Whatever kind of business or enterprise you run, if there is money involved then there is accounting involved. And unless you’re doing it yourself, it usually is your bookkeeper who handles this part of the business. So what do they actually do?
A person whose job is to keep records of the financial affairs of a business.
Who is a bookkeeper?
Essentially, your bookkeeper will track and document the daily financial transactions of the company. These records are later sent to an accountant and the data is used to make important financial decisions or used in preparing for tax season.
Is ‘bookkeeper’ synonymous for ‘accountant’?
No. A bookkeeper records the daily financial transactions. They show you where your finances stand. Their job is straightforward and objective.
An accountant uses that data to draw up financial reports and derive insightful inferences about the financial health of the company. Their job is slightly subjective as it requires them to infer or extrapolate the data into meaningful and actionable reports.
What are the things a bookkeeper does?
The fundamental job:
- Data entry
- Receipt recording and management
- Labelling of expenses [who paid you what, how much and when]
- Tracking of incoming payments
- Issuing of invoices
- Provide records during audits
- Ensure deductions are legit
The financial statements they prepare:
- Income statement [shows your revenue, expense, P&L]
- Balance sheet [gives you a snapshot of your business’ health – assets, liabilities and equity – for a given accounting period]
- Cash flow statement [shows cash inflows and outflows in the company]
- Statement of changes in equity [shows the total recognised gains and losses in capital, reserves and retained earnings]
The other tasks:
- Process payroll
- Maintain the annual budget
- Provide the accounting team with accurate financial statements for tax season
- Reconcile accounts
- Pay invoices from suppliers or contractors
- Collect and remit tax to the government
- Monitor debt and report issues and variances
- Sleuth when numbers don’t add up
What are the things a good bookkeeper does?
A good bookkeeper will know how to prevent businesses from failing because of typical bookkeeping errors.
Their exceptional qualities are:
- Knowing where the money is going
- Making good budgeting decisions
- Keeping the books well to avoid book-keeping bungles of substantial consequence (for instance, during tax season)
- Provide detailed and accurate documentation so that audit day is an uneventful affair
- Understand the peaks and dips of the business season
- Be keenly aware of key business metrics – revenue, cost, profitability and so on
- Take care of the numbers so you are free to focus on the business
Your bookkeeper is someone in a position of trust. They deal with the sensitive data of the business, and their accuracy is the foundation on which the rest of your financial department stands! With a good bookkeeper, your business is on sure grounds and bound to see growth!