Bookkeeping is a valuable tool for any business, but how exactly can a professional bookkeeper help ensure a business is running smoothly? This article explores what bookkeepers do and the benefits of hiring one.
What is a Bookkeeper?
A bookkeeper is someone who records the financial transactions of a business. They take care of things like budgeting, taxes, and payroll. Bookkeepers are essential to any company that needs to keep track of finances-especially if they want to save time or money! A bookkeeper is a crucial but often invisible support system for most businesses.
What Does a Bookkeeper Do?
Bookkeepers are responsible for creating and maintaining all the books in a business. They take care of things like keeping track of accounts payable, receivable, payrolls, budgets, taxes (both federal and state), as well as invoices from suppliers or other businesses. They also manage general accounting ledgers, record journal entries (transactions), and generate financial statements. Bookkeeping is very important because it’s one of the only ways owners and managers can understand their business’s financial health.
A bookkeeper is usually the first person to know when there are problems, whether it be with expenses or revenue. They also work closely with HR to make sure that payrolls are accurate and on time. With so many responsibilities in addition to keeping track of financial numbers, it’s easy to see how working with a bookkeeper is essential for any business.
Who Benefits Most from Hiring a Bookkeeper?
The entire business benefits from having a bookkeeper on board because the financial health of a business is important to anyone who receives a paycheck. That being said, the people who benefit most from a professional and experienced bookkeeper are the ones in charge. A CEO, president, owner, or high-level manager will always want to have a bookkeeper by their side because they can delegate tasks that otherwise would consume a lot of their time.
What Are the Benefits of a Bookkeeper?
The most obvious benefit is that a bookkeeper takes care of accounting tasks. Bookkeepers can make all tax forms and filings, extract data from financial transactions, prepare budgets or projections for future growth, and organize payroll expenses-all without cost in terms of resources or time.
There are also less obvious benefits to a bookkeeper, such as the fact that they can catch errors or discrepancies before they become too expensive! Bookkeepers have an eye on what’s going on in a business and will spot something if it’s wrong like too many expenses coming from one place or another. This ability is invaluable because it can save business owners and managers time, money, and even reputation!
The benefits of hiring a bookkeeper are plentiful and it’s important to know the advantages before bringing someone on board. It’s also vital that a bookkeeper is qualified for the job based on experience, training, and education.
Bookkeeping Involves:
- Compiling financial records – generally this will be information from sales invoices, purchase receipts, cash registers, time cards or other sources to create a complete picture of the company’s finances.
- Posting completed records to an account book called a ledger that contains all debits and credits.
- Managing accounts payable and accounts receivable, which means ensuring that all necessary expenses are paid and paying employees, etc
- Balancing the books at month-end – the process of reconciling account totals to eliminate errors and verify that all information is correct.
- Use bookkeeping software, spreadsheets, and other databases to post up-to-date financial transactions.
- Look at the company’s cash flow and work with management to make budgets.
- Generate financial reports, such as balance sheets and income statements.
- Maintain and monitor financial records for accuracy.
- Reconcile or report any discrepancies in financial reports.
- Produce or pay invoices.
- Complete payroll.
- Help prepare corporate tax returns
- Collecting sales tax and reporting the amount received to the government.
- Keeping track of any debts obtained or owed and making sure payments for those debts, including loans, are paid on time
- Recording and keeping track of cash deposits and withdrawals from the bank.
- Ensuring all payments and cash collections have been paid or received.
- Providing accurate financial statements to assist in preparing for tax season.
- Maintaining a yearly budget for the company or business.
- Reporting issues and trends in financial statements.
Bookkeeping for Different Types of Businesses
The type of bookkeeping required will depend on the business. Three examples are:
- Bookkeeping for service-based businesses, such as home care agencies or landscaping companies – this involves tracking employee hours, progress on jobs, time billing clients, file taxes, and invoice customers for services rendered among other tasks
- Bookkeeping for retail stores – processing sales receipts from cashiers and stock workers, reconciling inventory counts and credit card settlements. The ultimate goal in this type of bookkeeping is to reduce expenses by getting the best possible price for products and maximizing profit by minimizing excess inventory based on customer demand.
- Bookkeeping for manufacturers – focusing on inventory, raw materials, and supplies. In addition, a bookkeeper will calculate output, labor costs, energy costs, utility bills etc.
Types of Bookkeeping
Traditional bookkeeping typically employs one of the two following systems dependent on the type of business and their financial statements:
Single-entry bookkeeping
- This is the most basic type of bookkeeping there is. This type of bookkeeping is typically used by small businesses or companies that don’t handle a lot of transactions. This type of bookkeeping is typically used to keep track of cash sales, cash receipts, and bank statements.
Double-entry bookkeeping
- Double-entry bookkeeping is typically used by businesses or companies that handle more complicated transactions. This type of bookkeeping is better suited for companies or businesses that use some form of online transactions such as purchasing inventory on credit or using accounts receivable.
Does Your Business Need a Professional Bookkeeper?
It’s pretty apparent that bookkeeping is a key component to running a successful business. Bookkeepers are responsible for managing and monitoring financial records, as well as balancing books at month-end to ensure that everything checks out. Bookkeepers also generate reports such as balance sheets and income statements in order to help management make decisions about the company’s cash flow or budgeting process. If you think it’s time for your business to work with a bookkeeper contact a professional bookkeeping and accounting firm like TenKey.