What Does A Bookkeeper Do For A Small Business?
Bookkeepers are tasked with the responsibility of giving an organisation accurate and up-to-date financial information. They are constantly monitoring the emotional state of the firm. Their findings are routinely distributed to the owners and managers of businesses in order to offer them assistance in decision-making.
On the other hand, some bookkeepers are involved in the process of formulating strategies.
Bookkeeping is simply one of the many responsibilities that modern bookkeepers may be responsible for.
Their responsibilities might range widely, depending on the kind of company for which they work.
In this blog post, we will be covering the following key points:
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Bookkeepers are equally as important as accountants when it comes to maintaining order in your business’s financial affairs. The distinction between a bookkeeper and an accountant can be summarised as follows: And how exactly might a bookkeeper assist you in the management of your company?
What is Bookkeeping?
The field of bookkeeping is rapidly expanding; it is a vocation that is demanding, fascinating, difficult, and most importantly, rewarding.
It is necessary to have an in-depth knowledge of the inner workings of a company in order to supply that company with precise data that will let it evaluate how well it is performing.
Outstanding professional opportunities are made available to men and women of all ages and from all walks of life in this sector.
Luca Pacioli, a Cistercian monk, is credited with inventing the fundamental technique of double-entry accounting. This system was developed more than 500 years ago. The fact that his method is still in use today and can be found everywhere in the world demonstrates that bookkeeping is a truly global profession.
The website of the Institute of Certified Bookkeepers (ICB) will provide information on how to become a member of the Institute as well as how to receive training to become a bookkeeper.
People who already have a certificate or who have been working as bookkeepers for a number of years but who now desire the support of a professional organisation to improve their career prospects may also find this to be helpful.
Bookkeeping in the modern era entails a great deal more than simply entering data and balancing the bank. When keeping books, one must consider both the requirements of the company and the steps that must be taken to achieve the desired outcome.
If you’re in the process of launching a new company, now is the time to get a handle on your financial records and accounting procedures.
When your company is doing well and you have a steady flow of income coming in, it will be to your advantage to have a firm plan in place for the bookkeeping tasks you need to complete.
As part of your responsibilities, you will need to check your invoices, document and keep track of any receipts, as well as keep tabs on your income and expenditures.
Here are five suggestions for proprietors of small businesses regarding bookkeeping.
Bookkeepers are accountable for the upkeep of a business or company’s financial records, the monitoring of transactions, the updating of statements, and the verification of accuracy. In addition, bookkeepers are tasked with the production of financial statements and other reports for management and other supervisors.
Bookkeepers are responsible for recording information from receipts, invoices, and bills through the use of accounting software, spreadsheets, and databases in order to make reports and compile data.
They will also frequently be assigned extra responsibilities, such as purchasing, payroll, and invoicing, and they may be required to deal with customers on occasion.
Bookkeepers are sometimes called upon to generate Business Activity Statements (BAS) and submit them to the relevant tax authorities in order to comply with legal requirements. This necessitates registration with the Tax Practitioners Board as a BAS Agent and will boost the career opportunities available to any and all bookkeepers.
What Do Bookkeepers Do?
The following are some of the responsibilities of a bookkeeper that will contribute to the efficient operation of your company:
Keeping track of daily transactions
The recording of day-to-day financial transactions is one of the responsibilities that fall under the purview of a bookkeeper.
Your bookkeeper will find this to be an extremely helpful tool if the accounting software you use incorporates daily automatic bank feeds into its functionality.
When the lines from your bank statement are fed into your accounting software, it is much simpler to monitor cash flow, and it also saves you time because it reduces the amount of data entering you need to do.
Your bookkeeper is responsible for managing all of your financial transactions. This includes entering them into the system in a timely and accurate manner, assigning them to the appropriate accounts in your accounting software, and producing weekly or monthly reports that provide helpful information on the performance of your business.
To verify that you are receiving the goods for which you have paid, it is imperative that each and every one of your company’s expenditures is recorded and then compared to any purchase orders and confirmations of delivery.
This function will be handled by your bookkeeper, who will also be responsible for entering any credit card and petty cash transactions into your accounting system.
They are also able to keep track of who is spending what and identify any possible instances of wasteful spending.
On any given day, your organisation is going to be responsible for making payments for necessary goods and services.
This might be anything from a power payment to an employee seeking reimbursement for the cost of gasoline incurred while travelling to a meeting.
Keeping tabs on these expenditures is essential because doing so is the only way to determine whether or not you are receiving value for the money spent.
Monitoring each of these day-to-day dealings can be a time- and labour-intensive endeavour due to the volume of information that needs to be analysed.
According to a survey conducted by Constant Contact, forty per cent of owners of small businesses are unable to take vacations and forty per cent report that they are unable to spend as much time with their families and friends as they would like to.
The reason for this is due to the fact that you can only really get things done like tracking expenses on the weekends and at night because you don’t have any other time available.
When you hire a bookkeeper to handle this task, you won’t have to manually investigate every single dollar spent because you’ll already have all of the information you need at your fingertips.
Creating and sending out invoices, as well as keeping the ledger for accounts receivable
In most cases, the job of preparing bills and sending them out to customers falls on the bookkeeper. A bookkeeper’s responsibilities typically also include managing the accounts receivable ledger and pursuing overdue payments when necessary.
The process of collecting money owed by customers is an essential cash flow driver for any small firm.
A competent bookkeeper will see to it that invoices are paid out on time, will keep track of overdue payments, and will manage all cash that comes into the company. This function can frequently determine the success or failure of a small company.
Keeping track of the ledger for accounts payable
In most businesses, the bookkeepers are the ones who are authorised to make payments on behalf of the company up to a specified cash amount. This covers the payment of invoices for the company’s suppliers, as well as expenses and petty cash.
During the initial several months of a company’s existence, the majority of entrepreneurs are responsible for handling payroll alone. It is the only method to ensure that the finances are in order and that there is sufficient funding to support employee salaries.
When an organisation expands, it will most likely hire more staff members. Eventually, this causes the activity to become time-consuming and difficult to manage for a small business owner who already has a myriad of other responsibilities.
A bookkeeper is the one most qualified to handle all of the payroll-related issues. They are able to check timesheets, pay any required taxes, distribute any commission-based payments, and handle the payroll in the same manner that you would.
Additionally, because they will be monitoring the funds, they will be able to alert you to any problems with cash flow before the money is distributed.
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.
These days, the vast majority of internet accounting software solutions link directly to corporate bank accounts.
Your bookkeeper has the ability to instantly download banking information into your accounting system, where it may then be used to record payments and receipts.
It is essential to ensure that all of your business’s financial dealings are properly recorded, and the best way to do this is to reconcile your bank transactions with your accounting software.
Keeping a close check on the flow of cash
Making certain that the business has sufficient funds for its day-to-day operations is one of the bookkeeper’s most critical responsibilities. They are able to accomplish this by carefully monitoring the proportion of income to expenditures.
Then, if it appears that the company requires additional quick cash, it will be able to take action or offer recommendations.
The use of petty cash helps to ensure that smaller firms always have enough cash on hand to deal with any unexpected expenses that may crop up.
In addition to this, it can provide funding for any little purchases that you or your staff may need to make on a daily basis.
It is essential, just like it is with the other accounts, to keep tabs on how much of the petty cash is used and for what. In most cases, having the accountant take care of this in addition to their other responsibilities makes the most sense.
They are able to keep track of expenditures, replace petty cash when it runs low, and monitor spending to ensure that no one is going beyond expenses such as birthday cakes or client lunches.
In the event that you are still interested in learning about cash transactions, you can always request that the bookkeeper get your permission before disbursing any petty cash.
Getting the books ready for the accountant to look over
It is the responsibility of the bookkeeper to guarantee that the accounting records, when requested by the accountant, are accurate and up to date. Because of this, the accountant is able to put their talents and experience to use by providing recommendations to the board of directors, completing tax returns for the company, and making business recommendations.
Your bookkeeper has to be a registered BAS Agent, which indicates that they are able to produce your BAS in accordance with the rules established by the ATO. They will also be able to handle the preparation of any documents and payments pertaining to payroll taxes and superannuation. They will be able to accomplish this for you if you have any business loans or any other sections of your financial situation that demand regular reports.
As was said at the very beginning of the piece, there was once a period when any and all financial transactions had to be recorded in a book.
In today’s world, everything is input into some sort of computer programme. In point of fact, this activity is monotonous and consists of manual labour, both of which are things that many proprietors of small businesses will put off for months.
Not only must this be done on a consistent basis, but it also needs to be carried out by an individual who is proficient in making use of the software.
Your financial information could be thrown off-kilter, and it could take hours or even days to identify and remedy the issue if one of your payments is recorded improperly or if one of your expenses is forgotten.
Bookkeepers are skilled in the process of inputting this data, and while errors can still occur, they are also able to discover them much more quickly than you will be able to do so. If you keep putting off inputting all of these statistics, you could end up wasting an entire weekend doing it; but, if you have a bookkeeper who does this on a regular basis, you won’t have to.
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.
In a nutshell, the bookkeeper is the one who is responsible for the day-to-day job, while the accountant is the one who is responsible for the strategic financial operations. Therefore, bookkeepers play a crucial part because accountants are unable to conduct their jobs properly in the absence of bookkeepers.
Let’s start by debunking a common misconception about the role of a bookkeeper so that you may obtain a better understanding of what they perform.
They do not actually store books; a librarian is responsible for that function in the organisation. They do this instead by maintaining financial records.
Certainly, all of these entries were originally kept in some enormous ledger in the shape of a book at one point in time. On the other hand, the majority of this information is now kept in digital form. For the sake of tradition, we continue to refer to them as bookkeepers even though they do not really operate with physical books.
These days, in order to get the task done, they employ computer programmes developed by firms like Reckon. And even while you might not be familiar with the specifics of what they do, it’s likely that you’ve heard of them.
So, what does a Bookkeeper do? One of the easiest ways to explain what a bookkeeper does for a small business is as a supervisor of the company’s finances. They will be responsible for recording all of the company’s financial transactions and ensuring that the numbers add up correctly. If you decide to hire one, the following is what you should anticipate happening.
Responsibilities Of A Bookkeeper
Bookkeepers are tasked with the responsibility of delivering precise and up-to-date financial information regarding an organisation. They are always monitoring the temperature of a company.
The majority of the time, their findings are sent to the owners and managers of the companies so that they may assist them in decision-making. However, some bookkeepers are genuinely involved in the process of formulating business strategies.
It’s possible that bookkeepers and accountants will collaborate on specific projects from time to time, such as the compilation of yearly financial reports and tax returns.
Try Not to Go At It Alone
You should be able to have a better idea of how much labour is involved in being a bookkeeper now that you know the answer to the question “what does a bookkeeper do?” When it comes to tightening their belts, small businesses absolutely must be on the lookout and alert these days.
Although other employees at your firm might not be overly concerned with the day-to-day economics of the business, the bookkeeper’s only focus is on these matters.
It is currently more important than it has ever been before to effectively manage one’s financial situation due to the current state of the economy.
According to the research of the business services company Dun & Bradstreet, the number of companies that ceased operations permanently and permanently closed their doors in Australia increased by more than 15,000 in just the third quarter of 2016.
“I’m not surprised at all by the high incidence of failure since in order to thrive, you need money, resources, and consumers. Imagine for a moment that you have ran out of any one of them. When confronted with the data regarding the failure of businesses, Karen Lawson, CEO of the corporate start-up accelerator Slingshot, stated to the Sydney Morning Herald that in such a scenario, it would be over.
Having a bookkeeper work for you will ensure that you have an accurate understanding of the financial condition of your company, allowing you to concentrate on bringing in new customers and keeping the ones you have.
Some proprietors of businesses incorrectly believe it is a waste of money to pay for a bookkeeper to keep their financial records. However, if you hire a competent one, you will discover that they have paid for themselves in just a few short months after they have started working for you.
The tasks of preserving financial records, which you despise doing, will no longer require you to spend numerous hours on them. Instead, a trained expert will carry out all of these tasks on your behalf and report back with the relevant information.
Instead of typing figures into a computer and keeping track of spending, you may direct your attention to building your company.
After hiring a bookkeeper, there is a chance, albeit a slim one, that you will, at last, be able to go on the vacation you’ve been daydreaming about.
Do you need help with your bookkeeping? Bookkept is a trusted accounting and bookkeeping company in Australia. We perform cheap and quick tax returns for individuals. You can give us a call on (03) 8568 3606 or email us on [email protected].
How Do You Determine Who Will Be the Best Person to Work With?
After determining whether you need a bookkeeper or an accountant for your company, the next step is to locate the professional who is best suited to meet your needs.
Depending on the specific services that they provide for you, both bookkeepers and accountants are required to be registered as either tax agents or advisors. You are able to verify their registration by visiting the Tax Practitioners Board.
Additionally, investigate whether or not they are members of any pertinent professional associations in the field. In order to keep their level of expertise and knowledge at a high level throughout their careers, many accountants will choose to become members of a professional body that mandates they participate in ongoing training and professional development activities on an annual basis.
Think about if you would benefit more from hiring a bookkeeper or an accountant who has experience in your particular field. You should at the very least make an effort to locate financial professionals that have prior experience working with companies that are comparable to your own.
Also, keep in mind that different types of accountants specialise in different areas. Some of them are tax accountants, while others are more focused on providing strategic counsel for businesses.
Before you decide to hire an accountant or bookkeeper, you should make sure you see them in person or at least have a conversation with them to get a sense of whether or not they are someone you are compatible with and with whom you would feel at ease working.
Finally, you should enquire as to the prefered method of communication with them. If you have a query, are they glad to receive a fast spontaneous phone call, or do they prefer to arrange meetings – and then evaluate how this would fit in with the way you like to work? Are they happy to receive a quick impromptu phone call?
Bookkeepers And Accountants Are Not The Same
As the owner of a small business, you are probably used to juggling a number of different responsibilities at once. It would be helpful if you created income, ensured that your clients were satisfied, and looked after financial information, in addition to keeping things moving smoothly.
However, keeping tabs on the finances can be a time-consuming effort, and one of the most important considerations you may have is who you should choose to assist you with your accounting needs. Do you require the services of a bookkeeper, an accountant, or both? Let’s take the mystery out of this.
The duties and responsibilities of bookkeepers and accountants are not interchangeable. The primary concerns of an accountant are:
- preparing and filing statutory returns
- advising on legal entity structures
- providing general business and financial advice
- preparing and filing statutory returns
Most accounting firms need their employees to be members of a professional association. Depending on the nation in which they are employed, qualified and registered accountants may refer to themselves as CPAs (Certified Public Accountants), CAs (Chartered Accountants), or other titles.
Bookkeepers are capable of juggling a wide variety of tasks and duties within a small company. However, the organisation, recording, and reporting of financial transactions as an integral part of the daily operations of a small firm are the primary focuses of this topic. Some bookkeepers have expanded their range of responsibilities in recent years to include the following tasks:
- training clients to use accounting software implementation of document management and inventory
- control processes to create efficiencies within the business implementation of POS (point of sale) systems
- capture the daily transactions in a retail setting training clients
- use accounting software implementation of POS systems that capture the daily transactions in a retail setting
Processes should be developed, implemented, maintained, and reviewed inside the company.
You will frequently find that a bookkeeper has a particular area of expertise, and it is a fantastic idea to enquire further about this when you are thinking about employing them for services when you are trying to hire them.
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