Bookkeeper’s Role in a Small Business

Bookkeepers are capable of doing a wide variety of tasks, depending on the requirements of the company.

Having said that, the vast majority of bookkeepers working in businesses nowadays complete their work with the assistance of business accounting software.

In addition, there are a few things that virtually every bookkeeper is capable of handling for your company on their own.

Despite the fact that being a bookkeeper involves a wide variety of responsibilities, there are a few fundamentals that must always be adhered to.

If you are interested in learning more about what a bookkeeper does, then it is likely that you are also considering whether or not you require the services of one. We will discuss the responsibilities that a bookkeeper can handle on your behalf, as well as the standard hourly pay for bookkeepers and the best places to look for qualified bookkeepers.

The size of a firm as well as its industry both has a part in determining what responsibilities a bookkeeper is responsible for.

In a very small company that does not have an accountant, the bookkeeper is likely to be responsible for a wide variety of tasks.

At a bare minimum, it is the bookkeeper’s responsibility to handle the paperwork associated with a company’s transactions and ensure that the relevant information is promptly and accurately recorded in the general ledger accounts associated with the company.

Today, the most effective method for accomplishing this is to make use of efficient software such as QuickBooks, which is made by Intuit.

The work done by a bookkeeper is frequently checked over by an accountant and/or the owner of a small firm.

A bookkeeper should have business sense, attention to detail, speed, accuracy, the capacity to adapt to changes in technology, an awareness of debits and credits, and general comprehension of financial statements.

Other credentials include the ability to adapt to new technologies.

It doesn’t matter if you make your living providing legal counsel, corporate software, or handcrafted alpaca socks; there are two things that are certain to be true about your company: you make money, and you spend it. Bookkeepers are the individuals who will assist you in keeping track of all of that information.

If you have been putting all of your mental energy into getting your business off the ground, it is possible that you do not have a complete understanding of what a bookkeeper does.

In this article, we will discuss the day-to-day responsibilities of a bookkeeper as well as the reasons why it is important to retain a good one.

Bookkeepers, defined

A person who prepares your accounts and records the everyday financial activities that take place is called a bookkeeper.

Bookkeeping is not the oldest occupation, but it is pretty darn close to being the oldest profession there is. Bookkeepers have been around as long back as 2600 BC when records were tracked using a stylus on slabs of clay.

A (very) brief history of bookkeepers

Bookkeepers in colonial America would record transactions in a book referred to as a “waste book.” This book got its name from the fact that the information would eventually be entered into an official ledger, while the original book would be thrown away.

In today’s world, keeping track of accounts requires the use of some kind of software platform, and any bookkeeper worth their beans employs it.

However, similar to the days when wastebooks were used, bookkeepers often give their records to an accountant when it is time to file taxes or when significant choices need to be made.

Accountants vs. Bookkeepers

Bookkeepers aren’t always prepared to handle all of the financial duties that come their way, which is why accountants are needed in these situations.

It is the responsibility of bookkeepers to maintain a record of daily transactions, and it is the responsibility of accountants to construct financial models based on the information acquired by bookkeepers.

Bookkeeping is straightforward and based on transactions, whereas accounting is more subjective and requires skilled interpretation.

For instance, if you want to maximise the amount of money you make from your business, consulting with an accountant can help you determine when it is the optimal time to incorporate your company or to submit your taxes.

Bookkeepers provide a clear depiction of your current financial status, whereas accountants help you acquire a holistic perspective on the trajectory of your company and the greater framework in which it functions. Bookkeepers and accountants both play an important role in every successful business.

It is not necessary to have any kind of specialised education or training in order to work as a book-keeper; in fact, you do not even need a bachelor’s degree to do so.

On the other hand, in order for bookkeepers to become certified public accountants, they are required to go through significant training and pass standardised exams.

But what does a bookkeeper actually do all day?

The duties of a bookkeeper will almost always include a significant amount of data entering and the organisation of receipts.

They are accountable for recording each and every monetary transaction in your general ledger utilising the double-entry method of bookkeeping, which is more commonly referred to as recording journal entries.

This may sound like a complicated process, but in most cases, it simply entails entering all of your transactions into accounting software.

Having said that, keeping accurate books requires more than just entering numbers into a spreadsheet. It also requires careful analysis and the appropriate amount of legal knowledge. After all, bookkeepers may assist you in surviving an audit by ensuring that your records are in order and that any deductions you take are within the bounds of the law.

What Is the Job of a Bookkeeper?

There is no way, under any circumstances, to provide a direct response to this enquiry. Like any other field of employment, bookkeeping can take on a wide variety of shapes and forms, depending on the organisation that is performing the work. On the other hand, the following is a list of the tasks that bookkeepers often perform the most frequently:

• Document all of your financial dealings.
• Perform a bank account reconciliation.
• Manage bank feeds
• Take care of the accounts receivable.
• Manage the accounts that need to be paid.
• Collaborate with your tax preparer and contribute to the fulfilment of tax obligations.
• Prepare financial statements
• Take on some responsibilities in the areas of payroll and human resources
• Make recommendations on how technology and processes might be streamlined.

Here’s a closer look at what a bookkeeper does:

Adjust Your Bank Accounts

Any bookkeeper worth their salt will tell you that the most important function they have is to reconcile their client’s financial records. When you perform account reconciliation, you confirm that the transaction data on your bank account statements, credit card statements, and any other financial account statements match the transaction details in your accounting software. This applies to any and all financial account statements.

If you require help with your bookkeeping, you can give us a call on (03) 8568 3606 or email us on [email protected].

It is essential to perform frequent account reconciliation in order to prevent paying fees linked with overdrafts, unauthorised expenditures, or transactions that were recorded incorrectly. These fees can be expensive. Making sure that each transaction is recorded accurately is one way to prevent this from happening. The implementation of accounting software makes reconciliation a reasonably straightforward process; nonetheless, the participation of a human worker is still necessary to guarantee that all transactions are recorded in the most correct manner possible.

Control Bank Feeds

At the most fundamental level, the management of the transactions that are received through the bank feed of your accounting system should be the responsibility of either your bookkeeping service or a book-keeper that you employ. You will be able to view each transaction as it happens in real-time if the accounting software that you use is connected to the bank account that is associated with your firm. This connection can be made possible through the usage of bank feeds.

Depending on how robust the accounting software is, it should be able to automatically categorise individual transactions in the manner that has been established. For the purpose of demonstration, a credit card transaction that is made by an airline can be automatically placed into the proper category for travel-related spending. Bookkeepers are accountable for keeping an eye on these transactions and ensuring that they are categorised in the correct way.

It’s possible that bookkeepers will need to add transactions manually if the bank feed doesn’t capture all of the company’s financial dealings.

It is almost certain that the transactions that need to be added will include transactions that were generated outside of the accounting system, such as payments made in cash or cheques that were handwritten. These are examples of the kind of transactions that will need to be added.

It might also involve matching deposits as customer payments to assist in managing accounts receivable, or it could involve outbound transactions as customer payments against vendor invoices. Both of these scenarios could be managed more effectively with the help of matching. Both of these potential outcomes could be beneficial to the management of accounts receivable.

Manage the Receivables

When it comes to managing receivables from customers, there are a variety of various ways that can be employed. As was previously mentioned, the employees of the small company may be entering their own estimations or invoices, and they may even be getting paid based on the invoices themselves. This may be the case because the tiny company is relatively new.

In spite of this, there is still a further option.

The customer is responsible for providing the book-keeper with the final amount after they have finished calculating the project using an application for cost estimation that is designed specifically for their sector. After that, they enter the estimates into their QuickBooks Online account and generate either progress invoices or final bills depending on where the project stands at any given time.

The provision of invoices, the transmission of such invoices to the customers, the provision of statements, and the provision of support in the process of collecting payments are all included in the A/R services that we give to our clients.

First, we create a deposit in QuickBooks Online for the amount that corresponds to the payment that the customer provides to the bank, and then we enter the payment that the customer has already made into QuickBooks Online. When a consumer has paid their bill, they are responsible for informing the book-keeper.

Accounts Payable Management

In many cases, bookkeepers are also in charge of managing the accounts payable for their clients, in addition to the accounts receivable for their clients.

This suggests that the book-keeper will be accountable for processing each and every invoice that the company receives from its suppliers as soon as it is received.

Bookkeepers are accountable for noting the payment dates that are specified by each vendor, sending payment to the seller, and claiming early payment discounts, if any such discounts are available.

As a company grows, its bookkeepers can discover that it is necessary to increase the number of people in the organisation who are authorised to give the go-ahead for payments.

Your accounts payable need to be managed in an efficient and effective manner if you want to keep positive trade credit conditions and healthy relationships with your suppliers.

Engage Your Tax Preparer in Work

Many bookkeepers neglect to mention one of the services that they offer, which is that by default, they will act as a kind of translator between you and your certified public accountant or enrolled agent. This is one of the services that they give, but many bookkeepers fail to mention it.

One of the things that most bookkeepers forget to highlight is this particular aspect of the business.

When you are getting ready to submit your small business taxes, it is sometimes quicker to have your bookkeeper contact your tax preparer. This is because bookkeepers have a lot more intimate knowledge of your accounts than tax preparers do.

Get Financial Statements Ready

The vast majority of bookkeepers will provide three key financial statements for your company: a profit and loss statement, a balance sheet, and a cash flow statement. These are the most common types of financial statements.

These are the most crucial financial statements that should be analysed.

It is a smart practise to keep one’s financial statements up to date on a monthly basis, in addition to doing so once more at the end of each year.

The profit and loss statement provides specific information regarding your organization’s bottom line as well as the costs that were incurred while the business was functioning normally. The assets and liabilities of your business are both listed on the balance sheet that your company uses to keep financial records.

The cash flow statement provides an overview of the cash that is coming into and going out of your business.

Bookkeepers are able to generate these financial statements using accounting software, after which they can share them with their clients’ accountants and tax preparers.

Perform Payroll

Bookkeepers may also be responsible for conducting duties relating to payroll and human resources.

There is a potential that the bookkeeping service you use offers payroll services, or that they will assist you in the processing of tax payments and paperwork in addition to paychecks. If this is the case, you should investigate this prospect further.

They might just insert payroll data into your accounting system after your payroll service provider has filed reports to you, or they might import the data from a file that you provide them with. In any scenario, the procedure ought to be extremely easy to understand.

Bookkeepers can also aid you in handling the timesheets of hourly employees and those who work overtime.

When you have staff members, processing payroll may very quickly become an onerous and time-consuming activity.

When it comes time to pay your employees, you will likely need to check their timesheets, assign any commissions that are due, calculate payroll tax and superannuation, and maintain correct employee records, including the specifics of their bank accounts.

After that, the payroll will unquestionably need to be managed through the accounting system and the bank account simultaneously.

You will find that hiring a book-keeper will save you a substantial amount of time if you process payroll once a week or twice a month. This is the case even if you only do payroll once a month.

Make Suggestions for Streamlining Processes and Utilising Technology

Bookkeepers also have a good handle on staying abreast of the most latest and innovative technical advancements, which is another one of their strong suits.

It is not unheard of for your book-keeper to find a new app or solution that is specialised in your company, such as software for self-employed accounting as an example. This is not an unheard of occurrence.

This is particularly likely to take place if a significant number of their customers work in the same location.

Alternately, you may look into whether there is a technique that might help you cut down on the cost of labour.

Bookkeepers look forwards to the challenge of discovering new ways to streamline operations in the back office and make sure that work flows as smoothly as possible.

As a consequence of this, they have the potential to be an extremely useful business partner for your firm.

Financial reporting

Finally, your bookkeeper will offer you regular financial reports such as profit and loss statements, balance sheets, budgets, and cash flow forecasts.

These reports will give you all of the information that you require to optimise the financial performance of your company.

They will be able to direct you towards the areas that require improvement as well as those that are doing well and have the potential to be elevated to the next level.

Why would one be useful?

You probably have a lot of excitement for operating your own firm and concentrating on the things that you enjoy doing the most if you’ve started your own business and are in charge of running it. On the other hand, if you’re like the majority of individuals who own businesses, you probably aren’t all that interested in following the particulars of each and every financial transaction. This is undoubtedly the case for the vast majority of business owners.

Take, for instance, the scenario in which you run a hair salon as an example. It’s possible that you:

• a straightforward method of conducting business
• a large number of customers and sales on a daily basis
• supplier invoices for hair products sales documented by cash registers or other point-of-sale (POS) systems
• sales recorded through cash registers or other POS (point of sale) systems
• staff salary to record and pay.

That constitutes a substantial quantity of information that needs to be kept track of and documented. In addition, it’s possible that you don’t find managing your books to be something that’s fun or that you have the time to fully comprehend.

If adequate bookkeeping were not to be practised, it would be quite easy for transactions to go unrecorded, and the records of those transactions would quickly pile up until the end of the financial month. If this were to happen, it would be quite difficult to determine how much money was made or lost during the month.

It is possible that mistakes could be made, and it is also possible that vital information will be lost or forgotten. Both of these scenarios are feasible.

When this occurs, the function of the book-keeper becomes significantly more important. They are able to alleviate some of the strain that has been imposed on the business.

They are able to do away with the everyday requirement of recording transactions such as receipts, invoices, and other sorts of financial dealings.

What Does a Bookkeeper Charge?

Freelance bookkeepers often charge between $30 and $50 an hour for their services, with the average rate falling somewhere in the middle. If you are only looking for someone to perform simple tasks like data entry on a part-time basis, you might be able to negotiate pricing that are lower than the market standard. If, on the other hand, you are looking for someone who has experience in accounting or drafting tax returns, you should be prepared to spend more money.

There is a possibility that the cost of your bookkeeper will be affected by each of the following factors:

• Types of work you’d like the bookkeeper to do
• The level of sophistication and the number of transactions that your company conducts financially
• Bookkeeper’s experience
• The total amount of hours worked per month
• If you use any accounting software, what kind it is, and how often? (most bookkeepers prefer QuickBooks Online)
• The physical location of your company

A detailed view of your business

Both bookkeepers and accountants use the same financial data from your company in their work.

Using accounting software that is hosted on the cloud, they are able to exchange that information. This indicates that they are able to access your financial information online in a secure manner from any location.

It gives them the ability to share reports regarding the current state of your company’s finances.

Therefore, you can ask either one of them for guidance regarding the current state of your company as well as the future course it will take.

It is common practice for the business owner’s bookkeeper to serve as the primary point of contact for all accounting-related matters. They will be in the greatest position to answer queries regarding the origin of the money as well as the destination of the money.

When should I hire a bookkeeper?

To put it simply, the sooner, the better. You should hire one as quickly as possible if you haven’t previously done so. In a perfect world, you would do so not long after launching your company.

In the event that this does not occur, you run the risk of having several months’ worth of receipts and invoices that need to be handled.

That may take some time, and it may be tough to carry out as a result of the fact that you will have forgotten which customer to bill for which expense.

For instance, you can enquire to yourself, “Where did you get this ticket for the train?

On July 13, I paid a visit to who?” A bookkeeper would be aware of the customer you went to see and the reason for it. After that, they would do the appropriate accounting procedures for the travel costs.

Finding the right person

Whoever you choose to hire, you need to feel comfortable trusting them with the day-to-day operations of your company’s money. Therefore, you ought to exercise extreme caution while looking for a bookkeeper to hire.

Because there are numerous businesses that provide bookkeeping, you will have a wide variety of options available to you.

You might get in touch with one directly, or you could enquire as to whether or not any of your clients or business partners have any recommendations.

If you have access to an accountant, you should also ask them. It would be ideal if you could find someone who works with the same accounting software as your current accountant.

That way, they will be able to effortlessly communicate account information with one another.

It is preferable for the accounting software to be cloud-based, which means that it can be accessed through the internet. Then you will all have access to the same version of the financial data for your company, which you can share. It is possible to carry out the task remotely and safely from any location.

After you have whittled down your options to a manageable number, you have the following options:

• check their past work record
• contact their referees and talk to them
• ask your accountant to have a meeting with your proposed bookkeeper.

It takes a significant leap of faith to entrust the financial information of your company to another person. Therefore, before you engage a bookkeeper you should carefully investigate your options.

Get the best out of your business

Bookkeepers provide a service that is essential to the success of businesses. They will take care of all of the day-to-day financial tasks for you, freeing you up to focus on the operations of your company. This will save you a lot of time. They are able to provide you with new insights into your company because to the real-time data that they are collecting.

When you’re seeking to set your company apart from the competition, this is a vital consideration to take into account. If you want to make smart choices for your company, having access to up-to-date information is really necessary.

The value of a bookkeeper to a small business cannot be overstated, and this guide has demonstrated that a bookkeeper can offer much more than just financial recordkeeping and regulatory compliance. In many cases, a bookkeeper will specialise in a certain area; hence, it is in your best interest to enquire about this so that they may provide even more value to your business.

If you want to make sure that you are getting the most out of your company, employing a bookkeeper to assist you along the way is a smart move.

You now have an understanding of all of the most important talents that a bookkeeper may contribute to your company.

There’s a lot more to bookkeeping than many owners of small businesses realise, including the fact that your bookkeeper is doing more than just looking things up in an accounting book and entering data into a computer.

You now know that the answer to the question “What does a bookkeeper do?” can be anything from reconciling transactions to processing payroll; in fact, the answer can even involve managing all of the aforementioned responsibilities at the same time.

In the end, the response to this issue will be determined by the requirements that you and your small business have for your bookkeeper. In either case, hiring a bookkeeper to manage the financial aspects of your small business will give you back the time and energy you need to focus on expanding your operations.