Bookkeeper Job Description: What Is Bookkeeping?

When you’re looking at bookkeeping vs. accounting, the one thing that separates the two is the end goal of the process. These traditional bookkeepers would help a small business manage their finances through bookkeeping software set up on one of your company computers. If they needed to, they would take a copy of the software file back to their office to work on and then return it to your office to copy your records. It is a financial report that tracks incoming and outgoing cash in your business. It allows you (and investors) to understand how well your company handles debt and expenses. By summarizing this data, you can see if you are making enough cash to run a sustainable, profitable business.

• According to the Bureau of Labor Statistics, bookkeepers are responsible for keeping track of accounts and recording all of a business’ transactions.
• In the same way, software like Quickbooks can help you record your financial data digitally but it can’t take the place of a professional bookkeeper.
• It is possible for a small business owner to do this him or herself, but chances are you don’t have time to keep an eye on this 24/7.
• In the past, business owners in this situation would be forced to hire a traditional bookkeeper who would do the work in person, at their office, and charge a substantial fee for basic services.

There are also a number of reliable online bookkeepers that can be a benefit to your business at a reasonable cost. At minimum, accurate and up-to-date bookkeeping reveals whether their small business is turning a profit, and, ideally, it helps them make informed decisions about their business’s future. Botkeeper, for example, provides bookkeeping software that is tailored to meet your organization’s needs, so you don’t have to worry about training and monitoring your staff to do it your way. Bookkeepers are responsible for setting aside money for planned expenditures like scheduled purchases, monthly office rent, and corporation tax. They also process payroll, ensuring all employees are paid accurately and on time. During tax season, they calculate and prepare tax payments while also calculating interest and investments.

The cash flow statement

For example, if your company is growing rapidly, you could benefit from going beyond just the basic financial statements to include cash flow analysis, projections, and planning. You might need to optimize your tax deductions so you can reduce your tax liability. You might need to know when would be the time to invest in your business.

The most common report in QuickBooks is the profit and loss report, which will first list all the income coming in, next all the expenses going out, and lastly the business owner’s net profit. For a fairly reasonable rate, you can get a payroll company to do that portion of the work, and what you would do as the bookkeeper, is communicate with the payroll company and tell them the hours worked for each employee. From there, you will get a report form the payroll company that tells you how to enter the information into QuickBooks.

Viewing Situations in Their Entirety – The Skills of a Good Bookkeeper

Even if your business has the very best in accounting software, payroll can still cause issues. It is important to remember, something as simple as paying an employee wrong can spell absolute disaster for a company. We’ve mentioned bookkeepers prepare documents and files for your accountant, and maybe now you’re wondering what the difference is between bookkeeping and accounting. Your business needs to have accurate reports of your financial data in order for it to run effectively and grow.

The bookkeeper brings the books to the trial balance stage, from which an accountant may prepare financial reports for the organisation, such as the income statement and balance sheet. Transactions include purchases, sales, receipts and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, including the single-entry and double-entry bookkeeping systems.

What is a Bookkeeper? Jobs, Skills, Salary & Career Path

That way,  you can take advantage of all your write-offs come tax time. Management accounts are meant to help owners or managers of a business make decisions using financial data. A bookkeeper can also consult with an accountant Running Law Firm Bookkeeping: Consider the Industry Specifics in the Detailed Guide on your behalf to ensure you’re not missing any tax deadlines. A cash flow statement provides an overview of all your cash transactions. This can help forecast future cash flow conditions so you can plan for, say, a dry month.

However, when it gets to a point of taking over too many hours you could otherwise dedicate to strategic plans and relationship-building, you can start to actually save money by hiring someone to do this for you. 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.

Your company needs to settle on a bookkeeping strategy before you even begin keeping financial records. Consider your company’s daily transactions and the total revenue it brings in. If you run a small business, you might have trouble with a complicated bookkeeping system that was made for bigger companies. On the other hand, more rigorous bookkeeping approaches are needed for large corporations. Consider what can happen if a small business owner uses Quickbooks or other accounting software to manage their books but they do it incorrectly. In the end, they will end up paying an accountant a lot of money to fix the mistakes that were made.

Accountants on the other hand, go through rigorous training and standardized exams to become certified public accountants. Bookkeepers offer a literal look at where you stand financially at the moment. Accountants take that financial data and help you see the bigger picture and the path your business is on. Rapid advances in technology, especially artificial intelligence, have made it possible for computers to undertake human tasks and do them with more accuracy and within seconds! At Botkeeper, the emphasis lies in maximizing the benefits of artificial intelligence so that bookkeeping is entirely automated. Bookkeeping is quite comprehensive, but this overview gives a categorical look at some of the primary bookkeeping responsibilities.