In any business, no matter what you do, there are two things you need to keep track of; your incomings and your outgoings. Bookkeepers are generally the best persons for this job. They are the experts on keeping financial records for your business but can also flag any potential financial issues in the business and how to avoid them.
If you have been tossing up between doing the books yourself or spending some money on a professional bookkeeper to do it for you, we may be able to help you in your decision. In this article we break down the main tasks of a bookkeeper, and why a good one is well worth the money.
But let’s deal with the most commonly asked question first…
What’s the different between bookkeepers and accountants?
Simply put, bookkeepers prepare most of the work that accountants do, and sometimes their duties overlap. For instance, bookkeepers record daily transactions made by a business; the accountants then use the information compiled by the bookkeeper to produce financial reports. Each piece of this financial process is equally important to the business.
Whether you need to hire a bookkeeper or an accountant depends largely on the industry and the magnitude of the business, which will determine the level of expertise required. Bookkeepers are a great choice for daily transactions, but if you need deeper insight and advice on how to better operate your business at scale you may also need the insight of an accountant.
What are bookkeepers’ duties?
There are some fundamental tasks a bookkeeper undertakes to keep track of the business financials; data entry, bank reconciliation and compiling reports.
You bookkeeper will oversee and manage all your financial transactions by entering them in to a digital system. During this process they will also allocate your transaction into your accounting software and generate weekly, biweekly or monthly reports. By analysing these reports you gain valuable insight into your business’ performance.
This process includes cross-referencing the books against bank statements to confirm accuracy and can detect any mistakes made in the data entry such as missed transactions or inaccurate sums. Nowadays, specific accounting software helps speeds up the bank reconciliation process by pulling transaction data directly from your bank.
A bookkeeper helps summarise the compnay’s financial position through periodic reports. These reports compile data gathered by the bookkeeper through data entry and bank reconciliation and other documents. These reports are a vital tool in understanding where your business is positioned in terms of profitability, and the year-end versions of these reports show how much income tax you need to pay.
Other bookkeeping tasks:
- Expense tracking
- Invoicing and receipts management
- Payroll Processing
- Financial reporting
Why you need bookkeeping
Hiring a good bookkeeper can help your business in more than one way by monitoring:
In order to know how much you should pay in taxes by the end of every financial year, you need to know your net profit from your total income and expenses. The only way of keeping an accurate record of all transaction over the year is to keep your books meticulously up-to-date.
A bookkeeper is also the best person to keep track of tax deductions. The more information you can give your accountant at tax time, the more you’ll be able to claim.
If you’re unsure why your business is not making more money, or any money at all, it’s time to find out where the money goes. The best way to gauge the financial health of your small business is to hire an experienced bookkeeper who can tell you if your cash flow is increasing or decreasing and why.
If you are in need of a business loan you have to be able to produce comprehensive financial statements for lenders and investors to gauge your business’ financial state before giving you money. They do this by looking into your revenue, cash flow, assets and liabilities summarised in your books, prepared by your bookkeeper.
Certified Bookkeepers in Capalaba & Brisbane
As certified bookkeepers, we have helped clients in Redlands, Brisbane and all over Australia. We have helped build and protect client businesses for more than 20 years.
The information in this article is general in nature and might not be right for your circumstances. Please arrange a meeting with one of our Accountants to discuss your particular needs. Ph (07) 3823 2344