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what exactly does a bookkeeper do

Bookkeepers have a tremendous amount of skill when it comes to entering this data. While mistakes can, of course, still happen, a bookkeeper will be able to rectify them in a matter of moments. Finally, having a bookkeeper take care of these records will ensure they are always up to date. A bookkeeper not only monitors the petty cash, but it is also their job to replenish it should it run low or require a boost.

what exactly does a bookkeeper do

On top of that, you’ll also be burning through your already limited time if you have to go back and correct a bunch of errors because you were less experienced when you started doing your own books. At tax time every year, the IRS wants to know how you’re spending your money. They want to see the what exactly does a bookkeeper do breakdown of how much a business spends in different categories, including meals, utilities, wages for your employees, and the list goes on. The IRS will ask for the dollar amount for each of those things, and it’s important for business owners to be specific and thorough in their bookkeeping.

What Is a Bookkeeper — And Who Should Hire One?

A bookkeeper’s responsibilities can vary wildly depending on the industry in which they work as well as the size of the company they work for. However, there are many common duties that all bookkeepers take part in completing. I want to first start off by saying that bookkeepers and accountants are not the same thing. Small Biz Club is the premier destination for small business owners and entrepreneurs.

Bigger companies tend to offer better compensation for bookkeepers; this is largely due to the increased volume of transactions and data. A multinational corporation performs hundreds of transactions a second, while a small business might perform less than a hundred in a day. Being consistent, accurate, and minimizing errors are key characteristics that employers are seeking for this position. It is indispensable to have a knowledge of accounting and to understand how to use accounting software systems. In colonial America, bookkeepers would record transactions in a “wastebook”—so called because the data would eventually find its way into an official ledger and the original book would go into the trash.

Reconcile Your Accounts

That’s where outsourced bookkeeping can be a real life-saver as you get the same dedicated, expert bookkeeping help you desire but at a fraction of the cost. A full charge bookkeeper is practically the same thing as a “regular” bookkeeper except that since they are “full charge” they are solely responsible for all of the accounting. Accountants, on the other hand, are more involved in using that information for broader strategic planning and interpreting your books. They make recommendations and craft financial strategy for the business (like putting together a budget). In this article, we discuss what bookkeepers actually do, and how to choose a good one for your business.

Automated bookkeeping software minimizes the risk of errors, which can be quite expensive, given the time and effort spent detecting and correcting them. At the end of the day, you should also consider whether the consultant or team is easy to collaborate with. Since you’ll need to communicate with them on a fairly regular basis, you don’t want it to be a strained relationship. Additionally, it’s important that you feel that you can trust them with your business’ sensitive financial information.

Can a Bookkeeper Do Payroll?

Bookkeeping provides the information that accountants need, while accountants help bookkeepers maintain advanced financial information, requiring a close collaboration between the two. Before we break down what a modern bookkeeper does, it’s important to know the difference between bookkeeping and accounting. The confusion between the two largely stems from the fact that they’re both related to financial reporting in one way or another. Think of it this way, Quickbooks is to your business what Photoshop is for designers.

  • Keep your business’ unique needs in mind when looking for a bookkeeper to find the right fit.
  • At BELAY, we have an extensive interview process where we carefully vet candidates for you to ensure all of these qualities are found.
  • In this guide we will go through what a bookkeeper is, the different types of bookkeepers, as well as why a good bookkeeper is so important for your business.
  • However, the world has evolved, and our bookkeepers now have access to a wide range of software and tools that make the process much faster and more efficient.
  • They can do this by keeping an eye on the balance of revenues to expenses, along with offering more advice if the business needs more available cash to operate.
  • At the very beginning stages of starting your business you may be short on funds and need to handle most aspects of the business by yourself.
  • When making the decision to bring on a bookkeeper it is crucial to know what to look for as hiring a bad bookkeeper is almost worse than not having one at all.

A bookkeeper can make sure that you have all of the correct systems in place that you need for your business to be successful. They make sure systems are in place to pay your employees and send invoices on time, prepare files for your accountant, and produce weekly and monthly reports so you have a better idea of how to continue to grow your business. Accountants provide a lot of analysis and forecasts while bookkeepers maintain the day-to-day operations that make that possible.

Bookkeeping first involves recording the details of all of these source documents into multi-column journals (also known as books of first entry or daybooks). For example, all credit sales are recorded in the sales journal; all cash payments are recorded in the cash payments journal. Most individuals who balance their check-book each month are using such a system, and most personal-finance software follows this approach. Accountants and bookkeepers sometimes work together but have different responsibilities. A bookkeeper’s role is to provide accurate financial records for business owners regularly.

what exactly does a bookkeeper do

Bookkeepers are now using computer software such as QuickBooks and Xero to deal with their daily tasks. While you possibly don’t fully understand what a bookkeeper does, it is a surety that you would have heard of them. The most basic responsibility of a bookkeeper is to record all financial transactions accurately and in a timely manner. Noon Bookkeeping is an outsourced bookkeeping and accounting solution for business owners consisting of a team of CPA’s and certified, expert bookkeepers ready to help you organize the finances of your business. For example, depending on how many bank accounts and credit cards your business uses, our team at Noon can handle all of your bookkeeping and accounting needs for just $399 per month. Typically, accountants prepare company financial statements, analyze the costs of operations, and complete income tax returns.

What Does a Bookkeeper Do? A Guide for Small Business Owners

This can be made much easier with compatible digital bookkeeping apps that can instantly analyse exchange rates without wasting much time. Find out what bookkeepers do, and get an intro to double-entry bookkeeping. When your company is small and has few transactions occurring each month this is definitely manageable, but as your business begins to grow you may find yourself being pulled into many different directions. A bookkeeper is the one who tracks everything that comes in and out of your business so that you have an idea of the financial position of your company. Bookkeepers provide a snapshot of the financial health of a business at a given point in time, say a week or month. Accountants, on the other hand, help reveal where the business stands overall and where it is likely to go.

  • This is a daunting task that a business owner has to think about, which is why many choose to hire a bookkeeper.
  • Of course, education depends on the individual or bookkeeping service you hire.
  • Just one small mistake in a complex system can throw the entire accounts of your company off, and it can sometimes take weeks to rectify the error.
  • If an account has a debit balance, the balance amount is copied into Column Two (the debit column); if an account has a credit balance, the amount is copied into Column Three (the credit column).
  • However, when looking to hire a part-time employee to handle your bookkeeping you may be looking at $400-$800 per month plus benefits.
  • Ultimately, the Bookkeeper’s responsibilities are to accurately record all day-to-day financial transactions of our company.
  • One way to think about it is that bookkeepers lay the groundwork for accountants to analyze and prepare financial statements.

Of course, as we now sit comfortably in the age of technology, these statements are entered on to a computer. This level of number entry is very repetitive and labour-intensive, and if undertaken by a small business owner, it will be put off for a very long time. Bookkeeping can be a hard job for small businesses, especially for people who don’t know much about accounting. However, there are several steps that small business owners can take to make bookkeeping more manageable. Bookkeepers track the financial transactions of your business using a debit and credit system to ultimately lay the groundwork for an accountant.