Bookkeepers don’t get enough credit for all the work they put into maintaining, organizing, and recording a business’s financial transactions. In fact, the average bookkeeper makes around $44,609 per year.
This is a seemingly small amount if you think of all the bookkeeper duties they have to handle every day.
With the countless database and recordkeeping software available today, hiring a bookkeeper may seem archaic. However, ask anyone who runs a successful business, and they’ll tell you bookkeepers are imperative to their business’ prosperity. That’s because they handle vital responsibilities to facilitate the smooth running of the company.
What is bookkeeping, and why should you seek help from a bookkeeping business? Join us as we highlight a few bookkeeper basics and look at why bookkeepers are important for businesses large and small.
Common Bookkeeper Duties
Bookkeeping tasks aren’t responsibilities you can put off because doing so may cripple essential business operations. A standard bookkeeper’s job description entails the following tasks.
Data Entry
Simply put, data entry is the process of keeping accurate records of the money that flows in and out of the business. This enables you to tell how profitable the company is and whether strategic plans and policies deliver the intended results.
Data entry involves recording details like:
- Transaction worth and date of transaction
- Product sold or bought
- Name of customer (optional)
Data entry also involves assigning the transaction to the proper account in the company’s ledger. This helps maintain accurate and up-to-date records.
Bank Reconciliation
Bank reconciliation means matching books and records against bank statements to ensure continuity and uniformity. Bookkeepers do this so that entries match with records. Despite our best efforts, we humans can’t seem to be 100% accurate when punching in figures.
By cross-referencing the books with bank statements, bookkeepers can trace any keystroke errors and make the necessary corrections. Bank reconciliation also helps detect fraudulent transactions and wrong payments.
Compiling Monthly Reports
Business owners task bookkeepers with creating monthly financial reports. There are many financial reports that the bookkeeper can create, but the most important ones include:
- Balance sheets
- Profit and loss reports
- Cash flow statements
- Aged payables and receivables
These reports are vital for establishing how profitable and viable the business is. These reports will be useful in crafting policies and strategies to help the company grow and boost profitability.
Additional Bookkeeping Duties
Apart from the duties mentioned above, bookkeeping services may also include:
Payroll Management
Bookkeepers play an active role in the payroll management process. Keep in mind payroll involves much more than just depositing employees’ salaries in their bank accounts. Payroll management also involves making necessary deductions, taxation, compliance, and managing leave entitlements.
Payroll is just as important to the government as it is to your employees. All payroll activity must be in line with employment laws, or you risk paying hefty fines.
Credit Control and Accounts Receivable
A bookkeeper is also responsible for creating and sending out invoices. They must also follow up on the invoices and ensure that they’re paid on time. In doing so, bookkeepers ensure that the business has enough working capital and actually makes a profit.
Bookkeepers have to decide how long customers can take to pay their invoices and put them in writing. They must also alert the concerned parties should they miss a payment on the due date.
Oversee Accounts Payable
You can think of accounts payable as the opposite of accounts receivable. Remember, your business has to pay suppliers and service providers. Paying bills isn’t the most exciting part of business, but it’s something that you have to do.
A bookkeeper ensures that all pending bills are paid on time. They also ensure the business pays all bills without draining its finances. This helps maintain the cash flow balance and keeps the business from running dry.
Why Your Business Needs a Bookkeeper
In-person or online bookkeeping services are invaluable for all types of business. If you haven’t hired a bookkeeper yet, here are a couple of reasons why you should consider doing so ASAP.
To Sidestep Penalties
If you often find yourself paying penalties to the IRS or other institutions for late filings, you need to get yourself a bookkeeper.
Bookkeepers can help you avoid hefty penalties from delinquent filings and other misdemeanors. You can channel that money into things that help grow your business and also minimize your losses.
For Relaxed Weekends
Weekends should be a time to relax and unwind. Unfortunately, weekends for most employers is a time to run the numbers through QuickBooks and performing and other administrative tasks.
Hiring a bookkeeper allows you to relax during the weekend and spend time with family and friends.
Even if you don’t like devoting too much time to play, you could be using that time to do more productive activities. You can let the bookkeeper handle the numbers while you look for more clients and develop strategies to expand your business
To Help Qualify for Financing
A little financial assistance can go a long way in helping your business reach greater heights. Financial institutions require accurate and up-to-date financial records before they can consider you for financing. You don’t want a lender to deny you much-needed financing because of chaotic recordkeeping.
Letting your bookkeeper handle financial records ensures that they are accurate and continually updated. This betters your chances of qualifying for financing, regardless of the lender.
These are just a few of the many ways a bookkeeper can help you in running your business. If these aren’t enough to convince you, maybe these reasons will change your mind.
Bookkeeping Basics: Hire a Bookkeeper Today
By performing these bookkeeper duties, hiring a bookkeeper can help take help a huge load off and increase your business efficiency.
A bookkeeper is crucial to the growth of your business and a wise investment for your business regardless of its size. However, make sure you hire a skilled and experienced bookkeeper for the best results.
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