helping businesses create strategies to maximise profits. An accountant might be part of a larger accounting firm or an accounting department within a company or have their own independent practice.
Good financial management is key to a successful business strategy. Understanding where your money goes helps you develop methods to improve profits and is essential for your financial decisions and projecting long-term growth. Correct financial reporting is also crucial to avoid tax penalties and other regulations. An accountant can help you manage your cash flow for business growth and reduce the likelihood of errors in your financial reporting.
In the UK, the basic educational requirement for becoming an accountant is a bachelor’s degree or master’s degree in accounting. Following their accounting degree, accountants can specialise or apply for further qualifications through one of the UK’s chartered accountancy bodies.
What Does an Accountant Do?
An accountant’s duties will depend on where they work and what the company needs. Preparing financial statements is one of the most common responsibilities and is usually required as the starting point for most other tasks. When an accountant prepares a financial statement or reviews a company’s existing financial accounts, they may check for accuracy, regulatory compliance, areas of excess spending, and anything else the client may want to flag.
Another important task for many accountants is preparing documents like tax forms. Taxes may require in-depth knowledge, particularly for businesses and self-employed individuals, and an accountant can help make that process easier and more accurate. Document preparation can also be time-consuming, so many find it more profitable to hire a certified public accountant.
An accountant may offer many more services, including conducting audits, advising on spending and cost-saving opportunities, and forecasting for opportunities and risk analysis. Some accountants work in specific industries to offer greater in-depth analysis in these fields.
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Types of Accountants
There are several other career specialisations that an accountant might pursue. Some of the most common types of accounts in the UK include:
- Financial accounting: Similar to bookkeeping, financial accounting involves tracking and analysing financial records.
- Auditing: External auditors are hired to ensure accuracy when companies produce their accounts reports.
- Tax accounting: experts in tax legislation and tax accountants help businesses and individuals as they prepare for tax season.
- Forensic accounting: This specialisation often includes an element of legal focus. Forensic accountants may analyse financial statements to look for fraud or review finances that apply to legal proceedings like divorce.
- Management accounting: A certified management accountant helps businesses create and adapt their financial strategies for money management.
Accounting is also divided into the public and private sectors. Public accounting firms generally refer to accounting that is external to a business, whereas private accounting is internal to the business. Certified public accountants work for a wide range of clientele, including the government, while private accountants typically work with a specific company. Because public accountants may work with government agencies, they are required to have particular certifications that private accounts may not need. Even when a business has a private accountant, its financial records may be externally audited by a certified public accountant if required.
Important Accounting Skills
A person in an accounting career needs a mix of technical and soft skills to interpret financial data. Essential technical skills include a thorough knowledge of accounting practices and tax laws, analysing financial data, the ability to prepare financial statements, data-analysis skills, and knowledge of industry and business practices. It’s also beneficial to have proficiency with accounting software, although the exact software type may vary depending on the firm or client they work for.
In addition to technical skills, soft skills like communication and problem-solving are helpful for accountants. Whether working in large accounting firms or as independent accountants, accountants must communicate their findings to coworkers and clients. The ability to work in a team, strong organisation, problem-solving skills, and time-management skills help ensure the process is swift and successful.
What are the Current Accounting Trends?
Although many of the responsibilities of an accountant remain consistent, the tools available are changing rapidly with the emergence of new technologies. Using AI to automate basic tasks means that many accountants can focus on higher-level critical thinking skills and problem-solving for clients. Data analytics and forecasting tools can also help predict trends in the market, although it’s important that an accountant analyse this data to check for accuracy and logic.
Remote working has also grown increasingly popular across many fields, including accounting. Online accountants like Mazuma and tools like accounting software support remote work so companies can track and share their financial data with accountants online. This can increase efficiency, reduce costs, and increase accuracy through the automation of the mathematical elements.
An accountant must review and analyse their client’s financial data. This can include a variety of responsibilities, with everything from reporting financial transactions and catching excess spending to preparing documents for taxes and compliance. Accountants who are trained in specific industries can also offer insight into financial forecasting, risk management, and other skills to help businesses create profit-maximising strategies.
Accounting is divided into the public and private sectors, with public sector accountants providing services to a range of clients, which may include the government. In contrast, private accountants typically work internally with a business. There are a variety of accounting specialisations ranging from taxation expertise to financial knowledge in legal proceedings. Accountants need a mix of technical and soft skills, which helps them stay updated on new trends to make the most of accounting technology.
FAQs on What an Accountant Does
What are the golden rules of accounting?
There are 3 golden rules of accounting: for personal accounts, debit the receiver and credit the giver. For real accounts, debit what comes in and credit what goes out. For nominal accounts, debit expenses, losses, and credit incomes and gains.
How can an accountant help with tax planning and preparation?
An accountant can help with tax preparation and planning by offering expertise on tax information, interpreting financial records, helping clients to organise their financial records, and preparing tax documents. A client may hire an accountant to assist with these skills when preparing their taxes.
What qualifications do accountants typically hold?
In the UK, accountants and management accountants typically have a bachelor’s or master’s degree in accounting. Many accountants will also train further to specialise in the accounting profession and may choose to get certified with one of the UK’s official accounting bodies.
How can an accountant help with bookkeeping and record-keeping?
Bookkeeping typically focuses on recording financial data and ensuring it’s organised, while accounting focuses more on analysing it. However, bookkeeping is the first step in most accounting procedures, so an accountant can likely help you keep and organise sensitive financial information and records.
What are some common software and tools used by accountants?
Accountants can use several different software and tools, including accounting software like FreshBooks, which offers features for expense tracking, recording revenue, doing financial reports, and creating and tracking invoices. Financial calendars are also helpful for keeping track of important financial deadlines.