What Does a Bookkeeper Do?
Bookkeepers form an integral part of any finance team. The role of a bookkeeper is to keep tabs on all financial income and outgoings for a company or individual trader.
16th March 2023
Bookkeepers form an integral part of any finance team. The role of a bookkeeper is to keep tabs on all financial income and outgoings for a company or individual trader. A bookkeeper ensures company finances are all in order and play an essential role in making sure companies pass financial inspections and audits. But what does a bookkeeper do specifically? Let’s take a look in more detail.
Bookkeepers are often confused with accountants given the role they play in updating and maintaining the company books. However, accountants are far more involved in aspects such as company evaluations and can be responsible for setting budgets and making business decisions based on the company’s financial status.
What is bookkeeping?
Bookkeeping is the role given to someone in charge of keeping track of all company expenses and income. This makes it easier for a company to flag spending trends, make income projections, track overall financial performance, and generate budgets. Bookkeeping is also a vital part of the auditing process as it shows accountants that all transactions are accounted. Bookkeepers are therefore an integral part of the company.
The main responsibilities and duties of a bookkeeper
The bookkeeper is essentially in charge of keeping track of the company’s finances, however, this involves several tasks and administrative processes in order to maintain accurate financial reporting. The key responsibilities of a bookkeeper include:
- Generating sales invoices to send to customers
- Keeping track of incoming invoices and making sure they’re paid on time
- Paying invoices to suppliers and services
- Making sure all company transactions on bank statements are reconciled against invoices or receipts.
- Keeping track of staff expenses
- Generate reports including financial reports, balance sheets and income statements
An ideal financial system means all receipts showing company spend are given to the bookkeeper for organising, reconciling, and filing. Likewise, the bookkeeper must also keep track of accruals and forecast company spending on business expenses. This can be anything from the office air conditioner needing a service to office party expenses.
Examples of bookkeeping
Bookkeepers can operate in several capacities depending on the size of the organisation they are affiliated with or on a freelance basis. However, some companies also prefer to do their own bookkeeping without hiring someone to do the job exclusively. Here are some examples of bookkeeping and how they work.
Doing your own bookkeeping
If you run a small business it can be easy to keep tabs on your monthly spending and income. However, larger organisations should carefully consider the amount of time taken for bookkeeping and hire someone to do the job if it is more economically beneficial.
Hiring an in-house bookkeeper
In-house bookkeepers are perfect for larger organisations that typically need to keep track of many transactions. In this case, it’s better to have an in-house bookkeeper who has a dedicated role in making sure all transactions are accounted for.
Installing bookkeeping software
With the progression of modern technology, there has been a huge drive towards implementing software to assist with bookkeeping tasks. Companies can now link their bank statements and company transactions to this software, where the program will categorise transactions after making sure receipts and invoices are uploaded to match. Reconciling bank statements is useful for tax and also helps companies keep track of their spending. Having software to assist with this is a great option and can also work in conjunction with a bookkeeper.
Hiring a freelance bookkeeper
It’s not essential for a bookkeeper to be onsite or in the office. In fact, many companies hire bookkeepers on a contractual basis, especially if they are already making use of technological tools such as bookkeeping software. Remote bookkeepers require access to bank statements and have to receive all receipts and invoices from the company in order to keep track of them. Paying a contracted bookkeeper is a popular option for those who do not have the bandwidth to keep tabs on their business transactions.
The benefits of using a bookkeeper
Hiring a bookkeeper has several benefits for your business and your financial organisation. When everything is accounted for, it’s much easier to keep on top of your company spending, ensuring you are sticking to budgets and financial projections. Let’s take a closer look at some of the other benefits associated with using a bookkeeper.
Saves you time
Going through bank statements and keeping track of invoices and receipts can be incredibly time-consuming. When you have someone dedicated to doing this for you, it leaves you as a business executive to focus on more important income-generating tasks.
Ensures you are tax compliant
When all transactions are accounted for, it’s far easier to do your taxes and ensure you are tax compliant. Businesses whose books are up to date may also be in line for tax breaks and returns. This is far easier to determine when you hire a bookkeeper.
You are ready for auditing
In the event of a company financial audit, you won’t have to spend months preparing if you already have a bookkeeper doing their job. All transactions and expenses will be accounted for and the necessary reports generated when you hire a bookkeeper.
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