What Do Bookkeepers Do?
In addition to recording expenses, income, and transactions in a company’s books, bookkeepers reconcile the company’s financial accounts on a monthly basis. A bookkeeper might also help prepare financial statements and reports. Even though bookkeeping can be an in-house position, most businesses hire freelance bookkeepers.
A bookkeeper can wear a variety of hats depending on what a business needs. The majority of bookkeepers nowadays work with business accounting software. In addition, most bookkeepers can handle a few tasks for your business. Despite the fact that a bookkeeper’s job is multifaceted, there are some tenets that all bookkeepers follow.
You may also be wondering if you need a bookkeeper if you’re wondering what a bookkeeper does. The tasks that a bookkeeper can perform for you, how much a bookkeeper charges, and how to find a good bookkeeper will be discussed.
What Are the Duties of a Bookkeeper?
This question can’t be answered simply. Bookkeeping can vary from business to business, just like any other line of work. Bookkeepers tend to handle the following tasks most often, however:
- Record financial transactions
- Reconcile bank accounts
- Manage bank feeds
- Handle accounts receivable
- Handle accounts payable
- Work with your tax preparer and assist with tax compliance
- Prepare financial statements
- Take on some payroll and human resource functions
- Make technology and process streamlining recommendations
Here’s a closer look at what a bookkeeper does:
Reconcile Your Bank Accounts
Reconciling your financial accounts is the most important task for any bookkeeper. It ensures that the information in your accounting software matches the information in your bank statements, credit card statements, and other financial statements.
You should reconcile your accounts regularly to avoid overdraft fees, fraudulent charges, or incorrectly recorded transactions. Software makes reconciliation relatively simple, but there is still a need for a human touch to ensure all transactions are accurately recorded.
Manage Bank Feeds
In a nutshell, your bookkeeping service or bookkeeper should be managing the transactions coming in through your accounting system’s bank feed. With a bank feed, you can see each transaction in real-time from your accounting software.
Accounting software should be able to automatically categorize certain transactions, depending on how effective it is. Credit card transactions from an airline, for example, can automatically be categorized as travel expenses. They make sure that these transactions are properly categorized by keeping an eye on them.
The bookkeeper may also have to manually enter transactions that aren’t included in the bank feed. A lot of the transactions that need to be added will be generated outside of the accounting system, such as cash payments or handwritten checks. It may also involve matching customer deposits with outgoing transactions as payments against vendor bills to help manage accounts receivable.
Handle Accounts Receivable
There are several ways to manage accounts receivable. Small businesses may enter their own estimates or invoices, and they may receive payments against the invoices.
There is another option, however. The client calculates the job using an industry-specific estimating program, then provides the bookkeeper with the total. As the project progresses, they create or update invoices in their QuickBooks Online account.
Invoice generation, sending invoices to customers, preparing statements, and assisting with collections are all part of the account receivable services we provide to our clients. The customer notifies the bookkeeper when they have been paid, we enter the payment in QuickBooks Online, and then we create a deposit matching what the client takes to the bank.
Handle Accounts Payable
In addition to accounts receivable, many bookkeepers handle accounts payable for their clients. The bookkeeper will deal with all vendor bills the company receives. The bookkeeper should note the payment deadlines from each vendor, early payment discounts if available, and submit payment to the vendor. When a company grows, bookkeepers can add additional approvers to approve payments. To maintain positive trade credit terms and relationships with suppliers, you need to manage your accounts payable properly.
Work with Your Tax Preparer
Many bookkeepers are unaware of the fact that, by default, they’re going to act as a translator between you and your certified public accountant or enrolled agent. A bookkeeper often has a better understanding of your books, so when it’s time to file your small business taxes, you can have your bookkeeper contact your tax preparer.
Prepare Financial Statements
For your business, most bookkeepers will prepare three financial statements: a profit and loss statement, a balance sheet, and a cash flow statement. The financial statements should be updated every month, and again at the end of the year. Profit and loss statements show your company’s bottom line and operating expenses.
The balance sheet shows the assets and liabilities of your business. The cash flow statement shows how your company is spending and earning cash. Bookkeepers can prepare financial statements with accounting software and send them to their accountants and tax preparers.
Payroll and human resource functions are sometimes also handled by bookkeepers. Payroll may be included in your bookkeeping service, or they may help you with tax payments and forms. Your accounting system might import payroll data directly from your payroll service provider, or it might import data from a file provided by your payroll service provider. You might also be able to use a bookkeeper to manage timesheets for hourly employees.
Recommend technologies and processes for streamlining
Additionally, bookkeepers are pretty good at keeping up with the latest technology. It’s not uncommon for your bookkeeper to discover a new app or solution tailored to your industry, such as self-employed accounting software, for instance, especially if many of their clients are in the same industry. Perhaps there is a way to reduce labor costs. The goal of a bookkeeper is to streamline your back office. Consequently, they can be an extremely valuable partner for your business.
Bookkeepers Help You Get Back to Business
You now know all of the main skills a bookkeeper can bring to your business. There’s much more to bookkeeping than simple data entry and consulting an accounting book.
Ultimately, the answer to this question will depend on what you and your small business need from your bookkeeper. You will have more time and energy to focus on growing your small business by having a bookkeeper keep track of your finances.