Small Business Bookkeeping Starting at $499.00/m

What Does a Bookkeeper Actually Do?

Bookkeepers, defined

A bookkeeper prepares your accounts, documenting daily financial transactions. Once Prepared, users can make informed business decisions and begin tax preparation.

Bookkeepers vs. Accountants

While bookkeepers record daily transactions, accountants use the information compiled by a bookkeeper to produce financial models. Bookkeeping is fact based and supported, while accounting is more subjective and calls for skilled interpretation—like helping you understand when it’s time to increase prices or filing your taxes to get the best return possible.

Bookkeepers offer a literal look at where you stand financially at the moment, and accountants help you see the bigger picture and the path your business is on.

But what does a bookkeeper actually do all day?

A bookkeeper’s duties include a fair bit of data entry and receipt wrangling. They’re responsible for recording every financial transaction in your general ledger using double entry booking—usually called recording journal entries. That sounds like a mouthful, but often that just looks like inputting all your transactions into accounting software.

That said, bookkeeping is more than just dropping numbers into a spreadsheet—it takes meticulous analysis and just enough legal know-how. After all, bookkeepers will help you survive an audit by making sure your records are in order and your deductions are legal.

Let’s break it down further. Typically bookkeepers are responsible for preparing four key financial statements:

• Income statement (also called a Profit & Loss), which shows your revenue and your expenses over a specified time period

• Balance sheet, which is just a snapshot of your financial position at one point in time

• Cash flow statement, which is a record of the cash and cash-like equivalents entering and leaving your company

• Statement of changes in equity (also called a statement of retained earnings) which shows how your share of capital, reserves, and retained earnings have changed in a reporting period

Some other important things they can do to help your business run like a well-oiled machine:

• Manage accounts receivable and accounts payable (make sure you get paid on time, and pay your bills on time)

• Collect and remit sales tax to the government

• Monitor debt levels and apply payment to any debt as it comes up for payment

• Record incoming cash and deposit at the bank

• Handle bank reconciliations every month

• Equip your CPA with accurate financial statements come tax time

• Maintain your annual budget

• Report on issues and variances when they pop up

• Process payroll

They can also usually take care of some of the tax preparation so that your accountant has less to do (which is a good thing, because bookkeepers are less expensive than an Accountant), but they won’t be able to help you with tax planning or handling your tax return.

What a bookkeeper can do for your business

Why do you need a bookkeeper? If you have a top-notch bookkeeper, you’ll reap some of the following benefits:

• Better budgeting decisions, knowing exactly where your money is going

• Peace of mind knowing your books are in order and tax season won’t be a scramble

• Audit-proof business with detailed documentation

• More hours in your day to focus on your business

• Understand the seasonal flow of your business

• Understand the key metrics in your business: revenue, costs, profitability, etc