What Does a Bookkeeper Do?
Whether you’re looking to hire a bookkeeper or aspiring to become one, this blog covers everything you need to know. Discover what a bookkeeper does day-to-day, from managing accounts payable to preparing financial reports and ensuring accurate tax returns. Learn why a full charge bookkeeper is vital for maintaining a healthy balance sheet and streamlining business finances. We’ll also share practical insights, like how to print a check using bookkeeper software, and review tools that simplify tasks such as generating balance sheets or tracking accounts payable.
Your Frequently Asked Questions about Bookkeepers
Ever wondered what does a bookkeeper do to keep a business financially sound? A bookkeeper is more than just a number cruncher; they meticulously manage accounts payable, maintain an accurate balance sheet, and prepare essential financial reports. By organizing finances and ensuring compliance, they make tax season smoother by readying documents for tax returns. In essence, a bookkeeper provides the clarity and financial insights that empower businesses to thrive.
12 Things Bookkeepers Do For Small Businesses
- Keep Records Accurate and Current
- Ensure Legal Compliance
- Prepare for Taxes (for Seamless Tax Returns)
- Monitor Cash Flow
- Manage Daily Account Tasks
- Handle Accounts Payable (Bills to Pay)
- Send Invoices and Track Payments
- Create Financial Reports (Balance Sheet, Income Statement)
- Run Payroll
- Monitor Bank Transactions
- Get Books Ready for Accountant
- Count and Track Inventory
What are Benefits of Having a Bookkeeper?
95% of small business owners believe that a bookkeeper’s services are essential for their business. Bookkeepers ensure that small business finances are organized. This allows small business owners to focus on running and growing their small business. Having a bookkeeper for your small business offers many benefits, including:
- You get time to focus on your business because you have accurate financial records.
- You no longer need to worry about tax season as bookkeepers help with tax preparation.
- They maintain and keep historical records, which can be crucial during an IRS audit.
Additionally, bookkeepers provide clarity on your business’s financial health by preparing regular cash flow statements, which track income and expenses to optimize liquidity. They also handle bank reconciliation to ensure your records match actual bank transactions, minimizing errors and fraud risks. With up-to-date cash flow statements and accurate bank reconciliation, you gain actionable insights into your financial information, empowering smarter business decisions.
When to Onboard a Bookkeeper?
DIY bookkeeping is time-consuming, especially when there is a large volume of financial transactions. Shoebox bookkeeping can be disastrous, as small bookkeeping mistakes can snowball into major errors, potentially leading to business failure. So, when you see any of these signs, it’s worth hiring a bookkeeper.
- Your business is getting neglected, and you are spending most of your time categorizing transactions.
- You’re behind on your books and behind on collecting accounts receivable or sending out invoices.
- You have relied too much on shoebox bookkeeping, and now your bills and receipts are not well organized.
- You are in the dark about making business decisions because your bookkeeping is a mess. You have no idea if it’s the right time to scale up or expand your business.
- Money is nothing less than a ghost. You have no idea where it is going in or out.
- You are always behind your books and every year need to hire a bookkeeper to catch up on books.
- Tax season is a nightmare for you. Your CPA or accountant can’t help because of messy books.
These signs are as bright as daylight. You can ignore them only at a great loss. Effective bookkeeping is essential for small business owners. Many find themselves overwhelmed with various bookkeeping tasks, from maintaining the general ledger and generating accurate loss statements to processing payroll and ensuring timely tax filings. This is where a professional bookkeeping service can be invaluable. Bookkeepers work diligently to keep your financial records organized, allowing you to focus on growing your business. They can help with time management by streamlining financial processes and ensuring accuracy in your books. While bookkeepers provide essential support, it’s also important to collaborate with a certified public accountant (CPA) for strategic financial planning and tax advice. A good bookkeeper and CPA team can be a powerful asset for any business.Don’t let these signs ruin your business. Hire a bookkeeper when it is necessary and before it’s too late.
What Is a Full Charge Bookkeeper (often a Certified Bookkeeper) ?
A full-charge bookkeeper is responsible for all bookkeeping tasks of a business. Often a certified bookkeeper, their services include managing all ledgers, including accounts payable (APs) & accounts receivable (ARs), payroll, billing, and invoicing. The full-charge bookkeeper reports straight to a senior manager, such as the president, and may interact directly with the company’s board of directors and auditors. The services of a full-charge bookkeeper may include supervising various accounting clerks. In this role, the full-charge bookkeeper oversees all aspects of the company’s financial functions and ledgers.
From In-house Full Charge to Outsourced Bookkeepers, What Bookkeeping Options Are Available for Business Owners?
The world of bookkeeping offers a variety of professionals to meet diverse business needs. A professional bookkeeper is a general term encompassing anyone skilled in bookkeeping practices. Certified Bookkeepers (CB) have earned a credential demonstrating their competency. For those seeking a higher level of expertise, Certified Public Bookkeepers (CPB) hold a certification similar to a CPA, focusing specifically on bookkeeping. Bookkeepers can be employed in-house as in-house bookkeepers, or they can work independently as freelance bookkeepers. Some businesses utilize agency bookkeepers provided by staffing firms, while others opt for outsourced bookkeepers who work for a separate company contracted to handle bookkeeping tasks. The American Institute of Professional Bookkeepers (AIPB) is a prominent organization offering resources and support to bookkeepers.
What are the Key Responsibilities of a Bookkeeper?
- Record Financial Transactions: One of the core responsibilities of a bookkeeper is to accurately document daily financial activities, including sales, purchases, receipts, and payments.
- Reconcile Bank Accounts: Regularly verify and reconcile bank accounts to ensure company records align with bank statements, resolving discrepancies swiftly.
- Process Payroll: Calculate employee wages, deductions, and benefits to process payroll accurately and ensure timely payments.
- Maintain General Ledgers: Use accounting software to update ledgers, ensuring organized and current financial data.
- Manage Accounts Receivable/Payable: Track invoices, follow up on overdue payments, and manage vendor bills to sustain cash flow.
- Prepare Financial Reports: Generate monthly reports (e.g., balance sheets, income statements) to aid business decisions.
- Process Payroll Taxes: Coordinate with HR to process payroll taxes, benefits, and compliance-related withholdings.
- Support Tax Filings: Assist in preparing documents for tax filings and collaborate with a certified public accountant (CPA) to ensure accuracy.
- Monitor Cash Flow: Analyze cash flow trends to forecast budgetary needs and optimize financial health.
- Ensure Regulatory Compliance: Follow accounting standards and legal guidelines to prepare for audits and avoid penalties.
Did you know?
Bookkeeping as a profession dates back to the 15th century when Italian mathematician Frater Luca Pacioli—the father of modern bookkeeping—detailed many accounting systems and tools still used today, including double-entry bookkeeping.
Is it Really Hard to be a Bookkeeper?
According to worldmetrics.org the bookkeeping industry has customer retention rate of more than 89% and bookkeeping industry contribues 1.6% to the global GDB. These figures are impressive. If your considering of working as a bookkeeper and wondering if it is hard to become one? Let’s find out.
Challenges Bookkeepers Face
For most people, the work of a bookkeeper is hard. Apart from their basic bookkeeping services, they need to stay updated about the rules, regulations, and laws of the particular industry in which they are working. Moreover, they must also develop personal qualities and skills, such as punctuality, responsibility, education, and continuous improvement in their bookkeeping skills.
Even if they have the required skills, personal qualities, and knowledge, their job does not become easier. Their role in business success is significant, as they are a crucial part of the puzzle in the big picture of business success, which always puts additional stress and strain on them.
Bookkeepers work with various financial tasks, including managing the general ledger, maintaining accurate records, and ensuring timely financial reporting. Successful bookkeepers excel in time management, balancing multiple tasks efficiently and meeting deadlines consistently. They also possess strong communication skills, enabling them to interact effectively with clients and team members. Mastering time management and staying organized are key to handling the responsibilities of a bookkeeper effectively.
Bright side of Bookkeeping Careers
Unlike the general perception that the bookkeeper’s profession can be very boring, experienced bookkeepers can undeniably argue otherwise. For them, it is a great profession for future career growth.
Despite all the complexities and required skills, it certainly has many advantages. This profession is always in demand; bookkeepers stay in touch with a large number of people, which makes their life amazing. They have the opportunity to control and discipline themselves while working as bookkeepers, develop logical thinking abilities, and work remotely.
Accounting Software: An Alternative to Hiring an Accountant or Bookkeeper?
Not all businesses need, or can afford, the expertise of a hired accounting professional. If you’re managing daily transactions yourself or delegating managing accounts to a team member, accounting software can streamline tasks like expense tracking, invoicing, inventory management, and payroll. These tools ensure accuracy and efficiency, even for businesses handling daily financial transactions without dedicated staff.
When selecting software, align your choice with your budget and operational needs. Free versions of platforms like Wave Financial are ideal for startups or small businesses, offering basics such as income tracking and financial reporting. Testing free tools is one of the best practices to determine if upgrading to a paid plan is worthwhile. Paid options, often with monthly/annual fees, unlock advanced features like recurring invoices or purchase orders, enhancing workflows that mimic bookkeeper responsibilities such as reconciling accounts or generating statements.
While software can’t fully replace a bookkeeper’s job—especially for complex tax planning or financial analysis—it simplifies routine tasks, reduces errors, and saves time. Integrating these tools into your business strategy ensures financial processes support growth without the overhead of hiring a professional. Whether you’re a solopreneur or a growing team, the right software bridges the gap between DIY accounting and professional expertise.
Bookkeeper vs Accountant? What is the Difference?
The terms are used interchangeably in some contexts. However, these two professions shouldn’t be mixed up. Making the right decision at the right time is key for any business. There are key differences between bookkeepers and accountants that you need to know before hiring a financial professional or becoming one.
Bookkeepers manage financial records, handle invoices, and generate reports. They provide insights into your business’s financial picture.
Accountants, using these records, build budgets, assess finances, and guide business decisions. They often oversee bookkeepers and have more advanced training.
What Services does a Virtual Bookkeeper Provide?
Virtual bookkeepers are a cost-saving alternative to in-house bookkeepers. Small businesses that do not have enough resources often use the services of a virtual bookkeeper. Virtual bookkeepers manage financial records, categorize them, and reconcile the business’s records using cloud-based accounting software. They get access to the company’s financial records and can remotely help the business maintain accurate financial records.
However, there is a flip side to hiring a virtual bookkeeper. Most businesses are concerned about the security and confidentiality of their financial data. They often need their bookkeeper to be available when making important business decisions. Local bookkeepers based in your city, on the other hand, have experience working in your industry. They have knowledge about rules and regulations and can stay compliant without your input. They manage daily financial tasks such as recording financial transactions, reconciling accounts, and processing payroll directly at your workplace. Their physical presence allows for immediate access to financial documents and direct communication with your in-house team, ensuring that all financial activities are seamlessly integrated into your business operations.
How to Choose the Right Bookkeeper?
Bookkeeping is like the health of your business. Healthier books mean a healthier business. This makes a bookkeeper the family physician of your business. Having the right bookkeeper means your business’s health is in good hands. Therefore, it becomes crucial to make an informed and rational decision about choosing the right person as your bookkeeper. Keep the following factors in mind while making the right decision:
Assess your business needs: You know your business better than anyone. You know where you need a hand to manage your books. Determine your specific bookkeeping and accounting requirements, whether it is basic data entry, financial analysis, payroll, or tax preparation support.
Look at experience: After assessing your business goals and needs, you need to find the bookkeeper that is suitable based on your assessment of your business. Search for bookkeepers with relevant industry-specific experience. The right bookkeeper’s experience must align with your goals and needs. You should also assess their software certifications and familiarity with your industry.
Set a budget: Bookkeeping is a business investment. You get a return in the form of clean books, which helps you make informed business decisions. Ultimately, you get higher profits and controlled losses. So, what’s the point of not allocating a separate budget for hiring a bookkeeper? After choosing the right bookkeeper for your business, you should request a free consultation. If you think you have the right person, ask for a quote with a detailed breakdown of their fees and services to ensure they align with your financial plan.
Set up a consultation session: Take advantage of free consultation sessions provided by reputable bookkeepers in your city. Discuss your bookkeeping needs and problems related to the financial management of your business. You must clarify how often you need to communicate with your bookkeeper and ensure you can easily discuss financial matters with them.
Ready to Meet Your Bookkeeper?
What is the Best Bookkeeper Software?
When it comes to choosing the best bookkeeping software, there are numerous options available for a bookkeeper to choose from, including Zoho Books, FreshBooks, Xero, Netsuite, and the all-time favorite QuickBooks Online. There are many factors that need to be considered when selecting the right software for your business or for your client. These factors include the business size, number of employees, number of financial transactions that need to be recorded, categorized, and reconciled, and lastly, the specific industry. Based on these factors, the right bookkeeping software is selected.
For most businesses, QuickBooks has become a popular choice due to its robust features and user-friendly interface. Bookkeepers for small businesses help business owners with the selection of the right bookkeeping software, set it up, implement a bookkeeping system based on business needs, train the in-house team if necessary, and provide ongoing support.
Bookkeeper vs CPA? What is the Difference?
Both bookkeepers and CPAs are responsible for managing business finances, but their responsibilities differ. Bookkeepers handle day-to-day transactions, keep accurate financial records, manage payroll, and prepare basic financial reports. Their primary focus is on ensuring that all financial data is current and accurately documented.
CPAs, on the other hand, provide more specialized services, including tax preparation, financial audits, and strategic advice. They have in-depth knowledge of accounting and tax laws, enabling them to offer comprehensive tax planning and higher-level financial analysis. While bookkeepers ensure financial records are accurate and up-to-date, CPAs help businesses navigate complex financial regulations and optimize financial strategies.
Is Bookkeeping Hard for a Teen?
If you are proficient and comfortable with mathematics and computing figures, and are punctual, organized, and detail-oriented, it is not hard to learn how to be a bookkeeper. Of course, a background in accounting practices will help you navigate the learning curve as a new bookkeeper.
Professional networking sites like LinkedIn are excellent for finding potential bookkeeping clients. They offer a direct and effective way to connect with business owners, showcase your expertise, and generate quality leads.
How I Print a Check on Bookkeeper?
Printing a check in Book Keeper is quite straightforward. Here are the steps you need to follow:
- Open Book Keeper: Launch the Book Keeper application on your computer.
- Navigate to Tools: Go to the ‘Tools’ menu.
- Select Cheque Printing: Click on the ‘Cheque Printing’ option.
- Customize Cheque Layout: Customize the cheque layout to fit your specific cheque format. Adjust the margins and fields as needed.
- Enter Cheque Details: Fill in the necessary details such as the payee name, amount, and date.
- Print the Cheque: Once everything is set, click on the ‘Print’ button to print your cheque.
Ready to Meet Your Bookkeeper?
How to Find Bookkeepers Near Me?
Local bookkeepers are the right choice for small businesses and startups for many reasons. They have experience working in the same community and are well-versed in local laws and regulations. You don’t need to worry about data security and confidentiality as much as with virtual bookkeepers. They are easily accessible whenever you need them during critical decision-making times for your business. There are many ways to find the right bookkeeper for your business in your own city.
- Online Search: Most popular way to find the right fir for your business is the use of search engine like Google. Simply type “bookkeepers” with your area and you’ll get a list of local bookkeepers. You can further refine your search by adding your industry, the specific services you are looking for or by simply typing your bookkeeping problem.
- Business Directories: Websites like Yelp, Yellow Pages, or local business directories often list bookkeepers with reviews and ratings. On these business directories, you get information about the services bookkeepers provide.
- Social Media: Platforms like LinkedIn or Facebook can help you find bookkeepers through professional networks or local community groups.
- Ask for Recommendations: Reach out to friends, family, or business associates for recommendations.
- Local Business Associations: Check with local chambers of commerce or business associations for referrals.
How Much Does a Bookkeeper Cost?
According to worldmetrics.org, small businesses lose about $33,000 a year due to bookkeeping errors, and the average hourly rate of bookkeepers in the US ranges from $20 to $50.
The cost of a bookkeeper is determined by many factors. Some of these are related to the expertise of the bookkeeper, while others are related to your bookkeeping needs and the size of your business. Always remember that bookkeeping is not an expenditure but an investment in your business’s financial health. Healthier books mean a healthier business.
What Skills Do You Need to Be A Bookkeeper?
- Attention to Detail: Maintaining accurate records is crucial for tracking a business’s finances and ensuring compliance with regulations.
- Numerical Proficiency: Strong math skills are essential for handling financial data and making precise calculations.
- Organizational Skills: Managing multiple tasks, such as Cash flow management and sales tax reporting, requires excellent organizational abilities.
- Knowledge of Accounting Software: Proficiency in tools like QuickBooks or Xero helps streamline bookkeeping tasks and maintain accurate records.
- Understanding of Financial Principles: A solid grasp of accounting basics, including Financial Planning, is vital for supporting a business’s bottom line.
- Communication Skills: Clear communication is necessary to explain financial data and assist in making informed financial decisions.
- Time Management: Meeting deadlines for tasks like sales tax filings and payroll processing is critical for a successful career path.
- Analytical Thinking: Analyzing financial trends and performing Cash flow management helps businesses plan effectively.
- Ethical Standards: Integrity is key when handling sensitive financial information and ensuring compliance.
- Adaptability: Staying updated with industry changes and software advancements is important for long-term growth in your career path.
- Problem-Solving Skills: Identifying and resolving discrepancies in financial data supports effective Financial Planning.
- Knowledge of Tax Regulations: Understanding sales tax and other tax requirements ensures compliance and avoids penalties.
- Budgeting Expertise: Assisting with Financial Planning and budgeting helps businesses optimize their resources and improve their bottom line.
Conclusion: Bookkeeping Professionals—The Backbone of Financial Clarity and Business Growth
A bookkeeper plays an important role in maintaining a business’s financial records, ensuring accurate financial data is recorded in real time. With a basic knowledge of single-entry bookkeeping and Bookkeeping Basics, an entry-level bookkeeper often starts with tasks like tracking business transactions and organizing invoices. Many begin their journey with a high school diploma, though some pursue Business Administration degrees or online courses to strengthen their essential bookkeeping skills. Tools like Microsoft Excel and QuickBooks Online are foundational for managing a bookkeeping system, while Organizational skills and attention to detail ensure accurate financial records—a hallmark of a good bookkeeper.
The duties of a bookkeeper extend beyond data entry to financial analysis and supporting business decisions through clear reports. Bookkeeping responsibilities may also involve liaising with auditing clerks or an accounting firm during tax season to comply with tax regulations. While a skilled Bookkeeper can handle small business bookkeeping independently, some opt for professional certification to advance their careers or take on additional duties like offering financial advice. Unlike the Bookkeeper vs accountant dynamic, where accountants focus on strategic accounting tasks, bookkeepers ensure day-to-day business’s financial transactions are meticulously documented.
For small business accounting, adopting online bookkeeping tools can streamline processes, freeing time to focus on business growth. Even entrepreneurs handling own bookkeeping benefit from a basic accounting understanding to interpret their business’s financial standing. Soft skills like communication, paired with years of experience, enable bookkeepers to explain complex data to clients via email address or in-person meetings. Whether working solo or within a team, the role of a Bookkeeping Professional remains a vital role in sustaining financial clarity, proving that behind every thriving business is a Bookkeeping Professional mastering both numbers and nuance.