Whenever you are looking to start a new business or expand an existing one, it is important that you have a proper level of staff to ensure everything runs well. One member of your staff that will be extremely vital to the success of your organization is a bookkeeper. Yet, specifically, what does a bookkeeper do?
This article will explain to you what a bookkeeper is, what service is a bookkeeper can typically provide to a business, what some of the drawbacks of a bookkeeper are, and what you should look for in an individual when you are looking to hire your next bookkeeper.
What Is a Bookkeeper?
A bookkeeper is a very important part of any internal accounting staff. They are generally responsible for the:
- Overall oversight of financial records;
- Account management;
- A variety of other tasks.
A wide range of companies can hire a bookkeeper. This includes small businesses, large corporations, and third party accounting companies.
So, What Does a Bookkeeper Do?
When wondering what does a bookkeeper do, a bookkeeper can perform a very wide range of services for a company. The most common tasks that a bookkeeper will handle is completing and maintaining a full set of financial records for an organization. The bookkeeper will be responsible for:
- Recording all sales;
- Managing all expenses;
- Keeping track of all distributions than an organization makes.
They are also typically the first line of defense when it comes to the preparation of:
- An income statement;
- Balance sheet;
- Statement of cash flows.
Those that are wondering what does a bookkeeper do, another common task is bank account management. Depending on the size of the organization that the bookkeeper work, they could be responsible for all aspects in regards to managing bank accounts. A bookkeeper will typically be the individual who:
- Prepares and signs checks to pay to vendors;
- Responsible for managing wires and depositing other revenue sources;
- Needs to reconcile all of the bank accounts to financial records on a daily basis.
They are often also the point of contact for the bank when there are any discrepancies.
When asking what does a bookkeeper do, another common task they perform is to provide support to outside accountants. The bookkeeper may be responsible for managing the financial statements during the year. However, most businesses will ultimately need to have their financial statements either reviewed or audited. This process can be a significant undertaking for a business. This is because it will require them to provide the auditors with a significant amount of information and reconciliations. A bookkeeper will typically be heavily involved in:
- Reconciling all information for the auditors;
- Preparing the financial records and results to them.
Downsides of Bookkeepers
While bookkeepers can provide a significant amount of tasks for an organization, there are some limitations for the services and tasks that they can provide. When wondering what does a bookkeeper do, some of the work of public accountants cannot be done by a bookkeeper.
In most situations, bookkeepers are not required to have a CPA or higher level of education. Because of this, a bookkeeper may not have the certifications and licenses necessary to certify financial statements. This means that you may need to hire an outside firm to do so if it is necessary.
What to Look for in Your Next Bookkeeper
Due to the wide range of services that a bookkeeper can provide to a business, it would be an extremely good idea to hire your own. When you are looking for your next bookkeeper, there are a lot of different aspects that you should look for in the person that you hire.
- The first thing that you should look for in your bookkeeper is experience. For a small business, finding someone that has experience in managing the financial records for small organizations is extremely important. This will ensure that they have enough knowledge to handle issues that can arise and can always keep your financial records organized.
- Another thing to look for when you are hiring a new bookkeeper is their experience with certain software programs. Today, the vast majority of companies complete their financial statements on various pieces of software. For example, many small businesses today use Quicken as it can be easily uploaded and converted into IRS records. It would be a good idea to find a bookkeeper that has experience with the software programs that you intend to use.
- The third thing that you should look for when you are going to hire a new bookkeeper is education. When wondering what does a bookkeeper do, it probably makes perfect sense that you would want to have someone with some level of accounting education. While you do not necessarily need someone that has a master’s degree or CPA, it would still be beneficial to hire someone that has at least a degree in accounting, finance, or some other related field. This will ensure that they have the educational background to understand the different types of accounting methods.
What Is the Compensation for a Bookkeeper?
One of the biggest concerns that all small businesses have is their overhead expense. While bookkeepers are necessary, you may be able to find one that does not cost too much money.
In many situations, you may be able to find one that is willing to work part-time and for an hourly wage. Then, once you have expanded and need more help, you may be able to bring them on full time.
To the Books
When you are looking to build your business, one of the most important staff members that you will need to hire is bookkeeper. A bookkeeper is heavily involved in the overall implementation of an accounting process, will need to prepare financial records, and will prepare a variety of other documents and records for your company.
Due to the importance of a bookkeeper, it is very important that you follow a variety of different provided tips to ensure you make the right hiring decision.
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