There is a certain common denominator of all businesses - whether it is a small business working out of your home or a large firm in an office: you earn money and you spend that money. Your bookkeeper comes into play to help you keep track of your income and expenses.
Now, you might ask yourself 'what does a bookkeeper do?'
If all your talent, time, energy, and focus have been targeted on getting your business off the ground; you might not yet fully understand what a bookkeeper does, or the advantages of having a bookkeeper assisting you through that tedious process. The following information may be useful to you and enlightening as to what the day-to-day role of a bookkeeper looks like; as well as why a good bookkeeper is worth the investment to retain.
What is a bookkeeper?
The role of a bookkeeper, a ledger keeper, or an accountant dates back to as early as 2600 BC. A bookkeeper is a person who has the training, intelligence, passion, tech-savvy, and skills for managing accounts, balancing budgets, and working with numbers. A bookkeeper is able to accurately record receipts, document daily financial transactions, create balance sheets for profit and loss, and advise on spending habits and saving strategies.
Bookkeepers vs accountants
Many consider bookkeepers and accountants to be one and the same. However, there are some financial tasks that accountants are better equipped for than a bookkeeper.
Bookkeepers are responsible for recording daily transactions. Whereas accountants use the information compiled by the bookkeeper to produce financial reports. Bookkeeping is straightforward in processing transactions. The role of an accountant is more subjective and calls for skilled interpretation. An accountant will have the ability to review entity structure, assess financials, advise on when it is time to incorporate your business or file your taxes for the best return possible.
Bookkeepers create a clear snapshot of where you stand financially. Accountants take your financial data and analyze that data to help you see the bigger picture; while also navigating the financial trajectory of your business and guiding you on the path that is most beneficial to you.
Bookkeepers and Accounts each undergo rigorous training, standardized exams, software classes, certification exams, and more to ensure that you will receive the best support possible.
What DOES my Bookkeeper do exactly?
The responsibilities of a bookkeeper include but are not often limited to, data entry, communications, receipt requests, recording financial transactions, and more. Much of what a bookkeeper does is tedious, time-consuming work.
Bookkeeping is more than just dropping numbers into a spreadsheet or accounting software program; it requires meticulous analysis, legal know-how, and attention to detail. It is that attention to detail from your bookkeeper that will help you survive an audit by making sure your financial records are in order and your deductions are legal.
Anyone who has tried to navigate and manage the income and expenses of their own business knows that bookkeepers deserve some serious respect.
In simple terms, here are some of the tasks your bookkeeper is responsible for:
Income statement - (also called a profit & loss statement), which shows your revenue and your expenses over a specified time period.
Balance sheet - a snapshot of your financial position at one point in time.
Cash flow statement - a record of the cash and cash-like equivalents entering and leaving your company.
Statement of changes in equity - (also called a statement of retained earnings) shows how your share of capital, reserves, and retained earnings have changed in a reporting period.
Some other important bookkeeping tasks that help your business run like a well-oiled machine are:
Manage accounts receivable and accounts payable (make sure you get paid on time, and pay your bills on time),
Post debits and credits
Collect and remit sales tax to the government,
Monitor debt levels and apply the payment to any debt as it comes up for payment,
Record incoming cash and deposit at the bank,
Handle bank reconciliations every month,
Equip your CPA with accurate financial statements at tax time,
Maintain your annual budget,
Report on issues and variances when they pop up,
and Process payroll.
Your bookkeeper can also assist with some of the pre-tax preparation so that your accountant can focus more on what matters, and spend less time doing the small stuff (which is a good thing, because bookkeepers are less expensive than an accountant). However, a bookkeeper won’t be able to help you with tax planning, or preparing, and filing your tax returns.
The benefits of having a bookkeeper for your small business:
Why do you need a bookkeeper? If you have a top-notch bookkeeper, you will reap some of the following benefits:
Better budgeting decisions; you will know exactly where your money is going.
Peace of mind knowing your books are in order meaning tax filing won’t be a scramble.
Audit-proof business with detailed documentation required by the IRS.
More hours in your day to focus on your business.
Understand the seasonal flow of your business.
Understand the key metrics of your financial health: revenue, costs, profitability, etc.
Strategic Financial Reporting Inc offers bookkeeping services, tax consultations, and accounting services. Book your appointment today with one of our knowledgeable and high-quality accountants by clicking the following link: Book An Appointment.