It’s not uncommon for the owner of a small business to assume the responsibility of tracking transactions or handling billing on their own. At the time, a bookkeeper may not seem crucial to keeping the business running. But in truth, a dedicated and experienced bookkeeper performs key functions that can add exponential value to your company, especially as it grows.
What does a bookkeeper do?
A bookkeeper plays a lead role in organizing daily financial processes, producing important financial statements and presenting data for future uses like budgeting or fundraising. They may also provide the foundation for a more robust finance team once strategic analysis and forecasting become a priority.
Learn about a bookkeeper’s job description and how you can find the appropriate bookkeeping professional for your business needs.
Bookkeepers are Not Accountants
Although bookkeeping and accounting professionals work in tandem, the two professions carry separate credentials and approach a business’s finances in different ways.
Bookkeepers prepare information. Accountants interpret that information. Bookkeepers, for example, help manage your day-to-day finances. That can include billing and invoicing or creating financial statements. Accountants, on the other hand, examine and review those financial reports, give guidance on tax questions and provide direction and leadership over daily financial operations.
Unlike CPAs (Certified Public Accountants), bookkeepers don’t require a license to perform their duties. They can, however, obtain optional certifications to set their expertise apart from their peers. For example, a bookkeeper can test to become a Certified Public Bookkeeper (CPB) through the National Association of Certified Public Bookkeepers, or they can obtain additional certifications for specialized areas (e.g., payroll) or specific software (e.g., Quickbooks).
A vetted bookkeeper with proven qualifications and experience can help you run a smoother operation and be a positive asset for higher-level finance professionals who require precise, organized data to make their judgments.
What Does a Bookkeeper Do? Duties & Responsibilities
That’s a high level overview, but when it comes to a day in the life, what does a bookkeeper do to bring your business to the next level?
There are many myths about bookkeeping, but one thing is clear: it’s not just data entry.
A competent bookkeeper should be able to:
- Maintain the general ledger and record all accounting data (i.e., track and record both incoming debits and outgoing credits on all of your accounts).
- Perform reconciliations and manage discrepancies between your books and the monthly balances from your financial institutions.
- Process payments to vendors, financial institutions, etc. and manage accounts payable (AP).
- Process invoices to customers and manage accounts receivable (AR).
- Track and maintain inventory records.
- Stay up-to-date with professional software in order to automate spreadsheets and processes for your financial information.
- Generate balance sheets, income statements and other financial statements that demonstrate financial health and trends.
- Keep accurate financial records for your company to allow for more efficient reporting and analysis.
- Handle payroll duties as necessary.
- Prepare necessary tax documents for your tax returns.
- Keep your business in compliance with federal and state laws and regulations.
Ultimately, a bookkeeper maintains your books so you or your accountant can see where money is going in and where it’s going out. Based on your company’s size and finances, you may use a full-charge bookkeeper who manages all business finances on their own and does not report to a senior accountant or controller. This may be the case for smaller businesses with simple transactions. Some businesses employ several bookkeepers who focus exclusively on areas like payroll, AR or AP and who report to the full-charge bookkeeper. As your business continues to grow, an accountant — and eventually a controller — will need to lead the financial department.
When Does Your Business Need a Bookkeeper?
For growing businesses with a high volume of transactions to track, the DIY approach can be too time consuming. The key to knowing when your business requires a bookkeeper is when your company reaches any one of the following points:
- You’re too busy categorizing transactions to focus on other parts of your business like selling, creating and growing.
- You’re behind on collecting on accounts receivable or sending out client invoices.
- You’re not keeping bills and receipts in an organized system or database.
- You have too many accounts to gain valuable business insights.
- You don’t have any clarity on what you’re spending and making.
- You play crazy catch-up every year-end to get your books in order for tax season.
- You spend more than a few hours per month on bookkeeping tasks.
If you’re encountering these issues with your business right now, it might be time to hire an outsourced bookkeeper.
Is a Fractional Bookkeeper the Solution?
Outsourced bookkeeping gives you more options in today’s changing work environment. With the right experience, a fractional bookkeeper can start performing their duties and making a difference for your business right away. They can be a regular asset for the company or assist in busier seasons, providing a flexible and cost-effective solution for businesses.
Additionally, you don’t have to be limited solely to bookkeepers in your organization’s physical region. Local bookkeepers are typically going to be generalists. By going with a remote bookkeeper, you can find someone with expertise in your industry even if they don’t reside in the same state as your business. Organizations are able to find fast solutions when they’re matched by industry and type of experience, rather than geography.
Keep It Simple: Automate Your Bookkeeping Processes
In today’s world, you don’t need somebody to input every single piece of data manually. The right bookkeeper should be proficient in professional financial software used throughout the industry so that they can automatically import and integrate financial data into the correct place. Desktop and online software like Quickbooks, Sage, Xero, NetSuite and others are typically used by financial teams to organize and report financial information.
A dedicated bookkeeper can handle most of your business functions quickly and more efficiently using their technical expertise. This frees you up to spend more time pursuing tasks that generate real value for your business.
Want to streamline your daily financial operations with the help of a fractional bookkeeper? If your business needs assistance with daily bookkeeping needs, or if you’re looking to increase the capacity of your financial team, request a consultation to learn about Paro’s highly-vetted bookkeepers and accounting professionals.