What Is Bookkeeping? Definition, Tasks, Terms to Know

Some even become substitutes, consultants, or auditors, using their accounting skills in different capacities. You typically maintain accurate accounting records across all transactions while communicating with others. A bookkeeper’s job comprises maintaining and balancing financial records, including transactions from coworkers.

It’s a key component of the accounting process and can be done as frequently as daily, weekly or monthly. Accurate bookkeeping is vital to filing tax returns and having the financial insights to make sound business decisions. You can earn certification from the National Association of Certified Public Bookkeepers (NACPB) and the American Institute of Professional Bookkeepers (AIPB). The NACPB offers a certified public bookkeeper (CPB) certification, while the CPB offers a certified bookkeeper (CB) certification. Bookkeeping focuses on recording and organizing financial data, including tasks such as invoicing, billing, payroll and reconciling transactions.

Others, like payroll, can be outsourced to independent companies that specialize in the task. Not only are you entrusting your bookkeeper with sensitive data, you are relying on their accuracy to maintain the financial records for your business. A good bookkeeper never cuts corners, and they are indispensable to small business owners who want to spend time growing their business, instead of maintaining it. A bookkeeper is someone who prepares your accounts, documenting daily financial transactions.

1. Laura is a freelance writer specializing in small business, ecommerce and lifestyle content.
2. Bookkeepers manage a company’s financial accounts, ensuring they are accurate and easy to review.
3. Since bookkeeping is a more straightforward process than accounting, it is something that many people can (and do) opt to take care of themselves.
4. You will check bank deposits for fraud, fix balance sheet errors, and maintain accurate payroll records.
5. So even if you have accounting software, odds are, you still need a bookkeeper to manage the software, enter data, file reports, identify errors and keep everything current.

Bookkeeping is the process of keeping track of a business’s financial transactions. These services include recording what money comes into and flows out of a business, such as payments from customers and payments made to vendors. While bookkeepers used to keep track of this information in physical books, much of the process is now done on digital software. Any process of recording financial data is considered bookkeeping and is the first step of data entry into the accounting system.

Start Your Own Bookkeeping Business

Two of the most common are single-entry bookkeeping and double-entry bookkeeping. In this article, you’ll learn more about what bookkeepers do, why they’re important to a business, and how much they earn. You’ll also explore how to become one and https://www.kelleysbookkeeping.com/allowance-for-doubtful-accounts-and-bad-debt/ find suggested cost-effective courses that can help you gain job-relevant skills today. The expected job decline is primarily due to cloud computing and other software innovations automating bookkeeping tasks that a person would normally do.

An accountant may interpret the financial records put together by a bookkeeper to assess a company’s financial health. Becoming an accountant usually requires more training and education than bookkeeping but can be a good next step in your financial career. They can become an accountant or senior accountant, overseeing financial records and preparing statements. They can also become an accounting manager or controller, managing the financial activities of a company. Some bookkeepers go on to become corporate controllers or finance analysts, focusing on financial planning, analysis, and management. Others move into office management or become assistant controllers, overseeing daily operations and financial tasks.

Do you need a bookkeeper if you use account software?

Read some of our recent reviews and see what it could be like having Bench on your books. Small businesses may prefer to handle their books themselves, but hiring a professional bookkeeper can be helpful. In researching bookkeeping or bookkeeping accounting, you may come across information on accounting or find that bookkeeping and accounting are used interchangeably. While there is some overlap between bookkeeping and accounting, several factors distinguish these processes, as we explore in the table below. If you enjoy organization and numbers and have experience with bookkeeping, starting your own business offering this service might be a smart career choice.

Managing the general ledger is part of your daily responsibilities as a bookkeeper. You may determine if any payments are due, submit them, and record them in the financial ledger. As a bookkeeper, you may also receive client payments and deposit them at your company’s financial institution. When first starting out, market yourself as a professional who is well-versed in managing accounts, reconciling transactions, providing financial overviews and balancing budgets.

Next, set aside a dedicated time either weekly or biweekly to review your bookkeeping, reconcile transactions and complete necessary data entry. You can either keep hard copies or opt for electronic files by scanning paperwork. Bookkeeping tasks provide the records necessary to understand a business’s finances as well as recognize any monetary issues that may need to be addressed. Proper planning and scheduling is key since staying on top of records on a weekly or monthly basis will provide a clear overview of an organization’s financial health. Your bookkeeper might also prepare other auxiliary reports for your business, like accounts payable and accounts receivable aging reports.

Their work plays an important role in the operation of a successful business, which can have very many transactions in a single day, let alone a week, month, fiscal quarter, or year. Additionally, there may be other responsibilities based on the unique needs of your business. For example, a bookkeeper may be required to learn a specific accounting software system or participate in certain meetings. A bookkeeper can expect to earn a salary in the range of $30,000-$60,000 a year in the US.

Plus, anyone who has tried to manage the income and expenses of their own business knows that bookkeepers deserve some serious respect. Today any bookkeeper worth their beans uses some kind of software platform to track finances. But like those old wastebook days, bookkeepers typically hand off their records to an accountant come tax time or when big decisions need to be made. According to 81 percent of CBs who interviewed for a new job after becoming certified, having a certification contributed to getting the interview [4]. With a certified bookkeeper designation, you are qualified to perform all critical functions through the adjusted trial balance and basic payroll for small to medium-sized businesses. A proper financial data management system can provide valuable, actionable insights and prevent problems, such as skimming fraud.

Gain additional bookkeeper certifications

The size and scope of a business will determine whether the company needs a part-time bookkeeper, full-time specialist bookkeeper, or an entire accounting department. Individuals who are successful bookkeeping professionals are highly organized, can balance ledgers accurately, have an eye for detail and are excellent communicators. It’s important to note that not all lenders and investors require certified or audited financial statements. However, it’s still a good idea to ask an accountant to review your bookkeeper’s financial statements for accuracy and completeness prior to submitting them to a third party for consideration. And even if you’re not looking for funding, consider asking an accountant to review your financial statements at least once a year.

Bookkeepers also deposit money, cash checks, and ensure correct credit card transactions. Bookkeepers play a vital role in the business accounting cycle by collecting and inputting data. As a detail-oriented professional, you would play a crucial role in the organization and growth of companies from small businesses to major corporations.

Build essential bookkeeping skills.

Standard methods of bookkeeping are the double-entry bookkeeping system and the single-entry bookkeeping system. Good bookkeeping practices are essential for a business to succeed, especially when it comes to the tax-paying season. The is accumulated depreciation a current asset American Institute of Professional Bookkeepers offers certification for experienced bookkeepers. You will learn how to record costs, value inventory, calculate depreciation, analyze financial statements, and use software programs.

A few employers offer on-the-job training for bookkeepers by providing internships and placement programs. According to the US Bureau of Labor Statistics (BLS), most bookkeepers can learn the profession’s basics in about six months [3]. Once you become a qualified bookkeeper, you can work as a permanent employee or freelancer. You may handle payroll functions as a bookkeeper, keep tax withholding records, and issue paychecks or send information to a contracted payroll service. Depending on the organization’s size, keeping track of business expenses and reconciling business statements may be your responsibility. As a bookkeeper, you will verify and balance receipts, keep track of cash drawers, and check sales records.