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Bookkeepers are an integral part of society. If not for the profession, businesses would struggle to make financial decisions and run their operations!
However, it’s not just businesses that depend on bookkeepers and the techniques they use. The tasks that bookkeepers carry out are also used in households across the globe to make sure that family finances are at their best.
In general, bookkeepers organize and manage the financial information of a business – whether that’s processing a new batch of invoices or payments or keeping files well-maintained for future purposes.
Bookkeeping comes in many shapes and sizes, which also means bookkeepers are some of the most versatile professionals in the industry!
Are you curious about exactly what bookkeepers do? In this article, I’ll dive into:
- The role of a bookkeeper, and the history behind the occupation
- What a bookkeeper can do for your business
- The different types of bookkeeping
- How bookkeeping benefits organizations.
What is a Bookkeeper?
Whenever I’m working with a bookkeeper, I have to remind myself that these individuals are some of the busiest in any business.
That’s because bookkeepers are responsible for a huge range of essential tasks! Primarily, bookkeepers organize a business’s financial information — whether that’s transactions, outstanding payments, or other monetary obligations.
They do that by recording these transactions in journals (which is how they got their name!).
Without the work that bookkeepers do, I don’t think any business can run smoothly or reach the level of success it has the potential to enjoy. They’re simply indispensable.
Related: How to Become a Bookkeeper
A Brief History of Bookkeeping
Bookkeeping has been around for a very long time. It has been a standard practice for numerous civilizations since ancient times; clear examples of this have been found in the ancient civilizations of Mesopotamia and Babylon, where ancient bookkeeping records were uncovered.
However, bookkeeping really kicked off when an Italian mathematician named Luca Pacioli published a book on the topic.
It’s a system so intuitive, simple, and revolutionary that we use the same foundational principles to this day!
Responsibilities of a Bookkeeper
At a glance, bookkeepers are responsible for recording and maintaining the financial information of a company — making sure everything is accurate and organized, with a paper trail that’s easy to follow.
Depending on the business, bookkeepers can also carry out plenty of other tasks. They can help to prepare financial documents, assist with tax filing, and do other jobs that involve accounts and money!
Duties of a Bookkeeper
Now that you have a general idea of what bookkeepers are generally responsible for, I’ll now take you on a more detailed tour of what the position entails.
So, what does a bookkeeper do, exactly? As it turns out: a lot!
- Data entry: Since bookkeepers deal with so much financial information, they have to be really good at entering these into the bookkeeping system they use — and that’s where being proficient in data entry comes in! Bookkeepers also consolidate data in a user-friendly way so that they’re easy to interpret and can quickly yield helpful metrics to help you run your business.
- Bank reconciliation: Every business wants to put more money into its bank accounts — but how do they make sure that their accounts match what their financial documents say? Bookkeepers are in charge of performing bank reconciliations at least once a month so that you know exactly how much you have!
- Monthly reports: If you’re anything like me, your eyes quickly glaze over when you take a look at your ledger. Fortunately for both of us, bookkeepers have this covered as well with monthly reports that summarize everything that’s happening on the financial side of your business.
- Accounts receivable (and credit control): Cash inflow is always an exciting aspect to track when running a business, and bookkeepers will make sure you’re getting all the money you’re owed!
- Accounts payable: Whether it’s an invoice from your supplier or a bill from your utility provider, bookkeepers are here to keep you on time in all your financial obligations to others.
- Payroll: If you want to, you can even assign a bookkeeper to handle payroll requirements! Bookkeepers are more than capable of handling payroll and ensuring all your employees receive their hard-earned money for their efforts.
- Tax filing: It’d be a mistake to think that bookkeepers are only good at organizing financial records! Hand the hard work of filing taxes off to them and watch as they complete it just as efficiently.
- End-of-year reporting: Businesses are always busy at the end of the year, and with so many documents lying around, it’s easy to get overwhelmed. Luckily, bookkeepers and their proficiency in keeping records make this job a whole lot easier.
- Business strategy: There’s no one more familiar with your financial data than your bookkeeper, which is why they can also be extremely helpful when drafting your business strategy. With the insights they possess, your bookkeepers will keep your plans grounded and realistic!
- Training staff: When you’re looking to expand and hire new bookkeepers, senior-level staff can provide all of the necessary training for new employees.
- Virtual office: Do you know what I really love about bookkeepers? It’s the fact that they only need their computer to do their job, so you can have them work from home or report to the office — whichever is more convenient!
- Liaison: When it comes to matters of finances and coordinating between different departments, bookkeepers are uniquely placed to provide valuable guidance.
Related: How to Launch a Bookkeeping Business
Types of Bookkeeping
|Bookkeeping can be done by anyone! If you choose to learn and practice a bookkeeping method by yourself, I recommend using Microsoft Excel to organize and personalize your bookkeeping experience.
|Instead of handling bookkeeping responsibility all by yourself, you can also hire a professional bookkeeper! Onboarding one means you’ll have a real expert handling all your records.
|If you’re looking for a more specialized experience with bookkeeping, finding a bookkeeping software tailored to your exact business might be a good option. And if you’ve decided to try doing your own bookkeeping, I really recommend using bookkeeping software to keep everything as organized as possible!
|Remote or virtual
|Bookkeepers can be hired for in-house operations, but the job can be carried out just as effectively as remote work. Consider hiring a virtual bookkeeper!
Benefits of Bookkeepers
If you ask me, bookkeepers are a key reason behind any financial success experienced by a business. Here are all of the major advantages that a bookkeeper will bestow:
Financial clarity and organization
Whenever I bring this point up, I like to picture a boat lost out in the foggy ocean. If there’s no lighthouse in sight, who knows if you’re headed to safety or crashing against the rocks!
For businesses, it’s very challenging to make financial decisions without the insight provided by organized financial data — and that’s where bookkeepers shine their brightest.
With bookkeepers, you’ll gain access to vital information with which you can plan your next steps!
Accurate tax filings
If you’re anything like me, the mere mention of tax filings will make you grimace. Taxes can be very complicated, and having bookkeepers around will make the process a lot less grueling.
With their expertise, you’ll be able to file taxes correctly and in a timely manner!
Having trustworthy data on hand will tell you what parts of your business are safe and which ones are at risk of a significant slip-up in the near future!
This foresight isn’t really possible without the work that bookkeepers do, making them essential for any financial decisions you make.
Effective cash flow management
Cash is exchanged very quickly in most businesses, and if you don’t keep a close eye on your reserves you may burn through them in no time at all.
With their sharp attention to detail, bookkeepers will make sure every transaction is recorded and every missed payment is flagged.
Compliance with regulations
When you’re running a business, getting into trouble with the authorities is one of the worst things that can happen!
You’ll be able to adhere to relevant financial regulations more easily when a bookkeeper handles and organizes all of the financial documents in your business.
Time and cost savings
You may think that hiring a bookkeeper will just be an added strain on your finances, but that couldn’t be any further from the truth.
It only takes one simple error to create an avalanche of costly mistakes, and having a bookkeeper around prevents that from happening!
Bookkeepers can save business owners tremendous amounts of money and time by verifying transactions, requesting payments from customers, and performing time-intensive daily operations.
Business growth insights
I love bookkeepers and how familiar they become with a business! Being up close to all the data means they can identify cost patterns and let you know where processes can be improved.
Do you still want to become a bookkeeper?
There you have it! By now, you should be well-versed in the wonderful world of bookkeeping and all the benefits it can provide to your business.
It may be time to hire a bookkeeper to take your finances to the next level — or even become a bookkeeper yourself!
What is the difference between a bookkeeper and accountant?
The difference between bookkeepers and accountants is actually pretty simple.
A bookkeeper manages a business’s day-to-day finances, while an accountant relies on the bookkeeper’s organized data to create a full financial picture of the business.
This information is then used to make informed decisions in the future!
Why should I hire a bookkeeper?
As you’ve already learned, having a bookkeeper will mean that all your transactions are accounted for – leaving no room for you to wonder whether an obligation has been paid or not!
Whether you’re a business owner or simply want to manage your household finances, bookkeepers bring with them superb organizational and financial skills that will put your mind at ease.
Why shouldn’t I hire a bookkeeper and just do it myself?
Bookkeeping can be for everyone; while it’s a skill that requires dedication, it’s also accessible to people of all ages, educational levels, and financial backgrounds.
In that light, you may want to learn the ins and outs of this profession to manage your own financial records.
However, trust me when I say that hiring an experienced, skilled bookkeeper is a decision you won’t regret either!
What skills do you need for bookkeeping?
Because they deal with data constantly, bookkeepers should have a good grasp of basic accounting, math, and statistics. Luckily, many universities offer free courses on these!
Additionally, bookkeepers should also master relevant software (such as QuickBooks) for their line of work.