What Does A Bookkeeper Actually Do?

Regardless of what business you run, there are two things that we can state about your business with certainty they are that your business earns money and spends money. A bookkeeper’s job is to keep an accurate record of that process.

If your energies have been focused on establishing your business you may not yet have a full appreciation for what a bookkeeper does. In this short article we will look at a bookkeeper’s daily duties and discuss why a good bookkeeper is worth finding and retaining

Who is a Bookkeeper?

A bookkeeper is someone who documents the business’ daily financial transactions And prepares the financial accounts. The bookkeeping profession can be tracked all the way back to 2600 BC when accounts were kept on clay tablets. This makes bookkeeping one of the oldest professions known to man

The “Wastebook” Bookkeeping Practice

Back in colonial times, bookkeepers used what they called the “wastebook”, as the information would eventually be transposed into an official Ledger and the “wastebook” would be discarded, never to be seen again.

Today most bookkeepers use software to track finances. However in a strange mimicry of those old days they usually hand their bookkeeping records to an accountant come tax time or when critical decisions need to be made about the business operations.

Bookkeepers and Accountants

Bookkeepers are not qualified to perform some financial functions that accountants do. They do however; perform the vital role of recording daily business transactions. It is this recorded data that accountants use to compile financial reports and models.

A bookkeeper’s role is largely transactional, while an accountant’s is analytical.

What Daily Duties Does a Bookkeeper Perform?

The usual bookkeeper’s role naturally includes quite a bit of data entry. In practical terms they classify expenses, show who and how much you paid and keep a record of receipts. They also track incoming payments and sometimes will issue invoices.

However, bookkeeping is much more than filling out a spreadsheet. A bookkeeper needs to be meticulously accurate have a fair degree of financial and legal knowledge and be incredibly thorough.

Let’s look at the role a little more closely. Usually, bookkeepers are responsible for four main financial statements- these are:

  • The profit and loss statement – sometimes called the income statement which will detail your income and expenses over a specific time.

  • The balance sheet which will give an overall picture of your business’ financial position at a point in time.

  • Cash flow statement details the cash flowing in and out of the business.

  • Statement of changes in equity detailing movements in share capital reserves and retained earnings.

In addition to these core duties, bookkeepers can also perform the following functions to keep your business running smoothly.

  • Tag and model your fixed assets.

  • Collect and send sales tax.

  • Be responsible for the payment of any supplier or contractor invoices.

  • Be responsible for loan repayments and monitor debt levels.

  • Record cash deposits at the bank and reconcile bank statements.

  • Be responsible for account reconciliation on a monthly basis.

  • Liaise with your accountant and provide them with accurate financial statements.

  • Look after payroll functions.

  • Monitor and maintain annual budgets.

  • Alert you to any anomalies or issues as they arise.

The Benefits of retaining a Good Bookkeeper

Having a first class bookkeeper will not only help your day-to-day operations but also deliver the following benefits:

  • Enable you to make better budgeting decisions with more accurate financial knowledge.

  • Provide you with peace of mind about the state of your books and your preparedness for tax time.

  • Bulletproof your business against surprise audits with detailed documentation.

  • Frees up more hours of your day to focus on your business.

  • Gives you a better understanding of the seasonal flows pertaining to your business.

  • Gives you a better understanding of the core metrics such as revenue costs etc.

Anyone who has spent any time trying to track and manage the income and expenses of their business will understand that good bookkeepers are essential.

Bookkeeping is a role that requires both curiosity and drive to solve problems and a willingness to go the extra mile when the numbers refuse to add up. Bookkeeping also requires a great deal of trust, you and entrusting the bookkeeper with confidential information about your business as well as being reliant upon their accuracy.

Business owners intent on growing their business rather than maintaining it recognise the true value of an outstanding bookkeeper.