What does a bookkeeper do and why do I need one?
In this article, we are going to take a look at precisely what a bookkeeper does. Firstly, we should state that they do not keep books; instead, they keep a tight hold on financial records. At some point in time, financial records were kept in a huge book-like ledger, and this is where the name originated, but this is no longer the case. As you can imagine, most financial information is now stored via a digital medium which is where cloud-accounting comes into play. Bookkeepers are now using computer software such as QuickBooks and Xero to deal with their daily tasks. While you possibly don’t fully understand what a bookkeeper does, it is a surety that you would have heard of them.
So, this article is going to take a look at exactly what a bookkeeper does. We will examine the importance of their role as the financial gatekeeper of a company’s finances, and then show exactly why a bookkeeper is so crucial to every business.
Bookkeeper Vs. Accountant
There is still much confusion today in regards to bookkeepers and accountants, and some people even accuse the two of being one and the same. Fortunately, this is not the case. Put simply, an accountant’s job is to analyze data and reports. A bookkeeper is, however, in charge of the entirety of an organization’s accounts. A bookkeeper will make a record of all transactions; this is known as the general ledger. A bookkeeper produces financial statements and a plethora of other reports for managers and supervisors.
Bookkeepers Keep A Company Legal
The primary duty of the bookkeeper is to keep your business on the right side of the law. Having bookkeeping services on site is the best way to ensure you don’t get your fingers burnt by the local authorities. A bookkeeper will collect, maintain, and organize financial records and statements in preparation for an audit. While some small businesses try to do this task without the aid of a bookkeeper, it can actually be a challenging task.
Should your local authority come knocking at your door and your records are not up to scratch, there will be no excuse you can give that will be deemed reasonable. If this doesn’t show the importance of a bookkeeper to your business, nothing will.
Every day your business is in operation, there will be company outgoing in some way, shape, or form. These costs can range from the electricity bill to travel expenses. Having somebody who is on the ball and able to track these expenses is imperative. Tracking expenses thoroughly is the only way to ensure you are getting exactly what you are paying for. While this task may not seem laborious, it really is time-consuming and very labour-intensive. If you are a small business owner and you do not have the skills of a bookkeeper onside, then you may find you are spending your evenings and weekends taking care of these arduous tasks.
Tracking down all transactions that take place in your business can be more than just tricky. Hiring a bookkeeper to take care of these tasks is not only a benefit to your business, but it also benefits your life too.
Everybody Must Get Paid
As a business starts to grow, taking on the stress of payroll is something that becomes a heavy burden to a business owner or manager. While to your employees, payroll is as simple as pressing a button, anybody that has run payroll will know this is not the case. Even if your business has the very best in accounting software, payroll can still cause issues. It is important to remember, something as simple as paying an employee wrong can spell absolute disaster for a company.
When it comes to payroll, it will always be best to trust this service to a bookkeeper. Bookkeepers will carefully examine timesheets, pay taxes, and even allocate calculated commission. As the bookkeeper deals with the companies finances from top to bottom, if there happens to be a cash flow issue, this can be addressed quickly too.
Manage Petty Cash
While petty cash may seem like an old fashioned notion, it is still widely used the world over to take care of small business transactions. Petty cash can be quite crucial to small businesses as every company will have the need for an emergency purchase at some point. Much like the rest of the companies finances, petty cash must be monitored very closely. It makes sense for a bookkeeper to handle this as it fits along with their other duties.
A bookkeeper not only monitors the petty cash, but it is also their job to replenish it should it run low or require a boost. It is also a good idea to have the bookkeeper require the approval of a manager or yourself before any cash is disbursed.
As previously mentioned, there once was a time when all financial transactions were into a book. Of course, as we now sit comfortably in the age of technology, these statements are entered on to a computer. This level of number entry is very repetitive and labour-intensive, and if undertaken by a small business owner, it will be put off for a very long time.
Unfortunately, this is a task that cannot be put off and must be completed regularly. Not only does the task need to be done at regular intervals, but it also requires more skill than you may realize. As these numbers are now added into a computer system, a bookkeeper will generally have the skills required to operate the financial software. Just one small mistake in a complex system can throw the entire accounts of your company off, and it can sometimes take weeks to rectify the error.
Bookkeepers have a tremendous amount of skill when it comes to entering this data. While mistakes can, of course, still happen, a bookkeeper will be able to rectify them in a matter of moments. Finally, having a bookkeeper take care of these records will ensure they are always up to date.
Reconcile Your Accounts
Possibly one of the most important jobs your bookkeeper will do is the reconciliation of your bank accounts. As we have already seen, a bookkeeper will enter all of the business’s financial information into a computer system.
Account reconciliation works to match your digital accounting solution to the transaction details of your bank account statements and financial accounts. While the software you use can make an account reconciliation far easier than it used to be, it is vital to have the skills of a bookkeeper on your side still. In a world where the technology may be looking to rule, there is always a requirement for that human touch.
A Bookkeeper Is The Hero Every Business Needs
So, as you can see, a bookkeeper can be essential should you want a successful business. They also play a huge part in balancing your life as well as your books. It is more important than ever to have stability and properly managed finances, especially in the current climate. It is important to remember, for you and your team, the finances may play second fiddle. To the bookkeeper, however, they are the most important thing. Having a bookkeeper as part of your business will guarantee a firm hold of your business’s finances, and this will allow you to focus your attention elsewhere.