What Are a Bookkeeper’s Responsibilities?

Bookkeepers are essential for any business. The core function of a bookkeeper is data collection and data input of a business’ accounting cycle. However, a bookkeeper’s responsibilities can vary significantly from business to business. So, if you’re considering hiring a bookkeeper for your small business, it’s important to understand a bookkeeper’s responsibilities to find suitable candidates as quickly as possible. 

Reconciling entries to balance subsidiary accounts

Account reconciliation after each financial month or quarter is crucial for companies and individuals. This allows them to check for fraudulent behavior and avoid accounting information problems by ensuring each transaction adds to the required final account balance.

The amount of each transaction needs to be compared to the amount shown as entering or exiting the relevant account throughout the documentation review process. For example, small business owners can sometimes dismiss small expenses or use their business cards to pay for their personal expenses. The resulting unusual bank statements can cause trouble with the IRS, so to avoid this, a bookkeeper will verify credit card activity with receipts and make adjustments if needed.

Maintaining a balanced general ledger

A general ledger is the cornerstone of a process used by bookkeepers to record and arrange accounting transactions necessary to generate income reports for the company. 

The transactions are subsequently closed or reported to the general ledger, and the bookkeeper prepares a trial balance, which serves as a summary of the balance of each ledger account. The trial balance is reviewed for faults and modified by posting additional required entries before being utilized to construct the income reports.

The bookkeeper collates and analyzes general ledger transaction information at several tiers to create financial statements, net income, balance sheets, cash flow, and other financial reports. This assists business owners, corporate management, auditors, shareholders, and other participants in continuously assessing the financial operations.

Preparing a trial balance for the accountant

A trial balance is a list of all the accounting journal balance sheets. It helps to verify that a debit registered in one accounting system is balanced with another account in the credit. A trial balance also serves as the foundation for creating the cash flow statement, the income statement, and the statement of cash flow.

Bookkeepers must first finish or “balance off” the ledger accounts to produce a trial balance by displaying each closing amount from the accounting records as a debit or credit balance. The sum of the ledger accounts should always match the sum of the credit accounts. 

Monitoring for variances from the projected budget

A budget variance is a recurring metric used among authorities, organizations, and individuals to assess the difference between budgeted and actual statistics for a particular accounting area. 

A favorable budget variance denotes positive variations or benefits, while an unfavorable budget variance denotes negative variance, indicating losses or shortages. A favorable variance occurs when revenue exceeds budgeted levels or expenses are lower than expected, while an unfavorable variance happens when the income falls far short of the estimated budget or expenses exceed expectations.

Budget variations can occur as a result of both controlled situations (such as a poorly planned budget and labor costs) and uncontrollable situations (such as a natural disaster.)

If there is a significant difference, bookkeepers will examine the financial records to find the cause. Then, they will decide whether to rectify the situation or not. However, if a significant disparity continues over a longer time, the business owner needs to review their planning approach.

Collecting and organizing financial data

Bookkeeping is the branch of accounting that handles the gathering and organizing of financial data. This implies that the bookkeepers’ responsibilities include collecting, arranging, and filing all financial data for your organization.

A bookkeeper is responsible for managing:

  • Invoices/receipts
  • Payroll records
  • Bank and credit cards statements 
  • Tax forms and other tax-related documents

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The bottom line

Understanding a bookkeeper’s responsibilities will assist you in finding a qualified bookkeeper for your business. However, if you’re new to running a business and short on resources, you can try handling these tasks by yourself. 

To achieve that, you can consult with a bookkeeper professional, take up some bookkeeping courses, and rely on accounting software. And Shoeboxed can help you with that!  

About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

Everything You Need to Know About Virtual Bookkeeping Jobs and How to Get into this Exciting Work

Nowadays, more and more small businesses are using virtual bookkeeping services, opening many opportunities for fresh-graduate accountants, professionals with CPA certifications, and people looking for online jobs. 

In this article, we’ll explain what exactly a virtual bookkeeping position entails, including common duties and skill/educational requirements. We’ll also highlight why it’s a good idea to work as a virtual bookkeeper, and give you some ideas of how to build your skill. 

What does a virtual bookkeeper do? 

Virtual bookkeeping is also known as online or remote bookkeeping. Like traditional on-site bookkeepers, virtual bookkeepers manage daily financial responsibilities, such as recording and verifying transactions, creating and analyzing financial reports, processing accounts payable, receivable, payroll, and managing invoices and tax payments. 

The key difference is that a traditional on-site bookkeeper needs to be physically present in an office to carry out these tasks, whereas a virtual bookkeeper handles everything remotely using cloud-based software.

The chart below illustrates the key differences between traditional and virtual bookkeepers’ work. 

Why it’s great working as a virtual bookkeeper

Virtual bookkeeping is easy to learn

Though many of us may fear that virtual bookkeeping is only for those with an accounting background, this job is an open opportunity for both the experienced and inexperienced. 

Bookkeeping jobs mainly involve categorizing things correctly and entering financial information into accounting systems. No formal education is required to be a bookkeeper, and only basic math skills are needed. It’ll be a huge plus if you’re detail-oriented, highly organized, and have experience in administrative work.

If you’re a beginner, you can take a bookkeeping course. Normally, bookkeeping courses last from three months to several years, depending on the length of the course. You can either learn through an online course or get a Bachelor’s Degree in Accounting. Online courses take weeks, depending on how many subjects you take on. Meanwhile, it may take up to four years to complete a Bachelor’s Degree in Accounting, though some programs offer accelerated, three-year degrees.

You can work anytime 

Typically, most bookkeeping jobs offer the flexibility to work in your own schedule. As there are no fixed work hours, clients can call you only when needed, allowing you to have more flexibility. You can start your day whenever you want, set your own schedule, and take breaks any time. Being a virtual bookkeeper, you have to keep track of your client’s daily financial transactions thoroughly in order not to be overwhelmed later on.

There may be, of course, times that your clients need you to work extra hours in a day, like during the tax season. However, if you have excellent time management skills, this won’t be as stressful.

You can work anywhere

Being a virtual bookkeeper means you can work anywhere. All you need is a good laptop equipped with accounting software and a stable internet connection. 

If you have young children, a remotely located job allows you to work at home and take care of them. If you have school-aged kids, you can do your tasks from any computer, including outside your home, such as in a coffee shop or a co-working space, while waiting for them to finish school.

Being employed as a virtual bookkeeper offers you more freedom as you can bring your work with you, making sure your job doesn’t consume your entire life. Not to mention, working in different environments can help you stay motivated and focused on tasks. 

There are also other good reasons for working remotely, including: 

  • Greater flexibility
  • Better work–life balance
  • Higher productivity 
  • Increased motivation
  • Reduced need for office space

You can have a healthy work and life balance

Virtual bookkeeping jobs offer you flexible working hours, allowing you to maintain the work-life balance you want and need. Since you don’t need to travel long distances and hours to work and don’t necessarily have to work exactly from nine to five, you’ll have more time for family, friends, and other habits. 

However, do keep in mind that though your virtual bookkeeping job is flexible in counting your work hours, it’s still important to have good time management skills.

Virtual bookkeeping jobs pay well

According to the US Bureau of Labor Statistics, as of 2021, the median salary of a bookkeeper is $40,240 annually or $19.35 per hour. The actual range falls between $69,000 to $91,000, depending on the employee’s degree. 

A virtual bookkeeper can work as an independent contractor for a bookkeeping agency hired by businesses that need outsourced bookkeepers, or they can work directly for a company in need of their services. Virtual bookkeepers also work as independent contractors with their clients. 

As a virtual bookkeeper, your salary will largely depend on the specific requirements of the job, the number of clients you handle, the level of education you’ve attained, any training and certifications gained, your work experience, and your specialty. 

Working as a virtual bookkeeper also brings you some economic benefits depending on certain factors. By making your home your office, you may be able to reduce commuting or lunch costs. Some virtual jobs even allow you to claim certain work-from-home expenses.  

What’s more, like most online jobs, virtual bookkeepers can work on the side and earn much more. Freelance bookkeepers with multiple clients can possibly make around $50 an hour.

What are the essential skills and aptitudes to succeed as a virtual bookkeeper?

To work as a virtual bookkeeper, besides having a strong base of basic accounting and finance-related knowledge, you need to be familiar with Excel sheets and accounting programs like QuickBooks, Xero, and Sage.

Remember that when it comes to bookkeeping, practice makes perfect, so before applying for virtual bookkeeping jobs, make sure you obtain proper education, train wherever you can, and master the science of bookkeeping through practice.

Having good time management and organization skills is also important for a virtual bookkeeper-to-be. Write a thorough and organized to-do list and check it as you go; this small action will help you manage your time and work much more efficiently. 

You also need to have an eye for details. Bookkeeping is a game of numbers, so there’s no room for error! A single wrong number can throw off all the work that you’ve already done, making things more difficult and making you untrustworthy to your clients.  

See more: Your Complete Guide to Online Accounting Jobs

After gaining all the necessary skills and aptitudes to become a successful virtual bookkeeper, how to find your dream job? Our suggestion is to visit some potential websites that are actively hiring for virtual bookkeeping jobs, such as FlexJobs, AccountingDepartment.com, Belay Solutions, Click Accounts, Two Roads, Robert Half, and 1-800Accountant

The bottom line

It’s fascinating how many advantages and possibilities virtual bookkeeping can bring to fresh-graduate accountants, those who earned a CPA certification, and people looking for a remote job. Even if you start from entry-level, you can reach further in this career with diligence and perseverance.

Don’t forget to fully use all the amazing virtual tools available to you! The Shoeboxed app is a tailored accounting app for freelancers, accountants, bookkeepers, and small business owners to simplify their accounting and bookkeeping processes. Shoeboxed helps users free their desks and drawers from piles of receipts and turn them into digital, clearly categorized data. You can easily scan your receipts, manage expenses, store business cards, track mileage, and so much more, with the Shoeboxed app

Additionally, Shoeboxed’s OCR (Optical Character Recognition) function and human-verification features ensure that your receipts are clearly scanned and well categorized, resulting in human-verified data that are legibly accepted by both the Internal Revenue Service and the Canada Revenue Service. 

If you’d like to explore more engaging success stories, DIY accounting, together with the latest Shoeboxed product updates, don’t forget to sign up for the Shoeboxed blog!

7 Bookkeeping Practices Every Business Should Implement

Bookkeeping is one of the most fundamental activities of a business. It’s the job of recording all financial transactions within your business. Without bookkeeping you won’t be aware of your financial position.

It’s essential to build a consistent bookkeeping practice so that you can avoid monetary issues and use your financial reserves efficiently to grow your company. With that being said, do you know how to build basic bookkeeping practices? If you don’t, we’re here to help. In this article, we list out seven essential bookkeeping best practices every business should implement.

1. Separate personal and business finances

The first bookkeeping practice is related to business finance management. Co-mingling expenses for personal and business purposes leads to many issues in the future for a business. Therefore, for your business’s sake, you should establish a clear distinction between your personal and corporate accounts.

The simplest approach would be to get a business debit card or a credit card. Both make it easy to track your business transactions. Details of any transaction are stored on the e-banking app which you can access anywhere at any time. 

Now that you know how separating finances helps you manage your business better, it’s time to inform other people involved in your business too. Ensure your employees aren’t buying things for personal use with business funds. If funds aren’t accurately allocated it will lead to cash flow issues as well as tax filing and auditing complications.

2. Determine which accounting method to use

Another bookkeeping practice is to choose which accounting method your company will use to record transactions. There are two standard systems of accounting: cash accounting and accrual accounting.

Cash accounting is relatively simple and broadly utilized by small firms. Cash accounting records transactions only when money is spent or gained. Due to its simplicity, the cash accounting method is also used by many people to manage their personal finances.

On the other hand, under the accrual method, transactions are recorded when they are incurred rather than awaiting payment. This means a purchase or expense is recorded as a transaction even though the funds haven’t been received or bills haven’t been paid immediately.

3. Establish cash controls

Cash controls refer to all cash management policies and procedures within your organization. Many of the financial hazards associated with running a business (such as inaccurate payments, theft, and fraud), can be mitigated by implementing procedures that maintain control over cash flow.

There are many examples of best bookkeeping practices which you can adopt to enhance the management of a company’s funds, including reconciling cash receipts to deposits and the general ledger, following up on collections of returned checks, or preparing cash flow forecasts. 

4. Keep track of sales

Bookkeeping is the recording of all financial transactions involving your business, and it goes without saying that sales receipts are the most important of all financial documents because they allow businesses to gain visibility into their performance, to identify whether they’re doing well and whether you have to adjust any strategies.

It’s essential to keep track of sales receipts because you’ll need them to calculate your business’s income. Your income reveals the profits or losses you make while operating your business. This data helps you make better business decisions, ranging from day-to-day purchases to long-term expansion.

5. Keep track of expenses

Bookkeeping isn’t only about the recording of sales, but also expenses. Expenses are a necessary part of any business. If you don’t keep track of your expenses, chances are you’re likely to run out of funds, or worse, you may get deep in debt.

Expenses turn out to be more tricky than one might think. People often assume expenses only include payments for office rent, utilities, loan repayments, or such. But business expenses are much broader than that. They could be anything that costs to run your business and are categorized into three groups: fixed, variable, and periodic expenses. Knowing which category each of your expenses falls into will help you manage them better.

Read also: 5 Tips to Control Your Business’ Expenses

6. Review financial data monthly

It’s critical to close the books on all financial transactions for the current month before moving on to the next. When you review transactions on a monthly basis, you’ll catch issues early and fix them quickly before they leak over into the next month. 

Other than that, reviewing financial data monthly helps a lot for your decision-making. By looking at the financial data you can determine whether your goals were achieved. Goals are an important part of running a successful business. 

For example, if your last month’s goal for sales revenue was $200,000 and you successfully achieved it, your business seems to be on the right track. On the other hand, if you fail to achieve your goals, you can quickly adjust your strategies to get everything back on track. 

7. Make a choice: professional bookkeeper or bookkeeping software? 

Many small business owners and managers take on the businesses’ bookkeeping management to save costs. As a result, the success of this task lies in their experience. But most of the time, their knowledge and experience are insufficient to handle this intricate job. 

If you ever find yourself in this awkward situation, there are two options: turn to a professional bookkeeper or adopt a bookkeeping software. Each of these solutions has its own advantages and disadvantages. Depending on your business size, model, and finance, you can determine which option fits best with you.

How can a professional bookkeeper help?

Bookkeepers are more experienced in handling records which could prevent errors that result in penalties on filing documents in the future. A bookkeeper provides you with a fresh perspective on your business, such as suggestions on managing your budget better and running your company.

However, the price of hiring a professional bookkeeper can break your bank. The average salary of a bookkeeper is $45,088, which means you have to pay them more than $3,000 per month. Unless you’re a big firm, whether to hire a bookkeeper should involve  serious consideration.

How can bookkeeping software help?

Bookkeeping management software are a better solution for small businesses, as they can do the same job as a bookkeeper and cost only a fraction of a bookkeeper’s salary. There are many names that you’ve always heard of such as  QuickBooks, Xero, or Shoeboxed. Bookkeeping management software developed by Shoeboxed is an ideal tool for small business owners. 

With Shoeboxed, you can turn your receipts into data, organize them, make reports and analyze your current financial position at any time and anywhere. And Shoeboxed only costs from $18 to $54, depending on your business size. To get the most out of your bookkeeping management, get started with Shoeboxed for free!

The bottom line

Proper bookkeeping practice drives your company to success. It allows you to stay on top of your business transactions. What’s more, it streamlines your financial data management; hence, you can stay focused on growing your business.