It’s not uncommon for the owner of a small business to assume the responsibility of tracking transactions or handling billing on their own. And with automation making it easier to process financial data, business owners may continue to take a DIY approach. However, amidst swelling data streams and digitizing documents, the bookkeeping function now goes beyond reconciling rows of numbers to help businesses optimize their systems and the data they gain from them. So, what does a bookkeeper do today’s business environment, and how can they add value as technology evolves?
What Is a Bookkeeper?
A bookkeeper for business records business transactions in journals and ledgers and summarizes them in financial statements. They perform related functions, such as processing invoices, reconciling figures and preparing tax documents. With these responsibilities, a bookkeeper plays a lead role for a business in organizing daily financial processes and presenting data for future uses like budgeting or fundraising. They may also provide the foundation for a more robust finance team once strategic analysis and forecasting become a priority.
The Evolving Role of the Bookkeeper
While recording transactions has traditionally been the role of the bookkeeper, that role is evolving with emerging technology. Seasoned bookkeeper, Christopher C., has seen a “noticeable change in the accounting world” since he first started 15 years ago due to automated tools and web applications. “The technology advances, although great and time saving in certain instances, is also creating new problems to be dealt with,” says Chris. Now, his role is evolving to include advisory on these systems, so that businesses can efficiently pull and use financial data effectively.
What Does a Bookkeeper Do for a Small Business? Daily Responsibilities
There are many myths about bookkeeping, but one thing is clear: it’s not just data entry.
On any given day, bookkeeper responsibilities will include the following:
- Maintain the general ledger and record all accounting data (i.e., track and record both incoming debits and outgoing credits on all of your accounts).
- Perform reconciliations and manage discrepancies between your books and the monthly balances from your financial institutions.
- Process payments to vendors, financial institutions, etc. and manage accounts payable (AP).
- Process invoices to customers and manage accounts receivable (AR).
- Track and maintain inventory records.
- Stay up-to-date with professional software in order to automate processes.
- Help assess, implement and manage bookkeeping systems and automated software.
- Generate balance sheets, income statements and other financial statements that demonstrate financial health and trends.
- Handle payroll duties as necessary.
- Prepare necessary tax documents for your tax returns.
- Keep your business in compliance with federal and state laws and regulations.
Ultimately, a bookkeeper maintains your books so you or your accountant can see where money is going in and where it’s going out.
What Is a Full Charge Bookkeeper?
A full charge bookkeeper handles the full responsibility of a company’s accounting cycle and financial activities. They may perform tasks such as:
- Overseeing accounting clerks
- Handling account reconciliations
- Managing accounts payable and accounts receivable
- Managing payroll tax compliance
- Monitoring and managing cash flow
- Preparing financial statements for management
These duties overlap with responsibilities often handled by controllers, accountants and certified public accountants (CPAs), although these positions have additional responsibilities not handled by bookkeepers.
In smaller businesses, a full charge bookkeeper often manages all finances independently, without reporting to a senior accountant or controller. Some businesses employ several bookkeepers who focus exclusively on areas like payroll, AR and AP and may report to a full charge bookkeeper. As your business continues to grow, an accountant—and eventually a controller—will need to lead the accounting department.
Bookkeeper vs. Accountant: What’s the Difference?
Bookkeepers are not accountants. Although bookkeeping and accounting professionals work in tandem, the two professions carry separate credentials and approach a company’s finances in different ways.
Most bookkeepers hold a high school diploma and a degree in accounting or business, unlike CPAs, who require formal certification. However, many pursue certifications from organizations like the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers and have at least one to two years of experience. They may also gain certifications in specialized areas like payroll or software like QuickBooks.
Bookkeepers manage daily finances, preparing information for accountants who interpret these reports, advise on taxes and guide financial operations. While accountants focus on tax and advisory roles, bookkeepers handle the practical use of bookkeeping software, including troubleshooting. “It really falls on the bookkeeper—the intermediary between the systems and the business owner—to learn and understand this technology and to guide their clients,” states Christopher.
Do You Need a Bookkeeper if You Have QuickBooks or Other Accounting Software?
Today’s bookkeeper has access to automated bookkeeping tools that simplify routine tasks. Transaction data can be imported directly from digital sources, eliminating the need for manual data entry while reducing the risk of errors. Cloud-based accounting software makes it easier to manage bookkeeping from mobile devices, transfer data between apps and keep up with transactions in real time.
“Originally the expectation of business owners was to hand off their bank statements and receipts, and you [the bookkeeper] were to produce the reporting… With technology now, with web platforms allowing us to have constant access to our banking, our merchant accounts, etc., business owners have access to instant, free data,” says fractional bookkeeper Christopher C. “Now a business owner can look on their Shopify account and get year-to-date analytics, and their Bank of America account can tell them general spending categories,” he says.
As technology continues to reshape the bookkeeper’s daily work, advisory and high-level consulting become valuable assets to the business.
“Although all this wonderful data is available, it is still very scattered and incomplete.,” says Christopher. That’s where bookkeepers can step in to provide proper procedures and guidance to organize and validate the data. “My role as a bookkeeper is less about the physical data input of transactions and more about advising what systems and integrations make sense for the client’s needs, creating those systems and then providing support and consulting on that system,” he says.
When to Hire a Bookkeeper for Your Business
For growing businesses with a high volume of transactions, the DIY approach is time-consuming. So, when is it worth it to invest in the cost of hiring a bookkeeper?
- You’re too busy categorizing transactions to focus on selling or growing.
- You’re behind on collecting on accounts receivable or sending out invoices.
- You’re not keeping bills and receipts in an organized system or database.
- You have too many accounts to gain valuable business insights.
- You don’t have any clarity on what you’re spending and making.
- You play catch-up every year-end to get your books in order for tax season.
- You’re having issues integrating your financial data, or you constantly have to resolve software issues yourself.
If you’re encountering these issues with your business right now, it’s likely time to hire an outsourced bookkeeper.
How to Hire a Bookkeeper: Is a Fractional Bookkeeper the Solution?
Outsourced bookkeeping gives you more options in today’s changing work environment. With the right experience, a fractional bookkeeper can start performing their duties and making a difference for your business right away. They can be a regular asset for the company or assist in busier seasons, providing a flexible and cost-effective solution for businesses.
Additionally, you don’t have to be limited solely to bookkeepers in your organization’s physical region. Local bookkeepers are typically going to be generalists. By going with a remote bookkeeper, you can find someone with expertise in your industry even if they don’t reside in the same state as your business.
Keep It Simple: Delegate Your Bookkeeping
In the modern era, manual data entry is outdated. A skilled bookkeeper must be adept with industry-standard financial software such as QuickBooks, Sage, Xero, and NetSuite. These tools enable automatic import and integration of financial data, streamlining the process for organizing and reporting financial information.
Do you want to streamline your bookkeeping with the help of a fractional bookkeeper? If your business needs assistance with daily bookkeeping needs, or if you’re looking to increase the capacity of your financial team, request a consultation to learn about Paro’s highly-vetted bookkeepers and accounting professionals, including full charge bookkeeping experts.
