Almost every business in the UK is obliged by law to keep records of its finances and maintain books. The process of recording finances and maintaining the books is known as bookkeeping. But do you know what is a bookkeeper and what does a bookkeeper do? Let’s explore it today!
What is a Bookkeeper?
Bookkeeping plays a crucial role in any business. A bookkeeper is a person who performs bookkeeping. To put it simply, a bookkeeper is an accounting professional who processes, records, and maintains the finances of a business and keeps them in order.
Typically, a bookkeeper manages a general ledger, records general entries, and generates financial statements. He/She performs a large volume of transactions including sales, purchases, payroll, payment of bills, accounts receivables and so on. Once, bookkeeper completes the books, they are further reviewed by an accountant or business owner to do the adjusting entries and to make informed business decisions.
What Does a Bookkeeper Do?
Bookkeepers keep error free and up-to-date records of financial transactions of a business. They collect, classify, and store the financial records of a business, like cash flow statements, profit and loss statements and bank reconciliation, etc.
In most cases, their reports are delivered to accountants and business owners for further processing. The reports help them to form a budget, identify trends and to craft plans for the future. In some instances, bookkeepers and accountants share the same jobs, like a bookkeeper can prepare yearly financial reports and tax returns same as an accountant.
Duties of a Bookkeeper
Generally, the core duties of small business bookkeepers are to do data entry and bank reconciliation. These are the foundational tasks that bookkeepers perform on which others duties depend. Let’s break down the bookkeeping duties into a core, additional and advanced:
Here is the list of core duties that a bookkeeper performs:
- Data Entry: It is recording financial transactions and maintaining the books.
- Bank Reconciliation: It is the process of comparing business accounts with that of the bank.
- Monthly Reports: Preparing monthly reports and summarising the financial position of a business.
The additional duties that a bookkeeper performs include:
- Payroll: Working out employees’ pay and making necessary deductions.
- Accounts Receivable (Controlling Credit): Preparing and sending invoices and following through to get the payments.
- Accounts Payable: Ensuring that all the debts and invoices from the suppliers are paid accurately.
Other than core and additional duties, there are some advanced duties of a bookkeeper. These are:
- Tax Return: Filing taxes to the tax authorities.
- Annual Report: Preparing the annual profit and loss & balance sheet of the business.
- Business Strategy: It includes budgeting and forecasting. Advising on business improvement.
- Business Process: Researching, analysing, and implementing the latest software to improve and enhance business performance.
- Training: Training staff with the latest software solutions.
- Meetings: Arranging meetings with accountants and tax authorities, on the client’s behalf on financial and tax concerns.
Do You Need a Bookkeeper?
The quick answer is yes if you are operating a business and you don’t have the time to manage your finances. However, in most instances, your accountant will decide whether you need one or not. For small businesses, sometimes a bookkeeper may suffice the need for an accountant.
Although bookkeeping can be done by business owners themselves, however, it is recommended to hire a bookkeeper to keep your finances accurate and reliable.
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Quick Sum Up
Now that you know what is a bookkeeper and what does a bookkeeper do, consider hiring one to keep your finances accurate and up to date. A bookkeeper can make the life of an accountant and business owner easier by providing accurate and organised financial records, ultimately helping an accountant to process finances more efficiently. With the combined efforts of an accountant and a bookkeeper, you can focus on your business growth.
Disclaimer: This blog is intended to provide general information about the topic.