As your business grows, the role of a bookkeeper gets more and more vital. Your company’s money keeps going in and out rapidly, that it is impossible to keep track of it on your own. Hiring a bookkeeper will help to keep your business in order. Unfortunately, not many entrepreneurs or business managers realize how beneficial a bookkeeper can be for their business. They often ask themselves, ‘what does a bookkeeper do?’
Well, keep reading and you’ll find the right answer.
Who Is A Bookkeeper Anyway?
What does a bookkeeper do, anyway? A bookkeeper is a person who keeps track of every transaction in a business, be it credit or debit balances. From things as small as parking fees to the major ones such as property purchase, a bookkeeper will have those all written down neatly in a book. They work daily to avoid missing out on something.
Some people use the term “bean counters” to refer to bookkeepers or accountants. However, it is highly advisable never to use the term because it has a derogatory connotation.
Bean counters refer to people who are being too fussy and petty on small things as beans. Meanwhile, it is a bookkeeper’s responsibility to pay attention to the details of every transaction.
History of the Bookkeeper
The profession is nothing new. The first bookkeeper ever recognized in history dates back as far as 2600 BC. Paleontologists found that people at that time used clay slabs and stylus to note down their transactions.
An Italian mathematician, Luca Pacioli, also found that the advanced bookkeeping technique has been around since the late 15th century. Back then, people have already used the double-entry system, the financial bookkeeping technique that most people use today. It is such impressive progress considering that computers have not existed yet. They only used hand-written journals and ledgers.
Bookkeepers vs. Accountants
Do not confuse bookkeepers with accountants. Although their jobs may relate to each other, they have different roles in the company. There are many differences between what a bookkeeper does and what an accountant does.
People need at least a Bachelor’s Degree and probably an additional certification to be eligible to be an accountant. Meanwhile, you don’t need any degree to be a bookkeeper. In-job short training will be enough to conduct the task.
Scope of Responsibility
Accountants cover a more vital role in a business. They are responsible for managing and analyzing the financial balances of the company. Their main goal is to maximize revenue while also reducing the costs of the business. On the other hand, a bookkeeper only needs to get every transaction issued and documented neatly.
Bookkeepers deliver accounting ledgers, which contain financial reports and documentation. Meanwhile, accountants submit finance forecasts and propose strategies based on the data they analyzed.
Management requires input from accountants for any crucial decision that affects the company’s finance. It is such a critical aspect to consider because it will affect future profit and loss. On the other hand, bookkeepers are not involved in the company’s decision-making process.
A bookkeeper will submit the report to the accountant and the management. The accountant will then analyze the data and arrange budgeting plans that they think will benefit the business. Managers will look into it and make decisions accordingly.
Job Descriptions of A Bookkeeper
If you’re wondering what does a bookkeeper do, it’s relatively straightforward. Most of the time, a bookkeeper will be busy with data entry and receipt wrangling. Their main job is to document and summarize every earning and spending as neatly and meticulously as possible. To be more specific, these are the things that a bookkeeper should do:
- Recording every transaction, both credits, and debits.
- Documenting receipts for every transaction
- Updating the ledgers regularly in chronological order
- Processing daily banking activities
- Issuing payrolls for staffs
- Reconciling accounts to assure the accuracy of the booking
- Delivering financial reports regularly, usually every end of the month
- Notifying management of every finance issues and variance
- Paying taxes and taking care of tax returns if needed
- Monitoring cash flows and annual company budget
Due to its more simple duties, a bookkeeper requires fewer qualifications than an accountant. However, it doesn’t mean that anybody can perform bookkeeping works. If you seek a bookkeeper for your business, make sure to look for these traits:
- Close attention to details because even the smallest transaction matters
- Well-organized because they need to maintain a meticulous ledger
- Scrupulous and thorough because accuracy is crucial
- Basic data entry skills
- Basic accounting knowledge
- Proficient in Microsoft Excel
Benefits of Having A Bookkeeper
Statistics show that most companies managed to increase their profit, mainly after hiring a bookkeeper. Furthermore, running a business is also less stressful than it used to be due to a bookkeeper’s presence in the company. There are many logical explanations behind it, such as:
- Save energy and time for counting transactions so you can focus on more important matters.
- Allow you to make wiser decisions because it is clear to see where and how much your money is coming from and going.
- Financial audits will be stress-free and mess-free because all the transactions are noted in the ledger.
- Easier to identify which budget to increase and decrease to make the business more efficient
- Rest assured that the taxes and employee salaries will get handled accordingly on time.
- Having bookkeepers will decrease your accountants’ responsibility. Hence, you may save money by hiring fewer accountants because bookkeepers get paid lower than accountants in general.
The invention of computers has made the bookkeeper’s job significantly more comfortable. You even have the option to choose a virtual bookkeeping service like NumberSquad. Of course, there are many advantages if you invest in this modern bookkeeping service, such as:
- Lower cost, especially if you don’t need a full-time bookkeeper.
- Fewer risks of accidental inaccuracy with peer-review and quality control
- Get one-on-one support anytime you need
The more your business grows, the more transactions your company has within each day. Alongside that, you will also have more important things to do. It is impossible to handle everything on your own. But on the other hand, missing out on a transaction can harm your company’s financial balance. It is such a huge risk. Be it a full-time, part-time, or a virtual one. A bookkeeper will make sure your financial transactions are in check.