13 Things Bookkeepers Do For Small Businesses

What exactly does a bookkeeper do

Once the first leg of the race is finished, they hand the baton—the financial information contained in ledgers and journals—to What exactly does a bookkeeper do accountants to complete the race. Bench is a bookkeeping service that balances your books on a monthly basis.

  • They’re worried about keeping up with all the rules of accounting or that they’ll mess up their taxes.
  • This will also help with cash flow management going as your business grows and help you develop your business plan.
  • This is another chance to sell potential applicants on things like telecommuting, work-from-home options, or additional availability during tax season.
  • In this guide we break down the day-to-day role of a bookkeeper, and why a good one is worth holding onto.
  • One mistake and a dreaded letter from HMRC can soon be on your way.

Daily tasks for bookkeepers often involve looking at numbers and may involve simple calculations, such as addition and multiplication. There is a subtext here that we haven’t yet discussed and it’s important that we do. Because while every task the bookkeeping service completes is vital to the financial health of your business, it’s the underlying structure they apply that really makes a difference. Our experience is that sometimes bookkeeping is out of date when it is time to take over. The accounting process is critical to your success in avoiding losses, but it can take too long to learn and distract the business from expanding. This is the best place to keep your financial information in order. The ability to access the latest business information is essential to your decision-making process.

Other reports

You want to make sure that these are clearly reflected in your job description so that candidates understand your specific needs and how their skills align with those needs. An outsourced bookkeeper is a third-party professional who’s been hired to handle your finances. While the Keeper Tax app allows you to handle your finances on your own, we also have a team of real-life bookkeepers behind the app.

Now, I want to log those transactions in my accounting system (let’s ignore automatic bank connections for now). But when I enter the transaction, I fat-finger it and only enter $10, instead of $100. This is the first part of your business’s “books” that have been kept by your bookkeeper. Note that once this is done correctly, you can slice and dice anyway you like.

Doing so can make it easier to focus on the aspects of your business better-suited to your skillset, and in the end, significantly reduce your stress. Because let’s be honest, no matter how much help you have, being a small business owner is a demanding gig. The main role of bookkeepers is to categorize expenses and income for their clients.

To be a successful bookkeeper, it’s important to follow through when you agree to finish a project by a set deadline. Having discipline allows you to maintain a strong work ethic to consistently provide accurate information when preparing financial records. It also helps you maintain focus when working on meticulous projects with complex details. Numeracy and basic math skills can help bookkeepers feel comfortable working with numbers. This is beneficial when communicating numeric data and sharing reports with accountants or business stakeholders.

The Ultimate Guide to Working with Virtual Bookkeeper

| Monthly Bookkeeping Cost Trying to decide if you can afford to hire a bookkeeper? Learn about average rates and factors that affect bookkeeper pricing.

What exactly does a bookkeeper do

Another common banking related task they may perform is wire transfer or ACH preparation. Accounts receivable and Accounts Payable are very crucial to businesses as it defines the financial position at a given point of time. Bookkeepers usually take up this work of recording both AP and AR as they are important financial data and help in determining the debt vs credit owed by a business. You accidentally classified an employee as an independent contractor. You didn’t realize you need to register and pay sales tax in another state. You can’t get a business line of credit because your books are a mess.

So, what does a bookkeeper do all day?

As a business owner, one of your primary responsibilities could be keeping tabs on your product inventory and restocking it when needed. When you order inventory, your bookkeeper collects the receipt, enters the transaction into the general ledger, and files the record into your financial database. In 1494, Pacioli published “Summa de Arithmetrica, Geometrica, Proportioni et Proportionalita .” Effectively, he introduced double-entry bookkeeping and accounting to the world. Today, many use Pacioli’s core bookkeeping and accounting principles to streamline business finances. Companies also have to set up their computerized accounting systems when they set up bookkeeping for their businesses. Most companies use computer software to keep track of their accounting journal with their bookkeeping entries. Very small firms may use a basic spreadsheet, like Microsoft Excel.

  • However, it helps to have a two- or four-year degree in accounting, finance or related discipline.
  • By keeping track of every sale or purchase and using software to do it all, it’s much easier for them to keep an eye on your cash flow.
  • Bookkeepers deal with invoicing when working with organizations.
  • This can be done manually or with the help of accounting software.
  • They must take 24 hours of continuing education each year to maintain their license.

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. Producing invoices, chasing payments, getting you ready for tax deadlines and processing payroll. These are just some of the things bookkeepers do for small businesses. If you opt for bookkeeping software—like Quickbooks—keep in mind the time commitment required to learn how to properly use the program. While these programs are cost effective, you are paying with your time. And at a certain point, your time is better spent building your business than navigating DIY tutorial videos.

Additional duties

This professional manages and records the financial details of the company, tracking financial transactions and ensuring records, as well as accounts, are fully complete and accurate. They will be able to assess your individual situation and give you a better idea of what to expect. In general, catch up bookkeeping is an important task that all businesses should budget for. The basics of bookkeeping include analyzing and recording financial transactions, maintaining accurate records of financial transactions, and preparing reports to summarize the financial activity of a business.

It is indispensable to have a knowledge of accounting and to understand how to use accounting software systems. At Bench, our bookkeepers take pride in providing professional, high quality service for their clients. Read some of our recent reviews and see what it could be like having Bench on your books. Accountants on the other hand, go through rigorous training and standardized exams to become certified public accountants. Find out what bookkeepers do, and get an intro to double-entry bookkeeping. We gather login information from your sales channels or any other financial institutes that you log in to. This allows us to import your business information into QuickBooks, Sage Intacct, or whatever accounting program you use.

It assumes that each financial transaction, a business has an equal effect in at least two accounts. In other words, a credit in one account is offset by a debit in another account. At the end of the day, the total credits must equal the total debits. That’s why many small business owners rely on outside bookkeepers to help them manage their finances. There are a number of different ways you can approach the accounting process. Having an experienced bookkeeper on your side can help you cater to the system you integrate based on your company, the nature of your business transactions, and where you would like your company to go. Since the company you work for depends on you to assist them with their financial records, it’s important to be disciplined.

What questions do you ask a bookkeeper?

  • Tell me about your previous work experience as a bookkeeper.
  • What were your primary responsibilities?
  • How much interaction did you have with vendors and clients?
  • Tell me about your computer skills in general.
  • What do you know about this company and our services?

Once a bookkeeper’s got our chart of accounts set up, they’ll begin the work of categorization (you might also hear this called “classification”). But what about those in-between items, like computers, for instance?

Can a Bookkeeper Manage Inventory?

If they needed to, they would take a copy of the software file back to their office to work on and then return it to your office to copy your records. It helps the small business owner prepare financial records, keep track of cash flow and help https://www.bookstime.com/ prepare for the future. A Bookkeeper might have different tasks at his/her hand depending on the size of the business. However, the core responsibility of a bookkeeper includes recording and organizing the company’s financial transactions .

  • Allow them to give you the advantage of maximized efficiency of your business income and expenses while holding your employees accountable and minimizing exposure to various financial and audit risks.
  • An accountant uses the financial data provided by a bookkeeper to interpret, analyze, and report on the financial health of the business.
  • If you owned a construction company, however, you might have dozens of transactions each day as you pay contractors and buy supplies.
  • Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts.
  • Remember that while you don’t want to allocate an unnecessary portion of your budget to hiring a bookkeeper, you should be willing to pay for quality because your finances are so important to your business.

Depending on the stage of your small business, you may not need to hire a full-time professional bookkeeper. You can either get some bookkeeping software and learn how to do it yourself, or you can outsource your bookkeeping to a part-time, virtual bookkeeping service like Bench.

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Think of it this way, Quickbooks is to your business what Photoshop is for designers. It is a great piece of software with amazing capabilities, however, it can’t replace a professional graphic designer. In the same way, software like Quickbooks can help you record your financial data digitally but it can’t take the place of a professional bookkeeper. While our Basic Plan is perfect for start-ups, our more comprehensive plans are well suited for businesses that are expanding.

Often, bookkeepers become accountants and are overseen by accountants. Bookkeepers will also be responsible for preparing some significant financial statements for small businesses. These can include a profit and loss statement, balance sheet and cash flow statements. The information from a company’s balance sheet and income statement gives the accountant, at the end of the year, a full financial picture of the firm’s bookkeeping transactions in the accounting journal. Also, our services can grow to suit your needs, so you never have to worry about transitioning to another accounting firm.

A bookkeeper may create and send invoices to customers and make payments to vendors on your behalf, depending on your arrangement. Here’s a quick summary of notable differences between bookkeeping and accounting. If you have questions about bookkeeping generally, hit me up in the comments! And of course, let us know if you’re interested in exploring outsourced bookkeeping options from ZipBooks, or simply using ZipBooks as your accounting system of choice. Experience, of course, is another story, and when hiring a bookkeeper to do any of those things, you’ll want to make sure they’ve done it before or are a quick learner. Again, having done bookkeeping in the past doesn’t necessarily mean they’ve done any of those or had any type of training or education around them. And here’s where we need to make some distinctions between bookkeepers, accountants, and CPAs.

A bookkeeper records and updates the financial data in the company’s general ledger. For instance, bookkeeping rates are about $20 an hour in the U.S. If you require accounting services as well, you could be looking at rates of $150 per hour or more.

What exactly does a bookkeeper do

Most small business owners don’t focus enough attention on bookkeeping services and accounting in general. Frankly, they might not have enough time, energy, or know-how to do it. Rather, bookkeepers have a narrow focus on maintaining comprehensive and accurate financial information for their employer or for clients of that employer. The bookkeeper’s role is to provide information that can be understood by those who are empowered to make decisions at the business.

Keep You Prepared For Tax

When your small business’s bookkeeping and accounting tasks are too much to handle by yourself, it’s time to hire help. The terms are sometimes used interchangeably, and there can be some overlap in what they do, but there are distinct differences.

As always, of course, these other financial professions would be unable to perform their specialized duties without the general background information transcribed and provided to them by a bookkeeper. Unfortunately, with how convoluted and entrenched tax law may be, the majority of bookkeepers may find themselves out of their own depth and as such cannot provide quality advice on such matters.

Bookkeepers ensure that all of a company’s expenses, income, and transactions are recorded in the company’s books and reconcile the company’s financial accounts, typically on a monthly basis. Bookkeepers might also help with financial statement and financial report preparation. Although bookkeeping can be in-house staff position, most businesses employ bookkeepers on a freelance basis.

This is aided by electronic systems and mathematical rubrics that act as standalone error-checking methods independent of human error. While a bookkeeper does not necessarily do your business tax returns for you, they can be instrumental in the process. Your bookkeeper or accountant will work with your tax preparer to ensure that all the information about your business’ finances is accurate.

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