02 Aug What Does A Bookkeeper Do For Your Business?
It’s the age-old question, isn’t it? Maybe not to you, but to us bookkeepers we hear it all the time. To put it simply: you earn money, you spend money, and bookkeepers help you keep track of it all. Now that’s a very simple answer that bookkeepers typically give if someone is asking at a party, first date, or family gathering. As a business owner, you want to know what a bookkeeper does on a day-to-day basis.
Most business owners need more details before creating a new position in their business plan. You want to know: is it worth it? How do I know if I have a good bookkeeper versus a bad bookkeeper? What does a bookkeeper do that benefits my organization’s growth?
We’re here to break it down for you, so that you can distinguish your business’ needs accordingly when it comes to hiring a bookkeeper.
A Brief History Lesson
Bookkeepers have been around since the dawn of time. Well, not exactly. But they have been around since 2600 B.C. That’s when they would record the financial transactions with a stylus on slabs of clay. Fast forward to colonial America, and bookkeepers recorded their transactions in “wastebooks”. These records were called “wastebooks” because it would eventually be passed onto an official ledger, then the original book would be thrown into the waste (i.e. garbage).
Today things are handled a bit differently due to technological advances. The idea of “wastebooks” are still not lost on the current times. That’s due to bookkeepers handing the records off to an accountant come tax season (or if big business decisions need to be made).
You may be thinking, “Wait, I thought accountants did the same thing as bookkeepers?” The answer to that is: Not at all! What a bookkeeper does helps accountants do their job well. Recording daily transactions are for a bookkeeper, and using that information to create financial models are for accountants. Accountants help you see the bigger picture and best path for your business. Bookkeepers help you see your financial standing in the moment.
What A Bookkeeper Does Every Day
It’s not only data entry, receipt wrangling, labeling expenses, indicating payments of employees and consumers, and keeping records of all the receipts. It’s more than spreadsheets. What a bookkeeper does can help you survive an audit. They do more than making your records in order and make sure your deductions are legal.
Here are the four key financial statements that fall under a bookkeeper’s responsibilities:
- Cash flow statement: This is a record of the cash and cash-like hard equivalents entering and leaving your company
- Income statement: It shows your expenses over a specified time period and revenue
- Changes in equity statement: This shows in a reporting period how your share capital, reserves, and retained earnings have changed
- Balance sheet: It gives you a snapshot look into your financial position at one point in time
A bookkeeper can help your business run smoother with implementing some of these day-to-day tasks:
- Paying suppliers or contractors invoices
- Recording incoming cash and deposit at the bank
- Processing payroll
- Tagging and monitoring your fixed assets
- Reporting on issues and variances when they occur
- Monitoring debt levels and applying payments to debt as it comes up for payment
- Reconciling accounts each month
- Issuing financial statements
- Maintaining your annual budget
- Collecting and remitting sales taxes to the government
- Equipping your accountant with accurate financial statements come tax season
Overall, your bookkeeper can boost your business with all of your financial information at their fingertips. With Steph’s Books, you will be able to work more hours focused on your business and have peace of mind knowing your books are in order throughout the year (especially approaching tax season). Find a good bookkeeper that doesn’t cut corners and wants to spend time growing your business, not only maintaining it. What a bookkeeper does can help you and your business win in the end. When you find a good one, keep them.