Who is going to maintain track of the finances now that your firm is up and running? This is where a competent, dependable, and trustworthy bookkeeper can help. A skilled bookkeeper will maintain track of your finances and, presumably, keep you informed about your company’s financial health. If your company’s finances aren’t in good shape, it’s unlikely that you’ll remain in business for long.
With all of the other monotonous work needed in getting a business up and going, there isn’t much time to consider how important a skilled bookkeeper may be to your company. We’ll go through what a bookkeeper does in greater detail here to give you a better idea of what they do. We’ll begin by offering some background on how double-entry bookkeeping came to be.
The Birth of Double-Entry Bookkeeping
In Venice, Luca Pacioli, a monk, a magician, and clearly a mathematician, discovered double-entry bookkeeping. According to records, Luca Pacioli authored a massive arithmetic encyclopedia that includes a brief part on double-entry accounting. Luca Pacioli is most recognized for a minor section of the math encyclopedia. Nowadays, double-entry bookkeeping is employed in almost every industry.
Responsibilities of a Bookkeeper
A bookkeeper’s basic responsibilities include recording daily financial transactions, monitoring the chart of accounts, and creating financial statements for set periods. These responsibilities are far more comprehensive and crucial than they look. Depending on their skill set and how much responsibility you feel comfortable entrusting them with, bookkeepers can accomplish a little or a lot. The following are some of these responsibilities:
The creation and/or maintenance of the chart of accounts, as well as the definition of bookkeeping policies and procedures, are all part of system development to account for financial transactions.
- Financial information is entered into a database.
- Using source documents like as cash receipts, customer invoices, and supplier invoices to customers, posting information to accounting journals or, these days, accounting software.
- Accounts must be reconciled to maintain correctness.
- For compliance purposes, complies with federal, state, and local legal requirements.
- Collects, analyzes, and summarizes account information and trends to create various financial reports/statements. Income statements, cash flow statements, and balance sheets are just a few forms of financial statements that are commonly prepared.
Entry-level bookkeepers and full-charge bookkeepers are the two types of bookkeepers. Basic bookkeeping activities include data entry of financial transactions and maintaining the chart of accounts for entry level bookkeepers. They may, however, have a little more responsibility. Financial data can be entered on a daily, weekly, monthly, or quarterly basis. The frequency with which the data is entered is determined by the business owner’s desire for these duties to be completed. Full charge bookkeepers have greater responsibility than entry level bookkeepers, although while they do do some accounting chores, their obligations are usually not as complex as those of an accountant.
Tasks and Responsibilities of Full Charge Bookkeepers
What exactly does the word “full charge” imply? This phrase denotes that the person in this job is responsible for more than just keeping the ledgers up to date. A full charge bookkeeper’s tasks include making journal entries and preparing monthly or quarterly financial statements. Full-charge bookkeepers work for small to medium-sized firms and undertake the same activities that accountants do for larger companies. A full-charge bookkeeper is in command of a company’s whole financial operations.
Differences between the responsibilities of a bookkeeper and Accountant
An accountant is a professional accountant who has been trained in all aspects of accounting. The Certified Public Accountant (CPA) is the most prevalent accounting designation (CPA). There are a couple of additional common accountant designations, such as Certified Management Accountant (CMA) and Certified Internal Auditor (CIA) (CIA). To lawfully practice, a Certified Public Accountant must be licensed, although a Certified Management Accountant and a Certified Internal Auditor do not need to be licensed. Accountants must follow the Generally Accepted Accounting Principles (GAAP) rules and adhere to the ethical standards and guiding principles of the region in which they practice. For accountants, a bachelor’s degree is the minimum educational requirement.
A bookkeeper is responsible for the day-to-day financial activities that accountants would rather not deal with, such as data entry and chart of accounts construction and maintenance. Accountants consider these, and other routine duties, to be inefficient uses of their expertise, skill set, and educational background, hence they do not execute them. A bachelor’s degree is not required for a bookkeeper, although some form of professional training in the field of accounting/bookkeeping, as well as understanding of the Generally Accepted Accounting Principles (GAAP), is usually required.
Good Bookkeepers – The Payoff
A good, dependable, and trustworthy bookkeeper may be a huge help to your company. A bookkeeper, depending on their skill set and whether they are entry level or full charge, can keep your business financials on track, keep you informed about the financial health of the company, and keep you out of trouble with the taxing authorities, which is something you want to avoid.
As a business owner, your primary priority should be the bottom line, both literally and figuratively. The bottom line in terms of finances is critical because if your business isn’t financially sound, you may not be able to stay in business for long. All of the time, effort, and money you put into getting the business off the ground could be wasted if it fails, which happens to many enterprises in their first few years.
A qualified bookkeeper should keep you up to date on the financial status of the company. A skilled bookkeeper should be able to identify possible problems and give recommendations to you, the business owner, on how to address them before they become major issues. In the end, a professional bookkeeper may help you save time, money, and headaches. A good bookkeeper can help to make your life, a little less taxing by allowing you to focus on increasing productivity, which in turn increases revenues, rather than you trying to figure out how to balance the books.