What Does a Bookkeeper Actually Do: Essential Tasks Explained

what exactly does a bookkeeper do

Bookkeepers might also have degrees in accounting, but most have either technical certifications or on-the-job experience. While the basics of accounting haven’t changed in over 500 years, the practice of bookkeeping has. Bookkeeping was once done manually using actual books called journals and ledgers. Because bookkeeping is based on double-entry accounting, each transaction affects two accounts — one gets debited and the other is credited. A bookkeeper provides a critical role in the data collection and data input of a business’ accounting cycle. When there is a proper system in place that avoids problems such as skimming fraud, the recorded financial data can provide valuable, actionable insight.

Types of bookkeepers

Plus, anyone who has tried to manage the income and expenses of their own business knows that bookkeepers deserve some serious respect. While any competent employee can handle bookkeeping, accounting is typically handled by a licensed professional. It also includes more advanced tasks such as the preparation of yearly statements, required quarterly reporting and tax materials. Bookkeepers handle the day-to-day financial record-keeping, whereas accountants take on more complex tasks such as financial reporting, analysis, and tax preparation. While both bookkeepers and accountants deal with financial data, their roles in a business are distinct.

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what exactly does a bookkeeper do

However, if you’re looking for someone with accounting or tax preparation skills, be prepared to spend more. One of the services that many bookkeepers fail to mention is that, by default, they’re going to serve as a sort of translator between you and your certified public accountant or enrolled agent. Because bookkeepers have a much https://www.bookstime.com/ more intimate knowledge of your books, it’s sometimes easier to have your bookkeeper contact your tax preparer when you’re about to file your small business taxes. Bookkeeping is essential for businesses of all sizes, as it allows them to prepare accurate financial statements, file tax returns and make informed financial decisions.

Bookkeeper Skills

what exactly does a bookkeeper do

Bookkeeping is the recording of financial events that take place in a company. Any process of recording financial data is considered bookkeeping and is the first step of data entry into the accounting system. Standard methods of bookkeeping are the double-entry bookkeeping system and the single-entry bookkeeping system. Good bookkeeping practices are essential for a business to succeed, especially when it comes to the tax-paying season. The bookkeeper prepares the books and makes accurate financial records available.

  • Now one bookkeeper can manage the bookkeeping for several businesses in fewer than eight hours a day.
  • It is less expensive and time-consuming to have the process done correctly from the start.
  • You can either keep hard copies or opt for electronic files by scanning paperwork.
  • They reconcile transactions, prepare financial statements, and provide you with a year-end financial package to make tax filing easy.
  • There are some financial tasks that bookkeepers aren’t equipped for; that’s where accountants come in.
  • If you go this route, make sure you’re keeping good track of what it costs you to do business, using something like a spreadsheet for your expenses.

Bookkeepers offer a literal look at where you stand financially at the moment. Accountants take that financial data and help you see the bigger picture and the path your business is on. Below is a sample bookkeeper job description that you can customize to meet the needs of your business. When you leave a comment on this article, please note that if approved, it will be publicly available and visible at the bottom of the article on this blog. For more information on how Sage uses and looks after your personal data and the data protection rights you have, please read our Privacy Policy.

What is the difference between accounting and bookkeeping?

It involves recording transactions and storing financial documentation to manage the overall financial health of an organization. Most businesses use an electronic method for their bookkeeping, whether it’s a simple spreadsheet or more advanced, specialized software. A Bookkeeper is responsible for recording and maintaining what exactly does a bookkeeper do a business’ financial transactions, such as purchases, expenses, sales revenue, invoices, and payments. They will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The responsibilities of a bookkeeper include a fair bit of data entry and receipt wrangling.

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Bookkeeper Job Description

what exactly does a bookkeeper do

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