Maintaining records of your financial transactions is always incredibly important in any business. It is thus imperative to have someone reliable and efficient to manage this function. This is where the skills and expertise of a bookkeeper come to good use. So, let’s dive deep and find out exactly what a bookkeeper does.
Who is a Bookkeeper?
A bookkeeper, in essence, is a person who takes care of all the work related to accounts and finances in a company. They track the transactions and ensure all the records are accurate, complete, and properly maintained. The records that the bookkeeper prepares enables the CEO to manage their finances effectively.
What does a Bookkeeper do?
Like many essential positions, the role of a bookkeeper is integral in ensuring that the company is performing to its highest capacity.
Some of the key jobs that a bookkeeper performs are:
1) Data Entry
Data entry is one of the primary duties of a bookkeeper and is achieved mainlyusing a computer software. The bookkeeper records details of all financial transactions in the general ledger using double-entry bookkeeping and is expected to have enough legal knowledge to understand where to enter each number and transaction.. The computer programs also allow the bookkeeper to showcase their reports using spreadsheets and info charts.
2) Preparing Reports
Reports and statements need to be prepared daily by the bookkeeper. These reports are required by the management to understand the financial position of the company as well as its performance among the competition. This helps them in making more profitable financial decisions that lead to more opportunities and ensure steady growth of the business. The key financial statements that a bookkeeper prepares include the profit and loss statement, balance sheet, and cash flow statement.
Payroll refers to the payment of salaries for employees, which is an incredibly important task and requires a lot of attention. The bookkeeper computes the salaries keeping in mind the allowances that need to be paid, the deductions that need to be made, etc. Depending upon the company’s policies, the bookkeeper may also need to prepare paychecks to be handed out to each employee individually.
4) Liaison Activities
The bookkeeper needs to liaise with other employees managing the accounts of the company. Companies usually have an accountant or a CPA in charge of handling its finances. The bookkeeper would need to have a good relationship with those employees and provide them the data needed on a regular basis.
Bookkeepers may also need to liaise with the tax authorities in case of any last-minute tax issues. Liaising with clients may also be necessary to handle queries, or discuss any issues related to bills or pending payments.
Budgeting is also one of the important duties of a bookkeeper that needs to be fulfilled, especially if they’re working in a small company that doesn’t have a CFO or a financial controller to prepare the budget for them.
A bookkeeper’s holistic knowledge and expertise allow them to perform this task efficiently. The budget will include the company’s estimated revenue, fixed and variable costs, cash flow, and the profit that it is earning. Apart from the budget, bookkeepers can also prepare business forecasts to further increase their knowledge of the market and advise the company on strategic expansions and growth.
6) Ensure Accuracy
Bookkeepers are given an important responsibility of ensuring all the financial data is always accurate and up to date. In case they find any problems or discrepancies in the records, they need to highlight and report them to the authorities, whether it’s their supervisor or the CEO of the company. Doing this will ensure any and all problems are rectified, and the data presented is precise and dependable.
7) Managing Software
There was a time when companies would fulfill their bookkeeping responsibilities manually, which used to be very cumbersome. Thanks to the numerous software programs available online, bookkeeping work has now turned to be much easier, quicker, and accurate. The bookkeeper will identify the correct software to be used by the company, procure and use it to increase efficiency and productivity.
8) Ensure Compliance with Norms
Ensuring compliance with norms is one of the many responsibilities of a bookkeeper. . Norms that are defined by statutory and regulatory bodies need to be followed rigorously, as non-compliance can incite necessary legal action against the company. Therefore, what a bookkeeper does is be always vigilant of important reports and file returns on time as required by the law. They also need to ensure that taxes are calculated and remitted to the proper authorities before their deadlines.
9) Manage Accounts Payable
One of the most essential duties of a bookkeeper is to manage the accounts payable, which represents payments to be made by the company. Verifying invoices sent by suppliers, making payments, updating records, handling petty cash are some of the responsibilities that a bookkeeper needs to pay attention to.
10) Manage Accounts Receivable
Accounts receivable involves the money expected to be received by the company. The bookkeeper needs to prepare invoices for the customers and send them on time. They also need to maintain records by updating the accounts ledger with the receipts of the payments received by the customers.
In small companies, a bookkeeper’s duties also include taking stock of the inventory. This will ensure that accurate inventory reports are prepared, and any and all discrepancies are as quickly resolved as they are identified.
12) Bank Reconciliation
One of the major duties of a bookkeeper is to reconcile the accounts of the business with statements received from the bank. This ensures accuracy in the records and is also helpful in finding out mistakes or uncovering potential instances of fraud. Using relevant software programs, bank reconciliation is made sufficiently easier for the bookkeeper.
Using A Bookkeeper’s Services
Now that you have a proper understanding of what does a bookkeeper do and how vital this job is for the company’s growth, you wouldn’t wait any longer to have a competent professional take up this job.
While you are considering hiring the services of a bookkeeper, you have two options available: Hire a full-time accounts and bookkeeping employee or outsource the work to a professional bookkeeping and accounting services firm. The latter is more cost-effective and offers better results. Nevertheless, whichever option you opt for, you need to ensure you’re hiring a reliable professional who can help not only manage your accounts properly, but who will constantly offer financial advice and insights, and enable you to make future business decisions.
See Also: How Much Do Bookkeepers Charge?
At Monily, we have a team of expert bookkeepers who are ready to help you maintain your books. Talk to one of our experts and find out how our bookkeeping services can help fulfill the unique needs of your business.