What Does a Bookkeeper Do?

Many small business owners ask what a bookkeeper does and the value that bookkeepers provide. Bookkeeping is the recordation of a business’s financial transactions. Basic bookkeeping includes:

1. Data entry – Recording transactions that occurred in an accounting system.
2. Reconciliations – Comparing what was recorded in the books to a source document (e.g., a bank, credit card or loan statement).
3. Reporting – Generation of reports that categorize and summarize all that has been recorded. 

Advanced bookkeeping includes:

• Accounts Receivable Management – Issuing invoices to customers and following up with customers about past due balances.
• Accounts Payable Management – Ensuring that vendor bills are entered accurately and paid in a timely manner. It can also include the collection W-9s from vendors/contractors and the issuance of 1099s to vendors/contractors.
• Payroll – The calculation and issuance of payroll to employees.
• File and pay taxes – This includes payroll taxes, sales taxes, use taxes and income taxes.
• Budgeting – Assist with the creation and monitoring of a budget.

Why Do I Need a Bookkeeper?

An accurate record of business transactions allows you to see how your business is performing and make business decisions based on that information. Is your business profitable? Are you pricing your services or products high enough? Does one customer or client make up a significant share of your revenue? Where has all of your cash gone? These are some of the questions that accurate bookkeeping helps to answer.

What’s the Difference Between a Bookkeeper and an Accountant?

Accountants can do everything that a bookkeeper does, plus:

• Examine financial reports to make sure that transactions were recorded properly.
• Suggest accounting best practices, process improvements and technology.
• Suggest ways to cut costs, increase revenues and increase profits.
• Assist with cash flow management by projecting cash inflows and outflows over a period time so that financial decisions can be made.
• Ensure regulatory compliance in the company’s accounting practices.

Certified Public Accountants (CPAs) can do everything that a bookkeeper and accountant does plus:

• Prepare audited financial statements
• Act as a representative for a taxpayer or company in discussion with IRS Revenue Officers or Counsel.

Bookkeepers, accountants and CPAs all provide valuable services. Their level of experience and preferred practice area(s) will determine the specific services that they offer. Start by assessing your business needs and reach out to one or more of these professionals to inquire about their service offerings.

Disclaimer: This article has been provided for informational purposes only. Please consult your own professional advisor(s) for advice directly relating to your business or before taking action in relation to any of the provided content.