Choosing the Right Accountant

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.

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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.

Bookkeepers vs. Accountants

Bookkeepers aren’t always ready to handle all of the financial responsibilities that come their way, and that’s when accountants come in.

Bookkeepers are responsible for keeping a record of daily transactions, and accountants are responsible for developing financial models based on the information accumulated by bookkeepers.

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

For example, an accountant can help you understand when it is the right time to incorporate your business or file your taxes so that you get the highest possible return.

Bookkeepers provide a concrete illustration of your current financial situation, whereas accountants assist you in gaining a holistic perspective on your company’s trajectory and the larger context in which it operates.

To become a bookkeeper, you do not require any specialised education or training; in fact, you do not even need a bachelor’s degree.

On the other hand, in order to become certified public accountants, bookkeepers are required to go through extensive 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 Does a Bookkeeper Do?

This question cannot be answered in a straightforward manner at all. Bookkeeping, like any other field of employment, can take on many various forms depending on the company doing the work. However, these are the responsibilities that bookkeepers often take on 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:

Reconcile Your Bank Accounts

The duty of reconciling your financial records is the most critical responsibility that any bookkeeper may have. Performing account reconciliation ensures that the transaction details on your bank account statements, credit card statements, and any other financial account statements match the transaction details in your accounting software.

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 regular account reconciliation in order to avoid incurring fees associated with overdrafts, fraudulent charges, or erroneously recorded transactions. The use of accounting software makes reconciliation relatively straightforward, but the involvement of a human being is still essential to guarantee that all transactions are correctly recorded.

Manage Bank Feeds

At the most fundamental level, your bookkeeping service or bookkeeper should be responsible for managing the transactions that are received through the bank feed of your accounting system. Through the use of bank feeds, your accounting software can be connected to the bank account associated with your company, enabling you to view each transaction as it happens in real-time.

Depending on how powerful the accounting software is, it ought to be able to classify particular transactions in the manner specified automatically. For illustration’s sake, a credit card transaction made by an airline can be automatically sorted into the appropriate travel spending category. Bookkeepers are responsible for monitoring these transactions and ensuring that they are classified in the appropriate manner.

Bookkeepers may also be required to add transactions by hand if they aren’t included in the bank feed.

The transactions that need to be added are almost certainly going to be transactions that were generated outside of the accounting system, such as payments made in cash or cheques that were handwritten.

It could also involve matching deposits as customer payments to assist manage accounts receivable or outgoing transactions as customer payments against vendor bills. Both of these scenarios could help manage accounts receivable.

Handle Accounts Receivable

There are a number different approaches that can be taken when managing accounts receivable. As was just indicated, the staff members of the small firm might be entering their own estimates or invoices, and they might even be receiving payment based on the invoices themselves.

Having said that, there is yet another possibility.

After the client has calculated the project using an estimating application that is specific to their industry, they will next supply the bookkeeper with the total. After that, they input the estimates into their QuickBooks Online account and create either progress invoices or final bills as the project progresses.

The A/R services that we offer our clients include the creation of invoices, the transmission of such invoices to the customers, the provision of statements, and the provision of assistance in the collections process.

We enter the payment that the customer has made into QuickBooks Online, and then we establish a deposit that corresponds to the amount that the customer brings to the bank. The customer notifies the bookkeeper when they have been paid.

Handle Accounts Payable

Many bookkeepers are responsible for managing their clients’ accounts payable in addition to their clients’ accounts receivable.

This indicates that the bookkeeper will be in charge of handling all of the bills from the company’s vendors as they arrive.

Bookkeepers are responsible for noting the payment deadlines provided by each vendor, submitting payment to the seller, and claiming early payment discounts if applicable.

As a business expands, its bookkeepers may find it necessary to recruit more individuals who are authorised to give the go-ahead for payments.

Maintaining positive trade credit conditions and healthy relationships with your suppliers requires that your accounts payable be managed in an efficient and effective manner.

Work with Your Tax Preparer

Many bookkeepers fail to disclose one of the services that they provide, which is that by default, they are going to serve as a kind of translator between you and your certified public accountant or enrolled agent.

This is one of the things that many bookkeepers neglect to mention.

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.

Prepare Financial Statements

The majority of bookkeepers will generate three primary financial statements for your company: the profit and loss statement, the balance sheet, and the cash flow statement.

These are the most important financial statements.

Maintaining up-to-date financial statements on a monthly basis and once more at the end of each year is a prudent practice.

Your company’s bottom line and the expenses it incurred while running operations are detailed in the profit and loss statement. The balance sheet for your company details the assets it has as well as the liabilities it has.

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.

Process Payroll

Bookkeepers may also be responsible for performing activities related to payroll and human resources.

There is a possibility that the bookkeeping service you use provides payroll services, or that they will aid you in the processing of tax payments and forms, as well as paychecks.

They might just enter 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. Either way, the process should be very straightforward.

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

If you have employees, handling payroll can quickly become a time-consuming chore.

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

Afterwards, the payroll will, without a doubt, have to be handled through the accounting system as well as the bank account.

If you handle your payroll once a week or twice a month, you will find that hiring a bookkeeper will save you a significant amount of time.

Make Technology and Process Streamlining Recommendations

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Bookkeepers are also rather adept at being current with the most recent and cutting-edge technological developments.

It is not unheard of for your bookkeeper to discover a new app or solution that is specialised in your business, such as software for self-employed accounting, example.

This is especially likely to occur if many of their clients work in the same space.

Or perhaps there is a method that can assist you in reducing the price of labour.

Bookkeepers enjoy the challenge of finding ways to improve workflow and ensure that the back office operates as efficiently as possible.

Because of this, they have the potential to be a very beneficial business partner for your company.

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 do you need one?

If you’ve established your own company, you probably have a lot of enthusiasm for managing it and focusing on the activities that you enjoy doing the most. On the other hand, if you’re like the majority of people who own businesses, you probably aren’t all that interested in tracking the specifics of each and every financial transaction.

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 is a significant amount of data that needs to be monitored and recorded. In addition, maintaining your books may not be something that you find enjoyable or have the time to fully comprehend.

It would be quite easy for transactions to go unrecorded and for the records of those transactions to pile up until the end of the financial month if adequate bookkeeping were not practised.

It is possible that errors will be made, and it is also possible that essential facts will be lost or forgotten.

This is when the role of the bookkeeper comes into play. They are able to relieve some of the pressure placed on the company.

They are able to eliminate the need to record receipts, invoices, and other types of transactions on a daily basis.

How Much Does a Bookkeeper Cost?

For standard bookkeeping responsibilities, freelance bookkeepers normally charge between $30 and $50 per hour in fees. If you merely need someone to do simple jobs like data entry on a part-time basis, you may be able to negotiate prices that are cheaper than the average. However, you should be prepared to spend more money if you are searching for someone with experience in accounting or preparing tax returns.

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

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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.

 

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