• Dee Dee Huey

What Does a Bookkeeper Do and How Can They Help My Business?

Updated: Jun 5, 2019

What does a Bookkeeper Do Exactly?

Bookkeepers certify that all of a company’s income, expenses, and transactions are recorded in the company’s books and reconciled to the company’s financial accounts, usually on a monthly basis. Bookkeepers might also help with financial statement and financial report preparation. Although bookkeeping can be an in-house staff position, most businesses employ bookkeepers on a freelance basis.

Like most business owners, Bookkeepers can wear many different hats depending on what your business needs. That said, most bookkeepers use a business accounting software like QuickBooks to do their work. Plus, there are a few things that almost every bookkeeper can take care of for your business, like help you improve your profit and growth. Though the role of a bookkeeper is multifaceted, there are some core functions as to what bookkeepers can do.

If you’re wondering what a bookkeeper does, then chances are you’re probably also wondering if you need one. We’ll explain the tasks that a bookkeeper can take care of for you and show how it can help your business.

What Can a Bookkeeper Do?

There’s no one simple way to answer this question. Just like any other field of work, bookkeeping can look different from business to business. However, these are the most common tasks that bookkeepers tends to tackle:

  • Record Financial Transactions

  • Reconcile Bank and Credit Card accounts

  • Categorize Financial Account Feeds

  • Payroll Processing and Payroll Taxes

  • Accounts Receivable & Accounts Payable Management

  • Accounts Receivable Invoicing

  • Tax Time Accountant Communication

  • Prepare Financial Statements

  • Make Technology and Process Streamlining Recommendations

Here’s a closer look at what a bookkeeper does:

Reconcile Bank and Credit Card Statements

This may be a tedious, time-consuming task that you prefer to put off, but reconciling your financial account statements at the end of each month is a pivotal point on the business success timeline. Account reconciliation ensures that transaction details in your accounting software match transaction details on your bank account statements, credit card statements, and other financial account statements.

Categorize Financial Account Feeds

At a basic level, your bookkeeping service or bookkeeper should be managing the transactions brought in through your accounting system’s bank feed. Bank feeds link up your accounting software with your business bank account, allowing you to see each transaction in real time.

The accounting software, depending on how effective it is, should be able to automatically categorize certain transactions. For example, a credit card transaction from an airline can be automatically categorized as a travel expense. Bookkeepers keep an eye on these transactions and make sure they are being categorized correctly.

Bookkeepers might also have to manually add any transactions that aren’t included in the bank feed. The transactions that need to be added will most likely be transactions generated outside of the accounting system, such as cash payments or handwritten checks. It could also involve matching deposits as customer payments to help manage accounts receivable or outgoing transactions as payments against vendor bills.

Payroll Processing and Payroll Taxes

Bookkeepers also, at times, fulfill payroll and human resource functions. Your bookkeeping service might have a payroll offering, or they might assist you in the processing of paychecks or tax payments and forms. They might simply input payroll data into your accounting system after your payroll service provider has submitted reports to you, or they might import the data from a file provided. Bookkeepers might also help you manage timesheets for hourly employees or overtime. Another great task a bookkeeper can tackle for you is payroll tax payments to the IRS. The one last thing you want to do is slip up and not pay your taxes. A bookkeeper understands the legalities of paying taxes on time and therefore can take care of this for you hassle free.

Account Receivable Invoicing

Accounts receivable management can take on a few forms. Managing the money going out the door is just as important as the money coming in from your customers. Accounts Payable can be one of the first systems to fall behind when owners wear too many hats. This can lead to cash flow issues, penalties for late payments, and could even affect your ability to order products and services on credit.

With invoice & purchase order verification, automated electronic payments, and Professional attention to detail, bookkeepers can take the stress out of paying bills. 

Creating invoices, sending them to customers, providing statements, and assisting in collections is all part of the A/R (Accounts Receivable) services that bookkeepers can provide for their clients. The customer lets the bookkeeper know when they’ve been paid, we enter that payment in QuickBooks Online, and then we create a deposit to match what the client takes to the bank.

Accounts Payable Management

Along with accounts receivable, many bookkeepers also handle their clients’ accounts payable. That means the bookkeeper will handle all of the vendor bills that the company receives. Bookkeepers will note payment deadlines from each vendor, early payment discounts if available, and submit payment to the vendor. Properly managing your accounts payable is important for maintaining relationships with suppliers and keeping positive trade credit terms.

Tax Time Accountant Communication

One of the services that many bookkeepers fail to mention is that, by default, they’re going to serve as a sort of translator between you and your certified public accountant or enrolled agent. Because bookkeepers have a much more intimate knowledge of your books, it’s sometimes easier to have your bookkeeper contact your tax preparer when you’re about to file your small business taxes.

Prepare Financial Statements

Financial Reports are the temperature gauge for your company. Your Balance Sheet and Profit & Loss Statement tell the financial story of your business... and if the numbers you're reading aren't correct you could potentially be missing key warning symptoms in your company. Bookkeepers can make this check-up process painless! With accurate and up-to-date numbers you'll be able to forecast for the future, catch problems before they become big, and grow your business with the confidence that your finger is on the pulse.

Make Technology and Process Streamlining Recommendations

Bookkeepers are also pretty good at keeping up with the latest and greatest technologies. It’s not unusual for your bookkeeper to find a new app or solution specific to your industry and possibly help you cut labor costs. Bookkeepers like to search for efficiencies and make your back office run as smoothly as possible. In this way, they can be a very valuable partner to your business.

How Much Does a Bookkeeper Costs?

Some bookkeepers charge by the hour and that could be anywhere from $30-$65/hour. Some charge a flat rate monthly fee. Most of the time they also provide an online accounting systems for storing and tracking your data. There is no way to accurately answer this question. It solely depends on your needs, your location and your business size. The price could depend on the following:

  • Types of tasks you’d like the bookkeeper to do

  • Complexity and volume of your business’s financial transactions

  • Bookkeeper’s experience

  • Number of hours worked per month

  • Whether you use any accounting software and what type (most bookkeepers prefer QuickBooks Online)

  • Your business’s location

IMPORTANTLY: Bookkeepers Help You Get Back to Business

Now you know all of the main skills that a bookkeeper can bring to your business. Your bookkeeper isn’t just consulting an accounting book and doing simple data entry—there’s so much more that goes into bookkeeping than many small business owners realize. They're trained to see things that the typical business owner doesn't always see. They are your extra set of eyes.

The next time you find yourself wondering, “What does a bookkeeper do?”, you now know that the answer can be anything from reconciling transactions to processing payroll—the answer can even be managing all of the above.

At the end of the day, the answer to this question will ultimately depend on what you and your small business need from a bookkeeper. Either way, having a bookkeeper wear the financial hat, will free you up and help you save time and energy you need for growing your business.

~Dee Dee Huey

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