As a small-business owner, you’re likely juggling a lot of responsibilities, so staying organized can be a challenge. It’s great to provide a product or service that people want and need, especially when you’re making money from it. The more successful you are, the more important it is to maintain the appropriate financial records. If you’re at that point, it’s probably time to find a bookkeeper.
Some small-business owners actually prefer to do their own bookkeeping rather than hiring someone to handle their bookkeeping tasks. After all, trusting someone else with your financial information is not easy for some people. But while you’re busy being successful, having accurate, organized financial records can help your business run more smoothly and keep you out of financial trouble.
As a business owner, you need to keep track of every financial transaction that happens in your business. That’s where a bookkeeper comes in.
What is a bookkeeper?
A bookkeeper is someone who keeps financial records for your business by accurately tracking income and expenses and documenting daily transactions using bookkeeping software.
What tasks do bookkeepers do?
A bookkeeper may do a variety of tasks, depending on what the business needs, but for most bookkeepers, a typical day’s responsibilities may include:
- tracking and categorizing financial transactions
- maintain the general ledger
- keeping receipts as documentation
- processing invoices
- managing accounts payable and accounts receivable
- processing payroll
- reconciling bank account and credit card statements
What skills do bookkeepers need?:
There are specific skills that good bookkeepers need to be successful. These include:
- computer skills
- mathematical skills
- organizational skills
- data entry skills
- understanding of basic accounting principles
What tools do bookkeepers use?
Bookkeepers typically use accounting software programs, such as QuickBooks, Freshbooks, or Xero to maintain financial records. They enter data into an electronic accounting file, which is referred to as your “books.” This is a term that was originally used when bookkeepers used calculators and physical books, or ledgers, to keep financial records, so it’s a bit outdated now although people still use it. Today’s sophisticated bookkeeping software has eliminated the need for physical books, and an electronic recordkeeping system allows your bookkeeper to organize data, create a variety of reports, and easily refer back to records from previous years.
What is the difference between bookkeepers and accountants?
The difference between bookkeepers and accountants is that bookkeepers are typically responsible for recording financial transactions, while accountants are responsible for analyzing and interpreting financial data. Bookkeepers typically handle the basic tasks involved in keeping financial records. There aren’t any specific educational requirements for bookkeepers, but most businesses prefer to hire someone who has experience with accounting software, and some prefer a bookkeeper with some college or a bachelor’s degree in accounting, finance, or business.
Accountants use the information compiled by bookkeepers to create financial models, such as financial statements, balance sheets, and profit and loss statements. They can also prepare your tax returns during tax time and handle any federal tax payments that your business is responsible for throughout the year. Accountants must have specialized training and pass standardized exams in order to become certified public accountants (CPAs).
In small businesses with limited resources, it may not be feasible to hire accountants. Sometimes an accounting clerk or other staff member performs bookkeeping services. In these businesses, a bookkeeper’s job description may cover more responsibilities as they handle some of these accounting duties, such as cash flow statements and other financial reports. For many small-business owners, hiring a part-time bookkeeper or using the services of a freelancer may be more cost-effective than hiring someone on a full-time basis.
Your bookkeeper can play an important role in protecting your business’ financial interests. By collecting, organizing, and recording data about your business’s finances, your bookkeeper can help you free up your time so you can focus on other aspects of your business.