What does a bookkeeper do?
Vania Wang • October 8, 2020
What does a bookkeeper do?
Whether you sell baby diapers, SaaS software or plumbing services, there are two things your business is sure to do – you make money and you spend it. Bookkeepers can help you keep track of your revenue and expenses.
In this post, we explain in detail the daily responsibilities of a bookkeeper and why you need one.
So who is a bookkeeper?
A bookkeeper prepares your accounts, recording your financial transactions. The earliest bookkeepers could be traced back to 2600 BC when they tracked records on slabs of clay.
Bookkeepers are in charge of providing correct, up-to-date financial data about a business. They are always measuring the progress of a business.
Usually, their reports are sent to business managers and owners so they can make informed decisions.
Duties of a bookkeeper
A big part of a bookkeeper’s job is data entry and handling receipts. They record all financial transactions in your general ledger book using the double-entry bookkeeping method.
However, there’s more to bookkeeping than simply punching numbers. It calls for diligent analysis and some basic legal know-how. At the end of the day, it’s your bookkeeper who will help you handle an audit by ensuring your records are organised and your deductions legal.
Your bookkeeper will be responsible for preparing 4 crucial financial statements:
• Profit & Loss statement
– This statement reports your income and expenses over a specific period.
• Balance sheet
– This is a summary of your financial position for a given financial year.
• Cash flow statement
– This records all the cash and cash-equivalents leaving and entering your business.
• Statements of retained earnings
– Also known as a statement of changes in equity, this report shows how your reserves, share capital and retained earnings have changed.
Other important tasks a bookkeeper handles
There are many other things a bookkeeper can do to help ensure your business operates smoothly:
• Collect and submit sales tax to the government
• Manage accounts payable and accounts receivable
• Process payroll
• Record cash received and deposit them at the bank
• Monitor your debt levels and make payment as and when it becomes due for payment
• Maintain your yearly budget
• Handle bank reconciliations at the end of every month
• Provide your CPA with financial statements at the end of a financial year for tax filing
How a bookkeeper can help your business
So why should you hire a bookkeeper? A good bookkeeper can help you in the following ways:
• Free up your time that you can instead focus on your core business
• Know precisely where your money is going and make budgeting decisions
• Your business becomes audit-proof with detailed, organised and meticulous documentation
• Understand how the seasonal flow affects your business
• Peace of mind in the knowledge that your books are organised and come tax time you won’t have to run around the last-minute
• Track the key metric of your business – costs, revenue, profitability, etc.
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