If you’re interested in working in the accounting sector, a bookkeeper position is one of the best ways to go about it. You may not have heard of bookkeeping before and wonder what bookkeepers do. A bookkeeper’s typical responsibilities revolve around constantly monitoring the finances of a company, communicating with a variety of departments, and helping companies succeed financially.
To decide if you want to get a degree in bookkeeping, you’ll need to understand the role of a bookkeeper, their daily tasks, and the types of skills that successful bookkeepers regularly use.
What Is a Bookkeeper and What Do They Do?
A bookkeeper is a person who documents a company’s daily financial transactions to help prepare their accounts. To document these transactions, they are often responsible for keeping financial records updated for their company. In practice, a bookkeeper’s duties will usually consist of balancing bank accounts to ensure that payments going out and deposits coming in have been reported correctly.
How Does Bookkeeping Work?
Bookkeeping has a long history, dating back to pre-2000 B.C.E., when communities were still in a barter and trade system. The earliest entries would describe what was traded between two parties, with the trades documented in individual ledgers. Over the years, as the economy changed to a cash and commerce system, and bookkeepers continued to build on the accomplishments of others, more accurate bookkeeping methods were developed.
Today, bookkeeping provides contemporary companies with the same basic services that it provided ancient traders. Bookkeeping continues to help individuals and organizations keep track of their expenses along with their income. In other words, a bookkeeper records the monetary values of an organization’s transactions.
Bookkeeping is a preliminary process to accounting. It’s an information gathering job that provides valuable data to accountants, who then use the data to make more informed decisions. Bookkeeping reveals the value of a company, as well as tracking changes to that value due to losses or profits that take place over a set period.
Bookkeepers vs. Accountants
While they are related to one another, the difference between bookkeepers and accountants is that accountants are responsible for some financial tasks that bookkeepers are not trained to handle. These positions do complement one another, however.
Essentially, a bookkeeper will provide the base data for an accountant to work with as they analyze a company’s finances. Since the bookkeeper has the responsibility to record all of the business’s day-to-day transactions, they are vital to an accountant’s work. After the data has been collected, the accountant then interprets that data to provide recommendations to individuals and businesses. In short, a bookkeeper is interested in the short term of a company’s finances while an accountant is more geared towards the longterm.
With that being said, a bookkeeper’s job shouldn’t be reduced to entering data into a spreadsheet. While an accountant is responsible for more in-depth analysis and financial recommendations, a bookkeeper should be knowledgeable of the law and be skilled at conducting specific financial analyses to make sure everything is accurate. As bookkeepers have these skills, they’re often vital to a company passing an audit with flying colors.
What Is a Bookkeeper Responsible For?
Bookkeeper tasks and responsibilities can be fairly wide-ranging depending on what the business wants the bookkeepers to oversee and the amount of staff the company has. A smaller company, for example, might have a bookkeeper handle more duties than a larger company where they can divvy up tasks among a department of bookkeepers.
To give you an idea of what you can expect as a bookkeeper, you should know about the daily tasks that bookkeepers are typically responsible for, along with other responsibilities they have periodically.
What Does a Bookkeeper Do on a Daily Basis?
On a day-to-day level, a bookkeeper’s tasks involve keeping track of receipts and conducting data entry. To keep accurate records, they often label expenses and document who the business paid, along with the amount of money involved in the transaction. In addition to tracking expenses, a bookkeeper records any payments from clients or customers, while also sending out invoices when needed.
To record all the expenses and income that occur on any given day, a bookkeeper typically needs to know how to use bookkeeping software that helps record data. Sometimes this software also incorporates databases and online spreadsheets.
The daily responsibilities of a bookkeeper largely revolve around preparing four different kinds of financial statements. If you’re a bookkeeper, you’ll be working with the following financial documents:
- Balance sheet: A balance sheet gives a snapshot of a company’s financial health at a selected point in time. This document reveals a company’s current liabilities, assets, and shareholders’ equity, as well as the way in which the company has been financed.
- Income statement: The income statement, sometimes referred to as a profit and loss (P&L), shows a company’s revenues and expenses over a specific accounting period. This financial statement helps companies know how they performed over a given time.
- Statement of changes in equity: Otherwise known as the statement of total recognized gains and losses, the statement of changes in equity reveals any differences in a company’s retained earnings, share capital, and reserves during a reporting period.
- Cash flow statement: The cash flow statement records the cash-like hard equivalents that enter and leave a company. In effect, this statement helps companies determine how well they manage their cash position.
Other than putting together the financial statements listed above, a bookkeeper will likely have to communicate with coworkers and clients regularly to receive accurate financial information. For example, a bookkeeper checks with coworkers to see if they made any transactions that day so they can record said transactions in the relevant document.
Part of a bookkeeper’s daily communications will be around crafting travel vouchers, receiving receipts from coworkers who made company purchases, dispensing petty cash to relevant parties, and reimbursing employees for any company expenditures. Since so much financial information needs to be communicated to bookkeepers, companies often have systems in place to make it easier for employees to report transactions. Regardless of the system in place, a bookkeeper should be an excellent communicator so no transactions are missed.
Other Bookkeeper Responsibilities
Bookkeepers have other duties and responsibilities that sometimes don’t happen every day. To give you a well-rounded idea of what bookkeepers do, you can find some of the other typical responsibilities of bookkeepers listed below:
- Send out financial statements
- Reconcile accounts monthly
- Provide accurate financial data and statements to accountants to help with taxes
- Help companies stay within their annual budget
- Pay invoices
- Calculate sales tax and then remit it to the government
- Repay debts at appropriate times and have a strong handle on a company’s level of debt
- Monitor and tag fixed assets
- Process company payroll
- Report discrepancies or issues
The above responsibilities range in frequency, from weekly tasks to ones that may only be needed quarterly or annually. With so many responsibilities, it’s no surprise that bookkeepers are so valuable to businesses.
What Does a Bookkeeper Do for a Business? How Valuable Are They?
Bookkeepers are crucial to the financial success of businesses all around the country. Some of the benefits companies gain from using a bookkeeper include:
- Organized books: For companies that don’t employ a bookkeeper, tax season is likely going to be a problem. They’ll have to compile a vast set of data and worry that they might have missed something when paying their taxes. With a bookkeeper, a company’s books will already be in order, helping them pay the correct amount of taxes and find areas where the company is eligible for deductions.
- More informed decisions: When a bookkeeper keeps the records updated, a company has a greater handle on where their money going. This information helps a company decide how to budget appropriately and spend their money more wisely. By having more information at their disposal, companies can often save money and find areas where they could maximize revenues.
- Free up time: Sometimes, businesses think that they can spread bookkeeping duties amongst employees instead of having a dedicated bookkeeper. One of the primary disadvantages of this bookkeeping method is that it takes up the time of employees when they could be doing more profitable work that relates to their position. By hiring a bookkeeper, a company give their employees greater control over their time and free up their schedules to complete tasks related to the position they were hired for.
- Prepare for seasonal factors:Part of running a business is knowing when products or services are going to be the most popular. Additionally, companies should know if their business has seasonal downswings or upswings. This information allows businesses to prepare for times when they might need to scale back expenses or carry more products, to name only a couple of potential situations.
- Audit-proof finances: One of the top benefits of having a bookkeeper is that they maintain a company’s records so the books are entirely accurate. Additionally, bookkeepers keep detailed documentation that can help with audits. More accurate books mean that a company can pass any audits with flying colors and never have to worry about running into penalties or legal issues for failing an audit.
- Gain in-depth analytics. When a company has a bookkeeper, they also have greater analytics to work with to help them understand their business better. Some of the metrics they’ll have more information on will be related to profitability, costs, and revenue, among other factors. This information can help a company make more informed decisions.
Who Is Right for a Bookkeeping Position?
If you’re considering bookkeeping, you’ll probably also be wondering what skills are required in the position and if you’d be a good fit. For those interested in bookkeeping, consider the primary skills that top bookkeepers rely on to succeed:
- Head for numbers:Knowing how to do basic math is absolutely crucial for success. Solid numerical skills are vital to bookkeepers, as you’ll be balancing books and keeping track of money gained or lost in transactions. To succeed, you’ll need to be confident with addition and subtraction, along with multiplication and division.
- Communication ability:As bookkeepers communicate the financial state of a company to a variety of departments and collect records from coworkers, you’ll need to have excellent communication skills. It’s important to know how to speak with people either in-person or through electronic methods to make yourself and the company appear professional.
- Computer savvy:Bookkeepers must be comfortable working with software, such as Quickbooks and Sage. Manual bookkeeping is continuing to decline as software takes over, so you need the computer skills to do the job properly.
- Organizational skills:The best bookkeepers have the ability to organize data and keep track of all of a company’s transactions. Additionally, since some responsibilities are only needed periodically, a bookkeeper should know how to organize their schedule to factor in all of the requirements that come with a bookkeeper’s daily tasks and seasonal responsibilities.
- Detail-oriented:With the number of transactions that occur every day, a bookkeeper should be incredibly detail-oriented. Missing a transaction or misreading a number could throw a company’s financial data out of whack, leading to a variety of problems. Additionally, paying attention to every detail is critical for bookkeepers, as they’ll often be responsible for ensuring that other employees follow a company’s financial policies.
Types of Job Opportunities
Some of the primary job titles related to those with a bookkeeping degree are Payroll Specialists, Clerks, and Bookkeeping Specialists. With a degree, you’ll put yourself in a position to succeed at obtaining an entry-level bookkeeping or financial clerking position.
A career in bookkeeping allows degree holders to work in several different kinds of industries. Some industries that bookkeepers regularly work in include manufacturing, healthcare, government, insurance, and retail, among many others.
Learn More About the Bookkeeping and Payroll Specialist Associate Degree Offered Online at Vista College
To stand out in any application for a bookkeeper position and impress employers by fulfilling the duties that the job requires of you, you’ll need a degree. Vista College knows that your life is busy, and you can’t just stop everything to attend college. For this reason, we’re proud to offer an Associate of Applied Science in Bookkeeping and Payroll Specialist degree that can be earned completely online.
The program is accelerated and only takes 18-months to complete. These online courses include material designed to help students learn the skills that employers are looking for in applicants. Another major benefit of attending the program is how the courses prepare students to take the National Bookkeepers Association Uniform Payroll Certificate exam. Our online program is also bolstered by our personalized career services that help prepare students for future success.