Running a business requires handling many tasks, from managing operations to ensuring customer satisfaction. While it may look like you have everything under control, keeping track of your finances can be a significant challenge.
Many people put off starting their own business because managing finances seems overwhelming. The constant need to keep up with taxes, payments, and paperwork can be difficult to handle. It’s easy to feel stressed about ensuring every financial detail is correct.
This is where a bookkeeper comes in. They can take the stress out of managing your business’s finances, allowing you to focus on running and growing your business.
But what do bookkeepers do? How can they help your business? Let’s dive into the essential duties of a bookkeeper and how they can help your business run smoothly.
What is a Bookkeeper?
A bookkeeper is a professional who maintains and organizes the financial records of a business. They make sure all financial transactions are recorded accurately and systematically. This role is important for keeping the business’s finances in order, ensuring compliance with laws, and providing the necessary data for financial analysis and decision-making.The Role of a Bookkeeper in Business
Bookkeepers play an essential role in managing a business’s finances. Here’s a closer look at what does a bookkeeper do:What a Bookkeeper Does to Maintain Financial Records?
Bookkeepers handle financial records for businesses of all sizes, including:- Expenditures: Money spent by the business.
- Receipts: Money received by the business.
- Accounts Payable: Bills the business needs to pay.
- Accounts Receivable: Money customers owe the business.
- Profit and Loss: The business’s earnings and expenses.
What does Bookkeeper do in Handling Core Financial Tasks?
Bookkeepers manage several important financial transactions:- Data Entry: Recording financial transactions and balancing the books.
- Bank Reconciliation: Cross-referencing the books against bank statements and other source documents to confirm accuracy.
- Monthly Reports: Summarizing the business’s financial position.
- Inventory Management: Recording the value of unsold products.
- Loan Management: Keeping track of borrowed money and ensuring timely payments.
- Payroll Management: Managing the cost of employee wages and ensuring compliance with tax requirements.
- Purchases: Recording the costs of raw materials or goods needed to run the business.
- Sales: Recording income from goods or services sold.
What is the Role of a Bookkeeper in Managing Additional Duties?
Bookkeepers often take on additional tasks:- Accounts Receivable (and Credit Control): Creating and sending invoices, and following up to get them paid.
- Accounts Payable: Ensuring invoices from suppliers are accurate and paid on time.
- Payroll: Calculating pay and deductions.
What is the work of a Bookkeeper in Advanced Duties?
In more advanced roles, bookkeepers may handle:- Tax Filing: Preparing tax returns and filing them.
- End-of-Year Reporting: Assisting with annual income statements and balance sheet reports.
- Business Strategy: Creating budgets and forecasts, and advising on business improvements.
- Business Process: Reviewing, researching, and implementing software solutions and internal controls to streamline operations.
- Training: Working with staff on best practice bookkeeping and software usage.
- Virtual Office: Providing full-service virtual office support, including telephones, postal address, and email communications.
- Liaison: Meeting with accountants on behalf of clients about financials and tax queries, and acting on behalf of clients with tax authorities.
What is Bookkeeper Duties Based on Business Size?
The scope of a bookkeeper’s duties can vary depending on the size of the business:- Small to Medium-Sized Businesses: Bookkeepers often handle a broader range of tasks, including preparing financial statements, tax returns, and payroll.
- Larger Organizations: Bookkeepers focus more on daily transaction recording, while accountants or controllers handle more complex financial tasks.
What Skills Do You Need to Be a Bookkeeper?
To accurately understand the financial health of an organization, business leaders need skilled bookkeepers. These professionals must possess a combination of hard financial skills and soft interpersonal skills.Analytical Skills
Bookkeepers must be able to identify discrepancies or trends in financial data. They often assist with budgeting and forecasting, helping businesses plan for the future.Attention to Detail
Accurate record-keeping is crucial. Bookkeepers need to record data to maintain error-free financial records meticulously.Communication Skills
Bookkeepers must be able to explain financial scenarios or reports clearly. Effective communication ensures that business leaders understand the financial status of the company.Ethics and Confidentiality
Handling sensitive financial data requires a strong sense of ethics and confidentiality. Bookkeepers must protect the privacy of financial information.Financial Literacy
A solid understanding of basic accounting principles, terminology, and financial statements is essential. Bookkeepers should be proficient in double-entry accounting, which involves making two entries (a debit and a credit) for each transaction.Organizational Skills
Managing financial records, invoices, receipts, and other documents requires excellent organizational skills. Bookkeepers must be able to juggle and maintain various financial documents efficiently.Proficiency in Accounting Software
Modern bookkeepers use financial tools to record transactions, reconcile accounts, and create monthly reports. Proficiency in accounting software is necessary for efficiency and accuracy.Time Management
Bookkeepers need to prioritize their workload and meet deadlines consistently. Effective time management ensures that all financial tasks are completed on time.Relevant Experience
Experience in your specific industry can be invaluable. Bookkeepers familiar with industry-specific financial challenges and regulations can manage your finances more effectively.Professional Certifications
Certifications from recognized bodies like the National Association of Certified Public Bookkeepers (NACPB) or the American Institute of Professional Bookkeepers (AIPB) demonstrate that the bookkeeper has the necessary expertise and stays updated with the latest industry standards and practices. To accurately understand the financial health of an organization, business leaders need skilled bookkeepers. In addition to bookkeeping, if you need CFO advisory consulting for your business, we offer virtual CFO services, fractional CFO services, and outsourced CFO services. Contact us today to learn more.What Education Do You Need to Become a Bookkeeper?
To become a bookkeeper, the basic requirement is a high school diploma. Often, you can receive on-the-job training from an experienced supervisor or another employee. This practical training helps you learn the day-to-day tasks of bookkeeping.Learning Bookkeeping Skills
You can also acquire bookkeeping skills through various other methods:- Self-Study: There are many resources available, including books, online tutorials, and courses, that can help you learn bookkeeping on your own.
- Internships: Gaining practical experience through internships can provide valuable hands-on learning.
- Courses: Taking specific courses in bookkeeping, payroll, and online accounting systems can prepare you for a bookkeeping role.
Advanced Education and Degrees
While not always necessary, having an associate’s or bachelor’s degree can give you an edge when applying for bookkeeping positions, especially with larger organizations. These degrees can provide a more in-depth understanding of accounting principles and practices.Certification and Professional Advancement
Some bookkeepers choose to advance their careers through nationally recognized certifications. After gaining at least two years of work experience, you can become certified through organizations like:- National Association of Certified Public Bookkeepers (NACPB)
- American Institute of Professional Bookkeepers (AIPB)
