As a small business owner, have you ever asked yourself ‘what do bookkeepers do?’ If so, there’s no need to worry. Many business owners just like you have wondered the same thing at least a dozen times, usually when they’re overwhelmed with finance-related paperwork and wondering what to do with it all. So, you’re not deficient somehow just because you don’t know what a bookkeeper’s actual job is.
There’s another reason so many business owners don’t know what a bookkeeper does. This reason is that there isn’t an easy, one-size-fits-all answer to the question ‘what do bookkeepers do?’ We’ll be delving into a bookkeeper’s overall job description, but the duties they perform depends largely on what a business’s needs are.
Why do You Have to Have a Bookkeeper in The First Place?
Before we dig into what a bookkeeper does, let’s tackle a question that’s a little bit simpler than the first one we asked. Why do you have to use a bookkeeper in the first place? Well, unless you’re an accountant or some other kind of financial professional, the answer should be readily apparent. You have to have a bookkeeper because you didn’t go into business to wrestle with receipts, invoices, and accounting software for the rest of your life.
No, your passion lies elsewhere. It lies in delivering your chosen product or service, for instance. It also lies in marketing your brand and snagging new clients. In other words, your passion lies in actually running your business. You’ll learn more as you continue reading, but this is the shortest and most point-blank way to explain why your small business needs a bookkeeper.
With that out of the way, we can now take an in-depth look at what a bookkeeper or bookkeeping service does for your business on an everyday basis.
So Exactly What Do Bookkeepers Do?
Again, there are as many answers to these questions as there are business owners who ask it. The work a bookkeeper does is just like everyone else’s – its precise nature depends on the company that hires them. With that caveat in mind, we can summarize the duties they handle most often in order to respond with more than a blank stare when somebody asks, ‘What do bookkeepers do?’
Now let’s get started. In the following sections, you’ll see what exactly it is that bookkeepers bring to your small business.
Monitoring Your Bank Feed
A big part of a bookkeeper’s job is monitoring your company’s bank feed. This is a process where the bookkeeper reconciles the transactions that have downloaded into one of the companies registers and makes sure to input any transactions that come from sources outside of their accounting software. The external transactions that a bookkeeper might need to put into the company register can include:
- Debit/credit card transactions
- Electronic fund transfers (EFT) like echecks and wire transfers
- Manually written checks
Managing the bank feed can also include pairing up customer payments with specific bank deposits. This represents an overlap with the management of outgoing vendor payments and accounts receivable.
Taking care of the bank feed is often all that’s required for very small companies. In this scenario, a core group of employees would create invoices, pay vendor bills, make various types of bank deposits, and use debit/credit cards to buy company supplies as the need arises. Here, the role of the bookkeeper would be pretty straightforward. They’d come in afterward and balance the company register with bank statements every month.
A bookkeeper can also take care of your company payroll. The exact role a bookkeeper plays in getting everyone paid depends on what kind of bookkeeper you use and what your company needs. In-house bookkeepers often take care of the entire payroll process, especially if they work for a company full-time. Outsourced bookkeeping services often help companies process their employee paychecks, which means they export your payroll information into whatever accounting software you use after they’ve received it directly from you via an outside payroll service provider.
Handling Accounts Receivable
There are many different ways a company can take care of its accounts receivable (A/R). The company’s other employees may input their own invoices and estimates, for instance. In such cases, the employees probably take the customer payment on the invoices as well.
However, there’s another popular way to go about managing your A/R. The client company uses a software tool that’s specific to their industry to make an estimate on a given job. After that, they hand things over to their bookkeeper. The bookkeeper then inputs the estimates into their online accounting software and generates invoices as the job progresses.
Handling Accounts Payable
Somebody has to make sure your bills get paid, and there’s no one more fit for the job than a bookkeeper. This is another area where exactly what the bookkeeper does is different for each company, but most businesses require some version of the following. A bookkeeper typically serves as the contact person for a business’s vendors. The bookkeeper is also in charge of receiving vendor invoices and entering them into the company’s accounting system. After the invoice is approved by the appropriate department, the bookkeeper typically uses some form of accounts payable software to store the invoice and make sure that the vendor receives payment.
Interpreter, Translator, Go-Between
It might not be by design, but bookkeepers usually end up acting as a go-between with you and your CPA. This is because your bookkeeper knows the details of your finances better than anyone. As a result of this detailed knowledge, it’s often easier for your bookkeeper to deal with your tax professional when it comes to filing your business’s taxes. Tax season also requires your bookkeeper to work with your interpreter/translator. You’ll need someone to go over your return for accuracy, right? And if you’re like most business owners, you’ll also want to understand why you’re paying this or that amount in taxes. These overlapping tasks might go unmentioned most of the time, but that doesn’t mean they’re not essential to a bookkeeper’s job.
At this point, you should have a pretty good picture of a bookkeeper’s everyday duties. As you’ve already seen, there’s a lot more to bookkeeping than just entering data once a week. Bookkeepers do a great deal more than most people realize.
Again, it’s important to remember that the preceding sections were just an overview of a bookkeeper’s most common functions. You should be able to answer the question, ‘what does a bookkeeper do?’ by now, but the specifics are always contingent on the type of work your business needs.
About Juan Pizarro
Juan A. Pizarro Llanos was born in Santurce, Puerto Rico. He's a Tax Advocate, a Certified Public Accountant and an Entrepreneur by heart. His passion for helping others and making a difference is remarkable. With more than 7 years of experience. Worked for Fortune 500 companies as a W2 Contractor under JPizars - CPA & Business Consultants LLC. During that time he saw the opportunity and the need of Small, Medium Businesses and Individuals not having a good CPA firm to guide them in the process. Juan A. Pizarro Llanos decide to continue his passion as a CPA. Juan A. Pizarro Llanos, CEO and Founder of JPIzars – CPA & Business Consultants LLC had work with clients in countries like Dominican Republic, Puerto Rico and Colombia. Also, in the United States in states like Florida, California, Texas, Georgia, Maryland, Virginia, Illinois, Ohio, Michigan, Nevada, New York, Tennessee, The Carolina's, Iowa and Arizona. Juan A. Pizarro Llanos has a BBA degree in Accounting with a minor in Business Communications from the University of Puerto Rico (Rio Piedras Campus). Also, Juan A. Pizarro Llanos has a Master of Accountancy (MAcc) from Bowling Green State University.