What Is a Bookkeeper? What Do They Do & How Do I Benefit?

Bookkeeping services are essential for any business, no matter the industry. Any time there’s money coming in and going out, someone needs to monitor the flow, check the numbers, and generate the appropriate reports. This is a time-consuming task that busy business owners can’t afford to handle alone. The services of a bookkeeper can make a dramatic difference in how your business runs.

What Is a Bookkeeper?

Bookkeepers have been around for thousands of years. This profession dates back to 2600 BC when dedicated bookkeepers inscribed their financial records on slabs of clay using a stylus. Modern bookkeepers typically use a sophisticated software program instead of an earthen tablet, but the position is no less critical. As the name suggests, a bookkeeper literally keeps the books. This means they keep track of accounts receivable, accounts payable, and everything in between.

Bookkeepers are often confused with accountants, but the two actually have distinct jobs. Accountants are higher up in the organization, often having begun their careers as bookkeepers. The bookkeeper collects, organizes, and verifies the information that the accountant ultimately uses to make informed business decisions. Bookkeepers handle the records, while accountants assess the bigger picture formed by these documents. A bookkeeper is not a decision-maker, but they do provide critical information that should inform essential decision-making throughout the organization.

What Do Bookkeepers Do?

A bookkeeper will keep their finger on the pulse of the business’s finances. They maintain continuously updated information to accurately depict the current situation. Bookkeepers draft and submit reports to this end. This information typically goes to accountants, managers, and business owners, who will use it to inform their decisions.

Bookkeepers handle many daily tasks. They’re responsible for:

  • Entering data: They diligently record money coming in and going out of the business and maintain accurate records of all financial transactions.
  • Checking for inconsistencies: Bookkeepers check the internal books against the company’s bank statements and other financial reports. If these accounts don’t match, they must uncover the inconsistency and determine its cause.
  • Routine reporting: They’re responsible for producing regular reports that summarize a business’s financial information, which is typically done monthly.
  • Creating profit and loss statements: These professionals draft detailed documents that include specific information on the business’s income and expenses over a set period. They can then determine whether the company has made a profit or suffered a loss.
  • Submitting balance sheets: They provide concise summaries of the business finances at a particular time.
  • Drafting cash flow statements: This involves producing a record of the cash and other cash-like equivalents that enter and leave the company’s accounts.
  • Putting together statements of changes in equity: Preparing detailed documents that summarize changes to the reserves, capital, and retained earnings is essential.
  • Managing accounts receivable: Bookkeepers draft and send invoices and then follow up on submitted invoices to ensure successful payment.
  • Handling accounts payable: They are responsible for verifying the accuracy of invoices and ensuring timely payment from the proper accounts.
  • Managing payroll and employment taxes: They draft paychecks, submit payments to employees, and ensure the proper documentation of these payments.
  • Managing sales taxes: Bookkeepers collect and remit the appropriate taxes to the government.
  • Filing taxes: Preparing and submitting tax returns is a crucial part of the job.

The scope of a bookkeeper’s duties will vary by company. Each business owner can decide what work their bookkeeper will handle.

How Do You Work With a Bookkeeper?

If you’re interested in working with a professional bookkeeper, the first step is selecting the right person. Each business has its own distinct needs, so choosing a bookkeeper who’s familiar with your industry and comfortable with the scope of the work is crucial.

When interviewing potential candidates for the job, you should evaluate their education and experience. It’s possible to become a bookkeeper with minimal education and no certification. However, a certified bookkeeper is a more reliable choice because they can prove their expertise in the industry, even if they’re relatively new to the career. The National Association of Certified Public Bookkeepers offers a Certified Bookkeeping Professional license. The American Institute of Professional Bookkeepers offers a Certified Bookkeeper designation. Both are valuable credentials that will help to set candidates apart.

When you’re interviewing potential bookkeepers, pay attention to their communication skills. One of the most essential things a bookkeeper will do is communicate information to others within the organization. If they can’t communicate effectively, you haven’t found the right bookkeeper.

You can choose to employ a bookkeeper full time or part time. You might decide to hire an in-house bookkeeper who works for your company alone or outsource this position to someone who manages bookkeeping for multiple clients. If you’re managing a small business or getting started on your own as an entrepreneur, you might want to start with part-time help who’s available as needed before you hire someone full time. Let your bookkeeper know how often you require reports and what information you need so you’ll get just what you require from this working relationship.

What Are the Benefits of Having a Bookkeeper?

Bookkeeping tasks are essential in businesses of all sizes. Many business owners handle these jobs themselves when they’re just starting their companies. However, a growing enterprise will soon require more time and attention than a single entrepreneur can provide. Hiring a bookkeeper frees up your time and attention for other tasks. Bookkeeping is time-consuming, but it doesn’t require any significant decision-making. This is the perfect job to pass along to someone else, so you can keep your attention on more critical management aspects.

Having a dedicated bookkeeper also helps you keep up with your commitments. If your attention is elsewhere, it’s easy to overlook an invoice, lose track of the amounts owed, or make a mistake with your tax compliance. Since a bookkeeper has a singular focus, they can maintain crucial timeliness for your company and dedicate the appropriate amount of time and attention to accuracy.If you’re looking for a reliable bookkeeper for your company, Pasquesi Sheppard can help. We offer a full range of accounting services for your business. Call us or send us an email to set up an appointment.