Whether you sell handmade alpaca socks, enterprise software, or legal advice, there are two things we can guarantee about your business: you earn money and you spend it. Bookkeepers are the ones who help you keep track of all that. Great, but what does a bookkeeper do?
If all your mental powers have been focused on getting your business off the ground, you might not yet fully understand what a bookkeeper does. In this guide we break down the day-to-day role of a bookkeeper, and why a good one is worth holding onto.
A bookkeeper is someone who prepares your accounts, documenting daily financial transactions. Bookkeepers have been around as far back as 2600 BC—when records were tracked with a stylus on slabs of clay—making bookkeeping not the oldest profession, but pretty darn close.
In colonial America, bookkeepers would record transactions in a "wastebook"—so called because the data would eventually find its way into an official ledger and the original book would go into the trash.
Today any bookkeeper worth their beans uses some kind of software platform to track finances. But like those old wastebook days, bookkeepers typically hand off their records to an accountant come tax time or when big decisions need to be made.
There are some financial tasks that bookkeepers aren't equipped for; that's where accountants come in. While bookkeepers record daily transactions, accountants use the information compiled by a bookkeeper to produce financial reports. Bookkeeping is straightforward and transactional, while accounting is more subjective and calls for skilled interpretation—like helping you understand when it's time to incorporate, or filing your taxes to get the best return possible.
Bookkeepers offer a literal look at where you stand financially at the moment. Accountants take that financial data and help you see the bigger picture and the path your business is on.
You don't need any special training to be a bookkeeper—you don't even need a bachelor's degree.
Accountants on the other hand, go through rigorous training and standardized exams to become certified public accountants.
The responsibilities of a bookkeeper include a fair bit of data entry and receipt wrangling. They're responsible for recording every financial transaction in your general ledger using double-entry bookkeeping—usually called recording journal entries. That sounds like a mouthful, but often that just looks like inputting all your transactions into accounting software.
That said, bookkeeping is more than just dropping numbers into a spreadsheet—it takes meticulous analysis and just enough legal know-how. After all, bookkeepers will help you survive an audit by making sure your financial records are in order and your deductions are legal. Plus, anyone who has tried to manage the income and expenses of their own business knows that bookkeepers deserve some serious respect.
Let's break it down further. Typically bookkeepers are responsible for preparing four key financial statements:
Some other important bookkeeping tasks that help your business run like a well-oiled machine:
They can also usually take care of some of the tax preparation so that your accountant has less to do (which is a good thing, because bookkeepers are less expensive than a CPA). But they won't be able to help you with tax planning or handling your tax return.
Why do you need a bookkeeper? If you have a top-notch bookkeeper, you'll reap some of the following benefits:
Depending on the stage of your small business, you may not need to hire a full-time professional bookkeeper. You can either get some bookkeeping software and learn how to do it yourself, or you can outsource your bookkeeping to a part-time, virtual bookkeeping service like Accracy.
If you opt for bookkeeping software—like Quickbooks—keep in mind the time commitment required to learn how to properly use the program. While these programs are cost effective, you are paying with your time. And at a certain point, your time is better spent building your business than navigating DIY tutorial videos.
If you choose to go the route of hiring a bookkeeper, congrats! You are on the road to financial clarity for your business. We recommend taking the time to find a bookkeeper you can trust a great deal.
Why is this important? Not only are you entrusting your bookkeeper with sensitive data, you are relying on their accuracy to maintain the financial records for your business. A good bookkeeper never cuts corners, and they are indispensable to small business owners who want to spend time growing their business, instead of maintaining it.
At Accracy, our bookkeepers take pride in providing professional, high quality service for their clients. Read some of our recent reviews and see what it could be like having Accracy on your books.
We are offering free 1 Month Basic Bookkeeping to all new customers so you can experience Accracy's seemless and professional services.
Once your filing is out of the way, you only face one more tax hurdle: Paying the IRS. You've got a few options, by credit, debit, e-file, and more.
When you learn how to do a basic cash flow analysis, you'll feel more confident about making business decisions.
Who doesn't want free money? Here's a big list of U.S. small business grants, and how to win them.
