Running a small business means keeping track of much more than customers and sales. Every purchase, payment, deposit, bill, and expense eventually needs to be reflected accurately in your financial records.
That is where a bookkeeper comes in.
A bookkeeper helps maintain accurate, organized, and up-to-date financial records so you have reliable information about what is happening in your business.
While the exact responsibilities can vary from one business to another, most small-business bookkeeping revolves around several core functions.
Recording and Categorizing Transactions
One of the most basic bookkeeping responsibilities is making sure financial transactions are recorded and categorized properly.
That can include customer payments, operating expenses, vendor purchases, credit card activity, loan payments, owner transactions, and other financial activity.
Consistent categorization is important because your financial reports are built from this information. If transactions are missing or recorded incorrectly, the reports generated from your accounting system can also be misleading.
Reconciling Bank and Credit Card Accounts
Recording transactions is only part of the process.
A bookkeeper also compares the activity in your accounting system with your bank and credit card statements. This process is called reconciliation.
Regular reconciliations can help identify missing transactions, duplicate entries, incorrect amounts, or other discrepancies.
Simply having transactions download automatically into accounting software does not mean the account has been reconciled correctly.
Maintaining the General Ledger
Your general ledger contains the financial activity that ultimately flows into your financial statements.
A bookkeeper helps keep those records organized by reviewing account activity, investigating unusual balances, and correcting errors when necessary.
Without regular maintenance, small bookkeeping issues can accumulate over time and make financial statements increasingly difficult to rely on.
Supporting Accounts Payable and Accounts Receivable
Some businesses also need help managing amounts owed to vendors and amounts owed by customers.
Accounts payable bookkeeping can involve tracking bills, due dates, and vendor balances.
Accounts receivable bookkeeping can involve recording customer invoices, tracking payments, and monitoring outstanding balances.
Keeping both areas organized can give you a clearer picture of upcoming cash requirements and expected collections.
Preparing Financial Statements
Accurate bookkeeping should ultimately produce useful financial information.
Two of the most common reports are the Profit and Loss Statement and Balance Sheet.
The Profit and Loss Statement shows revenue, expenses, and profitability over a particular period.
The Balance Sheet shows the business's assets, liabilities, and equity at a specific point in time.
When the underlying bookkeeping is accurate, these reports can help you better understand how the business is performing.
Working With Your CPA
A bookkeeper and CPA typically serve different but complementary roles.
A bookkeeper helps maintain the financial records throughout the year. Your CPA or tax professional can then use those records for tax preparation, tax planning, or other accounting services.
Keeping your books current throughout the year can make the year-end process much more organized.
Giving Business Owners Their Time Back
There is another benefit that doesn't appear directly on a financial statement: time.
Every hour spent categorizing transactions, reconciling accounts, or troubleshooting accounting software is an hour that cannot be spent serving customers, managing employees, or growing the business.
For many owners, professional bookkeeping isn't simply about outsourcing an administrative task. It is about establishing a reliable financial process so they can spend more time running the business.
Good Bookkeeping Is About More Than Entering Numbers
The goal of bookkeeping isn't simply to put transactions into accounting software.
The goal is to maintain financial records that are accurate, organized, and useful.
When your books are consistently maintained, you have better information available when you need to make decisions about your business.