What Does a Bookkeeper Do? 5 Essential Bookkeeping Tasks

Bookkeepers handle many of the daily financial tasks of a business, possibly including preparing bank deposits, verifying receipts, sending payments, executing payroll, making purchases, creating invoices, tracking overdue accounts, and more. You do not need a bachelor’s degree or certification to become a bookkeeper. However, any credentials to verify your knowledge will improve your ability to find job opportunities as a bookkeeper.

Accounting and bookkeeping jobs involve similar functions, but certain aspects of the job differ:

• Education level: While bookkeeping does not require a bachelor’s degree, accountants must have one to prove their qualifications. A bookkeeper may need to receive additional certification to move up in the industry.
• Certification: On top of a degree, many accountants have a Certified Public Accountant license. CPAs receive the training to interpret financial records and offer guidance. Some accountants even specialize in specific businesses, such as start-ups.
• Daily tasks: While bookkeepers focus on the daily tasks and track money moving in and out of the company, the accountant’s job is to monitor a company’s financial health and advise the business owners on how and where to expand.

Like bookkeepers, an accounting clerk handles all the day-to-day financial statement preparation and other business needs before passing the financial information onto the accountants.

There are two primary ways to break down bookkeeping information on spreadsheets:.

• Single-entry system: This straightforward system records incoming funds and outgoing funds in the same column of a single-entry journal. Incoming funds are recorded as positive while outgoing funds are recorded as negative. Single-entry bookkeeping is only appropriate for very small businesses.
• Double-entry system: The more sophisticated double-entry system records financial transactions in two accounts. Each account has two columns—one for credits and one for debits. A credit to one account must include a corresponding debit to another account. For example, taking out a loan would involve a debit to an asset account and a credit to a liability account.

Bookkeeping tasks are essentially the first level of accounting that business owners can oversee. Business owners can do their own bookkeeping or hire a third party to run the bookkeeping services remotely. Some bookkeeping responsibilities include:

1. 1. Daily financial transactions: A great deal of bookkeeping is data entry and overseeing the basic financial transactions that come up over the day. Bookkeepers track the accounts, including debits and credits, in a general ledger. Bookkeeping or accounting software allows small businesses to stay up to date on transactions.
2. 2. Invoicing: Whether it’s creating invoices for accounts receivable or accounts payable, bookkeepers process all the invoices.
3. 3. Maintaining the books: Bookkeepers use a single-entry or double-entry system, depending on the business with which they’re working, ensuring they complete the bank reconciliation.
4. 4. Creating financial statements: Bookkeepers handle the general ledger, which helps form financial reports, including a balance sheet, the cash flow statement, income statement, and statement of changes in equity.
5. 5. Tax preparation: Bookkeepers ensure that tax filing goes smoothly from preparation to filing and even potential auditing.
   

A good bookkeeper can propel a business forward. Bookkeepers update business owners on the company’s bank accounts and track money, which can benefit the business in numerous ways. Some benefits of hiring a bookkeeper include:

• Delegation gives you more time to focus on the business. By hiring someone to handle the bookkeeping, you can focus on other aspects of the business and provide excellent service.
• A professional lowers the chance of error. Bookkeepers know what they’re doing and will be much less likely to create any errors in the system.
• Preparation for a possible audit. Bookkeepers will create tax returns and oversee the general tax filing. Still, if the IRS audits a business for some reason, a great bookkeeper will have everything needed on record to go through the process quickly and smoothly. Without those well-maintained records, the auditing process can be very challenging.

There is no formal bookkeeping training or education requirements for pursuing a bookkeeping career path, but bookkeeping courses can help you prepare for the role.

• Consider formal education: Degree programs are not prerequisites for bookkeeping careers, but a high school degree and a two-year associate’s degree program may be helpful to showcase bookkeeping skills on your resume. If you are attending a four-year school, you may want to consider pursuing an accounting degree. These programs can be online courses, in-person, or on-the-job training.
• Pursue a certification: You can receive certifications and licenses from organizations such as the National Association of Certified Public Bookkeepers Certification/Licensing and the American Institute of Professional Bookkeepers Certification. These certifications can help prove your knowledge and bookkeeping experience to potential clients and guarantee you’re up-to-date on accounting principles. These programs can also prepare you to open your own bookkeeping business.
• Begin with freelance work: Freelance virtual bookkeepers work for a parent company and are typically paid hourly. Businesses can hire a remote bookkeeper without having to commit to a full-time employee in-house.

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