Developing reliable financial reports is crucial to help monitor business performance and keep your transaction records up to date. External users, such as investors, financial institutions, and the government rely on accurate bookkeeping to make better investment and lending decisions. For both internal and external users, businesses rely on an experienced and trusted bookkeeper.
This article will lead you through the various bookkeeping procedures, how entries are recorded, and the important financial statements involved.
What is a bookkeeper?
Although the bookkeeper definition is typically conflated or used interchangeably, bookkeepers and accountants have different duties and obligations.
A bookkeeper is an accountant in charge of keeping meticulous records of purchases, payments, and other banking transactions. Based on the interest and practices of different people or institutions, the types of transactions reported for and documented can vary greatly.
History of Bookkeeping
The practice of bookkeeping is not a new one for the human race. Bookkeeping may have existed as early as 6,000 BC, according to records. Nearly every ancient culture had some financial and numerical records, according to historical artifacts. Frater Luca Pacioli, an Italian mathematician, presented modern-day bookkeeping in the late 15th century.
It might not be easy to imagine life before computers, especially for a bookkeeper job. Before computers, spreadsheets were handwritten, humans did arithmetic, paper ledgers were kept by hand, and file cabinets were the standard. Various occupations, including accountancy, have changed and revolutionized as a result of technological advancements. Technological advancements, such as the apps used by leading accounting firms have enhanced the speed and complexity of bookkeeping.
What Exactly Does a Bookkeeper Do?
A bookkeeper can handle the recording of day-to-day financial transactions. It is an excellent tool for your bookkeepers to use if your accounting program supports daily automated bank inputs. All of your cash activities will be managed by your bookkeeper, who will enter them into the system on a regular and accurate basis. They’ll be able to assign them to the relevant accounts in your accounting software and provide weekly or monthly reports that will help you track your company’s progress.
All of your business spending must be recorded and reconciled to any purchase orders and delivery receipts to verify that you are getting value for what you paid for. It will be handled by your bookkeeper, who will also record any petty cash or credit card purchases into your accounting system. They can also keep track of who is paying what and spot any possible overspending.
Responsibilities of a Bookkeeper
The following are some of the obligations that come with a bookkeeper job.
1. Daily transactions Records
A bookkeeping specialist can handle the recording of day-to-day bank transactions. It is an excellent tool for your bookkeeper to use if your accounting program supports daily automatic bank feeds.
2. Invoices are sent out, and the accounts receivable ledger is kept up to date
The cashier is usually in charge of preparing invoices and sending them to clients. A cashier is also likely to be in charge of the accounts receivable ledger, as well as pursuing down late payments.
3. Taking care of the payables ledger
Up to a particular financial amount, accounting professionals normally make payments on behalf of the company. Payment of supplier invoices, costs, and petty cash are all included.
4. Cash flow Monitoring
One of the most crucial responsibilities of a bookkeeper is to ensure that the firm does not run out of cash daily. If it appears that the company requires more immediate cash, it can take immediate action or offer recommendations.
5. Getting the books for the accountant
When the accountant requires the accounts, it’s the bookkeeper’s job to ensure they’re valid and up to date. It enables the accountant to provide business recommendations based on their abilities and knowledge.
Types of Bookkeeping
• Single Entry System
The transactions of the firm influence only one account. A cash book is created in this system, which shows the payment and receipts of cash transactions. The cash flow statement and personal accounts of debtors and creditors are kept in this method, and no other ledger is kept. Every business transaction is entered into the cash book without using the double-entry system principles.
• Double Entry System
Double-entry accountancy is an accounting approach in which a transaction is entered into two or more accounts in the same way. At least one account receives a debit, and at least one other account receives a credit. The overall debits and credits must equalize, which means they must account for the transaction’s whole dollar value.
• Bookkeeping software
Accounting software benefits entrepreneurs by allowing them to keep track of accounts payable and receivable. Have a comprehensive picture of their profitability and be ready for tax season with the program. As a company grows, its accounting requirements become more sophisticated, necessitating a specialized enterprise resource planning (ERP) system.
• Virtual Bookkeeping
When bookkeeper responsibilities include working with a client remotely, this is called virtual bookkeeping or cloud accounting. Accounting software that allows you and your clerk to share an account makes this possible. Your cashier can use a shared account to submit banking transactions, review and update reports, settle accounts, and execute other essential accounting duties without having to meet with you in person. To ensure proper file transfer and communication, the accountant and the business must use the same accounting software in this setup.
Importance of Bookkeeping
Bookkeeping aids in the budgeting of your business, the preparation of tax returns, the organization of your firm, and much more. Here are some reasons why bookkeeping is critical to your company’s success.
1. Assists you in making accurate budgeting decisions
Any firm needs bookkeeping because it makes budgeting so much easier. A budget creates your business’s financial roadmap. You can plan for future spending for your business to help with growth if you have a budget in place.
2. Keeps you tax-prepared
At the end of the fiscal year, businesses must file their taxes. You’ll have financial information ready for tax season if you have an accounting system in place, and the tax office won’t be screaming down your throat.
3. It’s Simpler to See Business Goals
It isn’t easy to create any growth goals when you have accurate numbers or data to analyze. Poor financial records may prevent this from occurring at the desired rate. You may more precisely sketch out your business goals and accomplish growth by staying on top of your finances and keeping regular financial records.
4. Keeps meticulous records
Last-minute stress from locating a critical piece of business can result in lost deadlines and minor blunders. You can keep organized records by doing your books frequently, staying on top of them, and not leaving them until the last minute. It will become much more useful to locate the bits of information you require in a short period as time goes on.
5. Complying with government guidelines
Every year, the government announces a new tax scheme with which firms must comply. Businesses will be required to begin filing their taxes digitally, using apps and software.
Comparison of Bookkeepers and Accountants
Accountants are in charge of classifying, evaluating, interpreting, reporting, and presenting financial data, whereas bookkeepers are in charge of recording payment information.
Duties of bookkeepers
The foundation for the final accountancy operations is laid by transaction recording, which an accountant can also handle. The biggest difference in occupations between bookkeepers and accountants is the limitations of the bookkeeper’s skills in financial data analysis and interpretation. A bookkeeper can maintain track of all financial transactions for a corporation daily.
Duties of Accountants
For analyzing and interpreting recorded financial data, an accountant follows accounting standards, principles, and procedures. The task performed by accountants are:
• Financial transaction analysis
• Statements and financial documents in summary
• Financial data interpretation
• Information from reviews is categorized.
• A summary of the economy’s performance and
• Reporting on the financial situation of the company
Tax accountants and Certified Public Accountants are two more types of accountants.
Small enterprises, charitable groups, and corporations all benefit from the services of bookkeepers. Documenting transactions, creating reports, and assisting with accounting activities play a critical part in managing a company’s finances.
If you’re looking for a reliable bookkeeper in Florida, turn to one of the most reliable accounting agencies, Swiftbooks, LLC. Call 786-204-2881 for a consultation or to turbocharger your business with a FREE trial.