What Does a Bookkeeper Do? Duties and Responsibilities

What is a Bookkeeper?

A bookkeeper is a financial professional who manages the day-to-day accounting and financial tasks of a business. From recording transactions to producing financial statements, the bookkeeper provides a crucial role in maintaining an organized set of books and providing financial insights.

What Does a Bookkeeper Do?

A bookkeeper is responsible for accurately recording all financial transactions of an organization in a timely manner. This includes cash payments, credit card transactions, invoices, receipts, payroll, and any other money that comes in or out of the business. These transactions are logged into record-keeping software, like QuickBooks, to create a detailed and ongoing general ledger.

The bookkeeper reconciles accounts on a monthly basis to ensure entries are correct. This includes reconciling bank statements, credit card statements, accounts receivable ledgers, and accounts payable ledgers. They identify any discrepancies or inconsistencies and make adjustments or corrections as needed.

In addition to recording transactions, a bookkeeper’s duties typically include:

• Processing payroll, calculating wages and tax withholdings
• Producing financial statements like profit/loss statements, balance sheets, and cash flow statements
• Preparing invoices and billing statements to send to clients and customers
• Ensuring all bills, vendors, taxes, and creditors are paid in full and on time
• Code transactions appropriately for easy reference and data analysis
• Perform account maintenance like opening and closing accounts
• Comply with financial laws and regulations

While recording daily transactions is essential, bookkeepers also provide valuable oversight, review, and advisory functions:

• Review entries for accuracy – analyze accounts regularly to identify and correct errors
• Make adjusting entries – record depreciation, bad debts, prepayments, accruals, and more
• Advise on improving accounting processes and cash flow
• Provide data and reports to inform budgeting and major business decisions
• Prepare information needed for audits and tax preparation
• Suggest accounting software upgrades or identify automation opportunities

A bookkeeper serves as the hub of financial information and record-keeping for a company. Business owners and executives rely on the data and insights provided by a bookkeeper to understand the ongoing profitability and health of their organization.

Importance of Bookkeeping for Small Businesses

Proper bookkeeping is extremely important for small businesses for several key reasons:

Compliance – Meticulous record keeping is crucial for meeting legal and tax compliance requirements. Accurate ledgers allow businesses to file complete and correct tax returns. Lapses in bookkeeping can lead to tax issues or penalties.

Strategic planning – The data contained in financial reports created by a bookkeeper provides critical insights business leaders need to make informed strategic decisions about growing their company.

Funding access – Banks and other lenders often require financial statements prepared by a bookkeeper to approve funding like loans or lines of credit. Poor financial records can deter lenders.

Cost optimization – Detailed bookkeeping helps identify unnecessary or excessive expenditures so businesses can control costs more efficiently. This helps boost profit margins.

Overall, thorough bookkeeping and financial management is vital for small business success in both the short and long-term. Investing in a bookkeeper provides a major return through compliance, planning, funding, and cost optimization.

Benefits of Hiring a Bookkeeper

While accounting software allows businesses to handle their own bookkeeping and finance, partnering with a professional bookkeeper has many advantages:

Save time – Bookkeeping requires daily attention to detail. Hiring a bookkeeper saves the business owner time that can be reallocated to higher-level tasks.

Gain expertise – Bookkeepers bring extensive knowledge of accounting procedures, standards, regulations, and software. Their specialized expertise results in higher quality financial processes and reporting.

Mitigate risk – Skilled bookkeepers help minimize legal, tax, and compliance risks through accurate work and financial vigilance. This protects the business’s reputation and longevity.

Obtain advisership – Beyond recording transactions, a good bookkeeper gets to know the business and can provide personalized advice about accounting, taxes, budgeting, and financial decisions.

For most small business owners, engaging an experienced bookkeeper is a smart investment that pays dividends.

Choosing the Right Bookkeeper

When evaluating bookkeeping candidates, businesses should look for these important traits:

Certification – Many bookkeepers obtain professional credentials like a Certified Public Bookkeeper designation to demonstrate their skills. Certification indicates commitment to the field.

Software proficiency – Extensive experience with leading small business accounting platforms like QuickBooks Online and Xero is ideal. Understanding accounting software saves ramp-up time.

Attention to detail – As a task-oriented and numbers-focused role, meticulous data entry and analysis skills are critical.

Timeliness – Transactions must be recorded daily, so candidates should have proven time management abilities and commitment to meeting deadlines.

Communication ability – Bookkeepers should be able to describe financial insights in understandable terms to those without an accounting background.

Finding a candidate that meets these criteria sets up a long-term bookkeeping relationship that provides immense value to a small business.