You’ve heard the title bookkeeper, but maybe you’ve wondered, what do bookkeepers do? And what are bookkeeper’s duties? This article will focus specifically on what a bookkeeper is and what their duties are. Many organizations hire bookkeepers. From large agencies to law offices, to small businesses, they all typically employee bookkeepers.
- Bookkeeping Definition
- Bookkeeper Definition
- Bookkeeper Duties
- Bookkeeper Work Environment
- Bookkeeper Qualifications
In simple terms, bookkeeping keeps track of a business’s finances. Bookkeeping ensures that records are correct, up-to-date and comprehensive. In bookkeeping, accuracy is key. It’s a distinct process that occurs within the broader scope of accounting. The reason the scope is so broad is because each transaction, whether small or large, must be recorded. Organizations or companies typically have set structures in place for how they manage bookkeeping.
So, now that we know what bookkeeping is, it’s now time to move on to what a bookkeeper’s role is. In broad terms, a bookkeeper is responsible for processing the paperwork for a company’s business transactions. They maintain records of financial transactions by establishing accounts and posting transactions. Creating these financial transactions includes posting information to accounting journals or accounting software. We’ll go into more detail in bookkeeper duties below, but here are some duties: expensing payments to suppliers, loaning payments, creating invoices, monitoring assets, generating financial reports and much more.
Now that you know what bookkeeping is, let’s talk about why it matters. While it may seem obvious, bookkeeping is extremely crucial for businesses of all sizes. Once you begin to introduce taxes, assets, loans, and investments, bookkeeping can become complex. Keeping all finances on track is vital for how a business is run. It’s crucial to have an up-to-date record of all current incoming and outgoing amounts.
Recording and balancing financial transactions for an employer or a client are only among some of the responsibilities a bookkeeper has. Here, we’ll go through the duties of a bookkeeper in detail.
The General Ledger
The bookkeeper is responsible for the general ledger, or sometimes known as the master document. This ledger is the businesses financial information summary. It breaks down what the business earns and spends and is made up of sub-ledgers that include accounts payable, accounts receivable, and inventory. All future and current financial statements are based on the information in the general ledger. As a bookkeeper, you’re also responsible for developing systems to account for these financial transactions. This also helps you when defining bookkeeping policies and procedures.
Income and Expenses
Bookkeepers record income from any and all sales. It’s the bookkeeper’s responsibility to document any activity that generates revenue. Gathering this information from receipts (including amount of cash and tax collected) is part of the bookkeeper’s duties. While you record the businesses income, it’s also important to track business expenses. This includes employee salary, rent, insurance, office supplies, petty cash, cost of goods sold, and more. All of the specifics will change depending on the company or organization you’re working for but they typically follow this structure.
Debits and Credits
In a nutshell, debits record money flowing into an account, while credits record the money flowing out of an account. One of the bookkeeper’s tasks is to monitor and record debits and credits from the different accounts. This is an important task as it records where the money is going and then where it’s coming from. Each business transaction needs to be entered in the general ledger (explained above) twice — once as a debit, and once as a credit. These values have to equal each other, which is what determines the profit or loss during the decided period of time. When the debits and credits are in agreement, you can say you have “balanced the books”. Proper bookkeeping makes this happen.
Reconciliations happen if your bank account does not match the transactions in your business books. As a bookkeeper, it’s your job to reconcile the numbers. This means comparing bank statements with bookkeeping records, and noting any discrepancies.
One bookkeeping task is essentially tracking the money that’s owed to you by customers. Whether that’s following up on invoices or making phone calls, this is a part of the bookkeeping job you may be doing quite often.
Opposite of accounts receivable, another bookkeeping task is keeping track of all the money the business owes. As a bookkeeper, it’s your responsibility to keep tabs on who needs to be paid by when, and make sure that no one is being paid twice. These payments include but are not limited to money owed to vendors, employers, suppliers, and sometimes the government.
Depreciation lets you deduct the cost of something that was bought for your business. Like laptops, desks, chairs, cameras, etc. But, instead of the bookkeeper doing it all in one tax year, you can write off parts of it in time. As a bookkeeper, you can depreciate assets, which allows you to plan how much money is written off each year, giving you and your business more control over finances.
Financial Statements and Reports
Clearly one of the largest bookkeeping duties is collecting and recording valuable information. But, what then? What do you do with all this information? There are many people within the business or company you work for who will want to see numbers and know what they mean. Well, that is the bookkeepers job – to organize and layout the information in financial statements. The following are three typical statements you’ll create as a bookkeeper:
- Income Statement (of Loss or profit): This shows revenue and expenses over a specific time period. It’s the best way to view the businesses bottom line.
- Balance sheet: This is a snapchat of the businesses finances at any given moment.
- Cash flow statement: A record of the cash entering and leaving the company.
Maintaining other bookkeeping tasks including but not limited to:
- Chart of accounts
- Annual budget
- Clerical and administrative support
- Orderly filing system
- Petty cash fund
- Monitoring debt levels
Typically, bookkeepers work in their employer’s office or business. This allows for there to be open communication between you and your coworkers and higher ups. It is likely bookkeepers may work in quieter office environments, although the pace of the workflow may rise during the end of the fiscal year and around tax time.
On the other hand, if you aren’t interested in working specifically for one company, you can be self-employed. For self-employed bookkeepers, you can work from your home office. If this is the route you choose to take, you will heavily rely on video calls, emails, and messages to be in continuous contact with your clients.
Bookkeepers tend to work typical business hours, Monday to Friday. During the busy season, bookkeepers may need to work extended hours. If you are working for a large organization, it’s typical to work full-time business hours. Part-time work is more common among those who worth for themselves, or small to medium sized firms.
While bookkeepers are responsible for maintaining financial records, bookkeepers do not need a specific certification or diploma to perform their duties. However, companies and businesses typically look for bookkeepers with an education in relevant fields like finance, accounting, and business studies. If interested, have a look at Robertson School of Business and the programs we offer.
- On-the-job training is also vital for bookkeeping. All businesses will have different processes but all bookkeepers should have basic bookkeeping education so most financial matters can be seamlessly resolved.
- Since there is no formal certification required, some employers may look at experience over education. Of course, you have to start somewhere. This may mean taking part in a work-placement through a college program or an internship. While your career may start off slow with a lower salary, the experience will be nothing but help in the future.
Successful bookkeepers must have a variety of skills. When employers look to hire bookkeepers, these are some of the qualities and skills they look for:
- Software skills
- Data entry
- Math skills
- Great communication skills
- Problem solver
- Familiar with double-entry bookkeeping procedures
Now, you can hopefully answer the question of, what do bookkeepers do? The duties of a bookkeeper tend to blanket over most businesses and organizations. A job in bookkeeping is a great choice for people who are passionate about helping businesses manage their finances. Begin your journey to become a bookkeeper today with Robertson’s School of Business.