New business owners often struggle managing their own finances. It is a complex, time-consuming an overwhelming job! Hiring a bookkeeper is one of the best ways to make sure your finances are up to date, accurate and working for you instead of against you.
But what does a bookkeeper do?
Bookkeepers keep good financial records
At its core, a bookkeeper’s job is managing the financials of a business. While this may sound simple, there are many different facets of doing this well. The most important part is keeping good financial records. Without good financial records, a bookkeeper will be unable to accurately keep track of any of the money coming in and out of the business which will obviously have very detrimental effects! Managing that starts with receipts and invoices.
Bookkeepers compile all of these records in one place and make a record of the money flow at the end of every day. And then, at the end of the month, your bookkeeper will use all of that information to create a report that can be reconciled against your accounts receivable and accounts payable to keep your business up to date and make sure you’re not missing any money. A bookkeeper will also log revenue, outstanding bills and IOUs, cash flow, liabilities and expenditures. Considering revenue from unpaid invoices is one of the major causes of a business’s lost revenue, this is incredibly important information to keep track of. See more here!
Bookkeepers stay up to date on everything
Any bookkeeper will tell you that things are constantly changing. Tax laws change frequently and not keeping up to date with them can cost your business a significant amount of money in late fees and fines (sometimes from 30 – 100% of what you owe, depending on the type of mistake). Regulation changes need to be monitored frequently to make sure that your business is following the most up to date tax codes and regulations. Another task your bookkeeper will do is to stay up to date with software updates for your bookkeeping software. The bookkeeper’s software is essential to their doing their jobs quickly, efficiently and accurately by providing back up and the ability to create reports and monitor accounts with ease. Your bookkeeper will tell you if there are any software updates needed.
What is the difference between a bookkeeper and an accountant?
Although accountants and bookkeepers frequently work together, there are some differences in their job descriptions. Bookkeepers are usually the managers of the day to day ins and outs of the money side of your business, which accountants handle managing your accounts as a whole. Sometimes bookkeeper’s are called “accounting clerks,” meaning the bookkeeper does the administrative work and provides the information to the accountant to disseminate. Although many business owners start out trying to do this on their own, they soon find out that a bookkeeper frees up their time to focus on what really counts – growing your business.
From managing all of your accounts and tracking the flow of your money to staying on top of all tax codes and software updates, bookkeepers are essential to making sure your business runs smoothly.