What are the basic bookkeeping skills?
Bookkeepers record and classify financial transactions. As well as being comfortable with numbers, organisational skills are particularly important for people in this role. If you are applying for a job as a bookkeeper, review the following list of bookkeeping skills, along with information on how to highlight these skills throughout your job application.
Bookkeeping and accounting often get used interchangeably; however, there are a few differences between the two. Both accountants and bookkeepers are essential to the successful operation of a business, and both are great assets to the financial side of things. However, some people will refer to an accountant as a ‘giant sifter’, with bookkeepers being the process of pouring stuff into the sifter. You can’t be an accountant without being a great bookkeeper. So what skills do you need to be a great bookkeeper? Here are a few things to keep in mind if you’re thinking about becoming a bookkeeper.
What is a Bookkeeper?
A Bookkeeper is responsible for recording and maintaining a business’ financial transactions, such as purchases, expenses, sales revenue, invoices, and payments. The bookkeeper will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The bookkeeper is generally responsible for overseeing the first six steps of the Accounting Cycle, while the last two are typically taken care of by an accountant. While there is a general overlap between the two professions, there are a few distinctions that are later discussed in this article.
Great data entry skills
Having great computer skills is a necessity when working as a bookkeeper. Knowing how to keep up with technology and being able to add in data in an accurate and timely manner is going to benefit you greatly. Touch typing skills are an added bonus that will save you time in the long haul. If you have trouble with new software changes, technology upgrades, or learning these kinds of skills quickly, you may find that you will struggle slightly with this kind of role.
If working in a large company, you may be required to work alongside accountants and other departments within the company that may require your assistance. Being able to communicate with everyone easily and effectively will make your job (and everyone else’s) a lot easier. Whether it be face-to-face communication or phone and email, being able to communicate effectively is essential to the role.
Knowledge of bookkeeping principles
It goes without saying that you should have a great knowledge of bookkeeping, and where necessary, the essential qualifications. Understanding accounting language and having the skills and education to undertake your role is a huge part of the role. You can gain qualifications from courses and schools all across the country, and they will all help in your path to gaining a role as a bookkeeper.
If you’re the type of person that gets sweet relief from organising files and numbers, then you would be perfect as a bookkeeper. Being able to organise and maintain financial records is essential to the role, and it certainly helps if you enjoy working in this kind of position. If you’re more of an “outdoors” person who hates sitting in front of a PC for extended hours looking at numbers and figures, bookkeeping might not be for you.
Attention to detail
If you work fast, you also need to be accurate. If you like looking at the details of a project and making sure no leaf is left overturned, this is going to help you in your role as a bookkeeper. Paying attention to detail not only makes for accurate workings and numbers, but it also means fewer issues and hassles in the future for both yourself and your colleagues. Understanding that a simple mistake in one area can cause bigger issues down the track is needed to ensure you perform well in your role.
Have an understanding of the bigger picture
It’s all well and good to understand the cost of equipment or a new employee, but do you know how this will affect the business six months from now? Or 12 months from now? Understanding how a decision that’s made now can affect the bigger scheme of things, and how a payment or purchase will affect the daily runnings of the company later on down the track, is going to make you a great asset to the company.
It’s easy to say you’ll get to a project or job when you can, but ensuring you actually follow through with it and make sure it is completed is another story. It’s important to understand that the role of the bookkeeper is relied upon by other areas of the company, and the company’s’ financial records are at stake. Being able to say that you will take on a project and complete it within a timeframe specified means that you can be reliable in your position.
Have an interest in furthering your education
Once you have the skills and knowledge to be a great bookkeeper, it doesn’t stop there. To keep up to date with many changes and updates that happen in this field of work, you should have an interest in learning more about the position and furthering your education when the opportunity arises. This may be in the form of short courses, or even a degree to become an accountant. You may also want to explore mentoring options as a means of gaining more hands-on experience. Wanting to work well and understand more will only work in improving your career prospects in the long run.
Showing that you are committed to your role is one thing, but showing you are committed to a business or company and their bookkeeping is essential. You will need to show that you are committed to providing the skills and outcomes for the business, and you aren’t going to just “squeeze them in” when you get around to it. This is especially true if you work part-time for a business. Showing you are dedicated to a business, and their needs improve not only your work ethic but also the relationship between you and the company.
Showing a business that you have all of these skills and traits will ensure that your client is a happy one. With so many changes happening in the industry and business always going through many changes financially and with its daily runnings, it’s important to be flexible yet committed to providing great bookkeeping service to your client.
Bookkeeping is the start of a solid career path in the accounting industry and provides a good foundation with which to begin. For this career to be successful, you need to showcase good commitment levels to get the job at hand complete, with minimal costs and use of resources to your employer or client.
OK, we know we said it’s more than being good with numbers, but being good with numbers is still the most important part of being a good bookkeeper. Numerical skills are essential when bookkeeping and accounting for obvious reasons, whether it be to balance the books or add up the total sum of a series of transactions. Addition, subtraction, multiplication and division are all skills that you should have, along with the confidence to use your ability in these areas.
Your employers and clients will set your deadlines, and you also need to work to Tax Return and VAT deadlines, as well as Financial Year End deadlines. Organising your time around these will not just shape your career, but how competent you are and how potential clients/employers view your services. You will need to plan your months and years ahead and how your work will depend on these tight deadlines.
Bookkeepers need to present information in a professional manner, and a way that is understandable to clients both in person and via electronic communication. Depending on the size of the organisation you work for, you will also need to communicate effectively with other people in your department and be able to express yourself to your team and colleagues in other departments.
Attention to Detail
You are dealing with a company/client’s financial data, and so you need to ensure all the data you are logging is accurate down to the last penny. This is so you can monitor financial transactions and make sure financial policies are being adhered to. This will ensure your career isn’t called into question, and you are following all moral obligations and measures of integrity.
The majority of bookkeeping nowadays is managed with computerised accounting systems – a stark contrast from the traditional method of writing down amounts and figures. Manual bookkeeping does still exist but has been overtaken by its software counterpart as a more efficient way of handling bookkeeping tasks. Systems like Sage and Quickbooks are two world-renowned examples with their simplicity and user-friendliness. Microsoft Excel and basic computing navigation are crucial skills a bookkeeper needs to possess to carry out their duties.
If you find any irregularity or an anomaly in a system or a set of accounts, it will be down to you to discover where the problem lies. Identify it, and how you can act upon it without compromising the output, the data will provide you. This will also test your judgement as you work out the best way to solve the issue.
The Bigger Picture
Being able to “see the bigger picture” is vital. Knee-jerk decisions lead to potential danger, which would be best avoided if you take a step back and think about the potential outcomes. Moving money between accounts may balance the books in one, but what happens to the deficit? Will it be replaced sufficiently? Are there potential incomings that would suit the first account, meaning you’ll break even?
This comes from qualifications and knowledge. Prove your expertise, the abilities you have and judgement to any potential clients or employers that may need someone of your skills to assist with their accounts.
Bookkeeper Salary Range
A bookkeeper can expect to earn a salary in the range of $30,000-$60,000 a year in the US. However, compensation will widely vary depending on the employer, location, and candidate experience. Bigger companies tend to offer better compensation for bookkeepers; this is largely due to the increased volume of transactions and data. A multinational corporation performs hundreds of transactions a second, while a small business might perform less than a hundred in a day.
Usually, the entry-level salary for both bookkeepers and accountants tends to be similar; however, the earning potential of an accountant tends to increase as their career progress. It is not uncommon for an experienced bookkeeper to make a career transition into accounting or another profession. As bookkeepers work closely with raw data, they tend to develop a good understanding of how a business works.
Difference Between Bookkeeper and Accountant
A bookkeeper is responsible for recording transactions into the system, which is part of the wider and more general practice of accounting. Generally, a bookkeeper will provide an accountant with the trial balance, which is a consolidation of all the general ledger accounts, which the accountant uses to derive the Balance Sheet, Income Statement, and later the Statement of Cash Flows.
One way to think about it is that bookkeepers lay the groundwork for accountants to analyse and prepare financial statements. Bookkeepers use software to assist with the recording of transactions. Generally, they use built-in data processing tools to help in the preparation of the financial statements and preset transaction classification to improve transaction recording efficiency.
What is Bookkeeping?
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.
Knowing when you need a professional bookkeeper
Sometimes, the best decision you can make is calling it quits on something if it’s become too complicated or you’re struggling to manage it.
Some of us just can’t wrap our heads around the numbers.
In other cases, you mightn’t have the time to spend on bookkeeping between all the jobs you’ve been called out to.
Maybe you straight-up don’t want to do your bookkeeping and would prefer to spend more time with your family!
In these cases, the best decision you can make is to hire a professional Melbourne bookkeeper to look after your finances.
Maximum Business Solutions are bookkeepers in Melbourne who can take care of all aspects of your business’ bookkeeping. That includes:
- Payroll solutions
- Invoicing and debt collection
- Balance sheets
- Cloud software implementation
- Audit preparation
- BAS and IAS statements
These are just some of the services your Melbourne bookkeeper can offer you. Ask your bookie about a tailored package that accounts for what you need to be done and how much (or little) of your bookkeeping you’d like to hand over.
Basic Accounting and Bookkeeping Skills
Accounting skills are the foundation for bookkeeping since you are maintaining the financial books for the business. You need to know your way around debits and credits. Any additional skills you can add will give your resume a boost.
- Accounts Payable
- Accounts Receivable
- Accrual Accounting
- Balance Sheets
- Bank Deposits
- Bank Reconciliation
- Debits and Credits
- Deferral Transactions
- Financial Statements
- General Ledger
- Inventory Transactions
- Nonprofit Accounting
- Journal Entries
Payroll Accounting Skills
If the business has even one employee, and that includes you, it has to deal with payroll bookkeeping and accounting. Employers will be looking for skills that include these.
- Benefits Calculation
- Bonuses and Commissions
- Depositing Payroll Taxes
- Payroll Journal Entries
- Payroll Tax Calculations
- Reporting Payroll Taxes
- Wage and Salary Calculation
Vendor and Customer Skills
Managing transactions and the flow of cash is a critical bookkeeping function.
- Customer Relations
- Monetary Exchange
- Vendor Relations
Computer and Technology Skills
As a bookkeeper, your technical skillset will almost always need to include familiarity or expertise with some form of computer software.
- Accounting Software
- Google Docs
- Less Accounting
- Microsoft Office
- Spreadsheets, Excel
- Tax Software
- Wave Accounting
- Zoho Books
Soft skills are often called people or interpersonal skills, but they’re more than that. They also include your “emotional intelligence” and your ability to understand situations and respond in a way that produces the best results.
- Attention to Detail
- Continuous Learning
- Critical Thinking
- Decision Making
- Detail Oriented
- Error Correction
- Finding Information
- Job Task Planning and Organising
- Oral Communication
- Problem Solving
- Significant Use of Memory
- Working With Others
- Written Communications
Hard Skills and Proficiency With Numbers
Hard skills are skills you can learn through study or skills that you can easily quantify. These are part of your technical skillset and demonstrate your ability to perform specific tasks.
- Math Level
- Record keeping
- Typing Speed (WPM)
- Using Calculators
- Using Adding Machines
Bookkeepers are essential for any business. 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.