I get a lot of people who are looking for a bookkeeper, but they don’t understand what that actually means. A lot of people think of a bookkeeper as someone who pays their bills, makes sure they have money in the account, invoices customers, and keeps up on day to day financial needs of a business. Sometimes it is also thought that they record financial transactions into accounting software or general ledgers. And a some assume a bookkeeper is also someone who prepares taxes. While all of those can be true, not all bookkeepers provide all services, and many can provide much much more.
Business owners often go looking for a bookkeeper, but what they’re actually wanting is an office manager or personal assistant. They want someone to pay their bills for them, make deposits at the bank, and call customers to get them to pay overdue invoices. While many people who do these tasks consider themselves a bookkeeper, that is not what bookkeeping is. If you want someone to do these things for you, what you really should be looking for is office staff that can preform those functions, like an office manager. On top of having someone to take care of your day to day financial needs, it is important to have a bookkeeper as well.
According to Wikipedia “Bookkeeping is the work of a bookkeeper (or book-keeper), who records the day-to-day financial transactions of a business. They usually write the daybooks(which contain records of sales, purchases, receipts, and payments), and document each financial transaction, whether cash or credit, into the correct daybook—that is, petty cash book, suppliers ledger, customer ledger, etc.—and the general ledger.”
Basically a bookkeeper records all of your daily business transactions either into ledger books, or much more commonly now, into accounting software. A bookkeeper should understand how to categorize each transaction, how those transactions are entered into the General Ledger, and how to create financial reports from the General Ledger.
Accounting software have changed the way that bookkeeping can be done, and made life much easier for many people. However, the down side is that more and more I see people use the software, but have no idea what’s going on behind the scenes and so they are not performing accurate bookkeeping. This create inaccurate financial statements, overstated income, unreliable bank account balances, and much more.
If you really want to know how your business is doing, you need to find a reliable bookkeeper. This person should be able to go over your financial statements with you each month and discuss what they mean. A good bookkeeper can analyze your income and expenses help you see trends in your business. They can tell you exactly what is in each account on any of your financial statements, especially Balance Sheet Accounts. Many bookkeepers can go even further and analyze your profit margin, find ways to save on expenses or increase income, discuss the stability of your business financially and help you budget and plan for the future.