A good bookkeeper is a staple in most businesses, and for good reason. Bookkeepers help businesses get their financial affairs in order (and their weekends and free time back). But what exactly does a bookkeeper do, and when might you need one? Let’s find out.
What is a bookkeeper’s role?
A bookkeeper’s main role is to provide a clear picture of a company’s financial position, and ensure that every dollar is accurately accounted for. They are responsible for tracking, recording and maintaining a business’s financial transactions and ensuring the overall financial health of the business. Bookkeepers will regularly generate reports summarising the financial activity of the business to show how the business is tracking. They perform many financial tasks, as well as providing strategic advice and monitoring key performance indicators.
How do they differ from accountants?
Accountants are another extremely useful financial professional, and are often confused with bookkeepers. However, while there is some overlap between the two roles, they generally carry out quite different tasks.
Bookkeepers are responsible for keeping meticulous records of the daily transactions of a business. Doing so will provide business owners with the accurate financial knowledge they need to keep their business running smoothly. Accountants, however, take a big picture view of your financial situation, and can help with tax planning, investments and decision-making. You can think of bookkeepers as the nurses in a hospital situation who attend to your immediate, daily needs; while accountants are like the doctors, who will see you occasionally to diagnose your problems and create a treatment plan.
What tasks does a bookkeeper carry out?
So, let’s break it down. What tasks does a bookkeeper actually carry out on a day-to-day basis in order to keep track of all the money coming in and going out of a business?
- Data entry – recoding all financial transactions into accounting software, such as purchases, sales, expenses and payroll
- Generating invoices and sending to customers
- Maintaining accounts payable, by processing bills from vendors and ensuring timely payments
- Maintaining accounts receivable, by tracking payments from customers and following up outstanding invoices
- Maintaining the general ledger, by posting transactions to the correct accounts
- Processing payroll, by calculating employee wages and deductions and preparing payroll tax filings
- Reconciling bank statements and balancing accounts, and identifying any discrepancies
- Preparing monthly or quarterly financial reports, such as balance sheets, income statements and cash flow statements
- Ensuring compliance with accounting standards
- Posting debits and credits
- Keeping records
- Preparing documents for tax return, and gathering necessary information
- Verifying expenses and managing approvals
- Preparing super contributions
- Managing end of financial year reconciliation and reporting
- Setting up new employees and terminating old ones
- Monitoring bookkeeping policies and procedures
Who does a bookkeeper work with?
Bookkeepers work with businesses of any size, sometimes as an in-house professional and sometimes as an external bookkeeper. Businesses can hire bookkeepers as a part-time employee, full-time employee or on a contract, depending on their budget and needs.
Do all businesses need bookkeepers?
All businesses do need bookkeepers, but not all businesses hire them. Some businesses do the work of maintaining orderly financial records themselves. However, this comes with its own set of problems, particularly if the person doing the tasks of bookkeeping lacks financial experience. And even the most hardworking of business owners can quickly get overwhelmed by the sheer magnitude of recording every dollar that goes in or out of their business. Often small businesses try to do their own bookkeeping to save money – but when you look at the time this consumes (that could be spent on growing the business), it makes better financial sense to hire the services of a bookkeeper. Not only will they be able to do the task quicker than an inexperienced business owner or employee, they will also be able to ensure complete accuracy and compliance with requirements. And that’s not something that’s easy to do for the uninitiated.
So, while not all businesses use the services of a bookkeeper, they all need bookkeeping services – because those financial tasks that a bookkeeper does are necessary for the successful functioning of any business. It’s just a matter of who performs those services – someone internal to the business, or an external bookkeeper.
Outsourcing the task of bookkeeping to a professional can be very cost-effective, as it provides access to experts without the expense of hiring an employee. By ensuring your finances are in order, they’ll save you money, time – and stress. If you’d like to access the
services of a prompt, detail-oriented and reliable bookkeeper for your business who’s also great to deal with, get in contact with Alexilum here: