What Is Bookkeeping? A Small-Business Guide

There are a couple of U.S. professional organizations that can certify those who want to become bookkeepers for small businesses. Taking the next step in maintaining your company’s records can seem daunting, but there are plenty of options available that will make it easier for you to stay focused on growing your business. Bookkeeping plays a vital role in your business operations, but how much do you know about the profession that makes mathematical magic? Let’s explore what bookkeepers do, examine some of the benefits of bookkeeping, and explore your options for using a bookkeeper.

Accountants will then use the updated trial balance to produce financial statements. A bookkeeper (also known as a bookkeeping clerk) is a professional who helps businesses and other organizations keep their finances in order. They manage general accounting ledgers, record journal entries (transactions), and generate financial statements. An accountant can certainly bookkeeper synonym perform bookkeeping tasks, but the title generally involves other responsibilities as well. An accountant may interpret the financial records put together by a bookkeeper to assess a company’s financial health. Becoming an accountant usually requires more training and education than bookkeeping but can be a good next step in your financial career.

Helps with tax compliance

The core function of a bookkeeper is to ensure that all bills are paid on time, transactions are recorded correctly, payroll runs on time and taxes are filed correctly. So if you’re looking to hire a bookkeeper, it is essential to create a bookkeeper job description that fills your recruitment funnel with ideal candidates as quickly as possible. If you need an extra hand, you can also work with a team of QuickBooks-certified bookkeepers to help you manage and maintain your books virtually. They can help you keep past books up-to-date and take everyday bookkeeping tasks off your plate so you can focus on your business. Bookkeepers can benefit your business by freeing up more time in your schedule, minimizing financial errors, and generating accurate financial reports.

The following analysis compares the education requirements, skills required, typical starting salaries, and job outlooks for accounting and bookkeepers. Bookkeeping is an accounting process of recording and maintaining accurate records of your company’s financial transactions. This information can help you make informed decisions about your business operations, investment opportunities, and other financial decisions.

What does a bookkeeper do?

For example, a bookkeeper may be required to learn a specific accounting software system or participate in certain meetings. Keep in mind that in most cases, you can edit the chart of accounts to better suit your business. It’s also a good idea to become familiar with the accounts included in your chart of accounts, which will make it much easier when you begin to enter financial transactions. This guide is designed to simplify the bookkeeping process for you, providing you with the basics from proper setup of all of your accounts to why it’s important to record transactions promptly. You know what a bookkeeper does and what their day-to-day responsibilities look like. Great bookkeeping goes beyond refined recordkeeping and balanced books.

In all cases, make sure to specify your type of bookkeeping skills and match them with the job description. However, you want to at least include education, experience and licensing requirements in your job description. Reconciling provides you with an accurate cash balance, which can be particularly important to smaller businesses with limited cash flow.

Bookkeeper Skills

In the broadest sense, bookkeepers help businesses keep their finances intact by keeping tabs on different accounts, transactions, and reports. They organize, collect, and store the business’s financial records, including cash flow statements, bank reconciliations, and loss statements. Bookkeepers make it possible for business owners and accountants to build budgets, identify trends, and plan for the future. Bookkeeping focuses on managing financial books by documenting transactions, managing accounts, and recording financial data. A bookkeeper is responsible for recording daily financial transactions, updating a general ledger and preparing trial balances for perusal by accountants. They monitor cash flow and produce financial reports to assist managers in taking strategic decisions.

While there are a myriad of courses available for bookkeeper education and training, a good deal of bookkeepers are self-taught since there are no required certifications needed to work as one. 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 https://www.bookstime.com/ hone and develop their expertise over time while others opt to complete seminars, read books or take online classes. Not only can this help you set goals, but it can also help you identify problems in your business. With an accurate record of all transactions, you can easily discover any discrepancies between financial statements and what’s been recorded.

An example of an expense account is Salaries and Wages or Selling and Administrative expenses. If you are going to offer your customers credit or if you are going to request credit from your suppliers, then you have to use an accrual accounting system. Julia is a writer in New York and started covering tech and business during the pandemic. Accountants are largely responsible for the financial health of a business. If they notice expenses are going over budget or under budget, they can look into what’s causing this discrepancy and make recommendations to resolve these problems. Bookkeepers need a strong grasp of all financial details in the company so they know if there are any inconsistencies.