What Does a Bookkeeper Do? Duties & More

As a bookkeeper, you oversee the first steps of the accounting cycle, while an accountant typically handles the last two. Bookkeepers manage a company’s financial accounts, ensuring they are accurate and easy to review. Their work plays an important role in the operation of a successful business, which can have very many transactions in a single day, let alone a week, month, fiscal quarter, or year. Accountants provide a higher level of financial analysis and planning. They may use the financial data bookkeepers generate to advise business owners on tax planning and budgeting. After you have a bookkeeping system in mind, the next step is to pick an accounting software.

Bookkeeper Skills

1. If your business deals with foreign currency, your bookkeeper has to maintain an accurate foreign currency account based on the current exchange rate.
2. Accountants help businesses understand the bigger picture of their financial situation.
3. Do you use accounting software that you connected to your bank account?
4. In addition, with proper payroll file updates, you can see how much you spend on salaries compared to how much the business earns from the work that they do.
5. Tracking your expenses is an essential part of managing your finances.

Managing both accounts payable and receivable is of the most essential bookkeeping duties and responsibilities. Both accountants and bookkeepers work to maintain accurate records of finances, and sometimes the terms are used interchangeably. Generally, bookkeepers focus on administrative tasks, such as completing payroll and recording incoming and outgoing finances. Accountants help businesses understand the bigger picture of their financial situation. Online bookkeeping services can align an organization’s resources properly by daily recording sales and purchase transactions. Without failing, bookkeepers have to record business transactions into the designated accounting software to know exact cash inflow and outflow numbers.

This can mean purchasing stock from a supplier, maintaining inventory records, and even managing orders. A bookkeeper must carefully record all the transactions that happen in a business. Their whole job is to basically keep accurate financial records and create accurate financial reports. Bookkeepers help business owners manage their finances by documenting transactions, paying and issuing invoices, generating reports, and recording accurate financial data. Bookkeepers can also deliver reports on your business’s financial standing.

Task #8. Budget Management and Allocation

As of 2021, approximately 1.7 million people worked as bookkeeping, accounting, or auditing clerks. The BLS expects the field to have a 5 percent decline in growth from 2021 to 2031. Still, you should see 197,600 job openings each year over the next decade 3. While bookkeepers can sit for the CB exam sections in any order, AIPB recommends taking part one before scheduling part two.

You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions. Debits and credits refer to values coming into and out of an account, respectively. Balancing a ledger refers to the act of making sure the total debits and credits equal the same amount or cancel out to zero.

Back Up Data

In researching bookkeeping or bookkeeping accounting, you may come across information on accounting or find that bookkeeping and accounting are used interchangeably. While there is some overlap between bookkeeping and accounting, several factors distinguish these processes, as we explore in the table below. Bookkeepers are important professionals in today’s economic and financial fields. Every company, even a small one, requires bookkeeping to maintain a healthy financial position. This type of account is designed for everyday use and allows businesses to make unlimited deposits and withdrawals. Typically, checking accounts also come with a debit card for easy access to funds.

Recording Bank Transactions

Depending on the organization’s size, keeping track of business expenses and reconciling business statements may be your responsibility. Typically, single irs 2018 form w entry bookkeeping is suitable for keeping track of cash, taxable income, and tax deductible expenses. Inventory is the stock of goods a business has on hand or in transit, waiting to be sold.

The skills needed to become a successful bookkeeper are often acquired through working in a career in the finance industry or even by balancing your personal budgets. Many bookkeepers hone and develop their expertise over time while others opt to complete seminars, read books or take online classes. If you use accounting software, you should also have that back up to a local drive or the cloud every month. In case of any kind of failure, redoing the books for a month-long period is not exceedingly difficult for a small business. Also, in case you make an error, you can restore the backup to retrieve deleted data or reenter data. Part of cash flow tracking is ensuring that there’s enough money to go around.

Tracking your AR, usually with an aging report, can help you avoid issues with collecting payments. Understanding your AR can also help you set efficient credit terms for your customers. On the contrary, clients might want to clarify some points mentioned in invoices or need more time to clear payment—they will contact the bookkeeper. Therefore, through call, email, or other communication modes, a bookkeeper should frequently communicate with colleagues and clients. At your request, QuickBooks will conduct a full evaluation of your bookkeeper’s work. Let’s explore what bookkeepers do, some of the benefits of bookkeeping, and your options for using a bookkeeper.