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!

Why Do Small Businesses Need a Bookkeeper?

To any small business owner, keeping track of your finances is essential for your business’s success. However, you may find that handling your bookkeeping tasks takes more time than focusing on the business’s core. This article will explain why small businesses need a bookkeeper. 

Is bookkeeping hard for small businesses?

You’re not going to like the answer, but it is both yes and no. Though this may sound confusing at first, everything will make sense once you understand what bookkeeping entails.

Bookkeeping is an important aspect of running a small business. It helps small businesses organize, store, and analyze financial data. By using this financial information, small business owners can accurately draw conclusions about the financial security of their business.

Without proper bookkeeping, it’s difficult to track and report critical information to the federal government. Furthermore, incorrect reporting or failure in filing might result in penalties and fines.

However, for every busy small business owner, finding the time and energy to maintain your books properly can be challenging and has the potential to cause endless headaches. You must not only be a perfectionist in making sure that no comma, decimal, or number is misinput, but you must also keep track of each employee to ensure that they provide you with the information you require.

That’s why hiring a bookkeeper has become more popular for most small business owners. Let’s read on to see why small businesses need a bookkeeper! 

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Why do small businesses need a bookkeeper? 

A bookkeeper helps you organize documents and records and identify mistakes early

Last-minute stress from trying to find a critical business document can lead to missed deadlines and serious problems. Businesses of all sizes shouldn’t make any mistakes, and regular bookkeeping can help you with that.

A bookkeeper helps you keep orderly records by doing your books frequently, staying on top of them, and not leaving them until the last minute. It will become much easier to find the bits of information you require quickly.

Moreover, a bookkeeper helps you identify mistakes early by tracking the accounts and overseeing daily transactions, ensuring accuracy. By that, you’ll be safe from any unusual transactions or bookkeeping mistakes

A bookkeeper helps you make accurate budget decisions

A bookkeeper keeps your books accurate and updated, with your business income and expenses properly organized, making it easier to review your financial resources and costs. 

Having an accurate budget helps you plan for your business’s future expenses. On the other hand, if you don’t keep your records organized, you might lose control of your cash flow because everything will be guesswork.

A bookkeeper ensures that you’re tax-ready

Whether you like it or not, you need to file your business taxes at the end of the fiscal year. Small business owners need to determine what their business earned before knowing their total annual income. 

Hiring a bookkeeper ensures that you have detailed balance sheets over time and all your financial information ready for tax season, which helps you predict your annual profits more accurately. By that, you will no longer need to spend hours on the tax filing process or find yourself in deep trouble with the IRS.

A bookkeeper ensures your business meets government regulations

We all know that tax policies can change every year. Failing to adapt to the new policies can lead to the termination of your business. One of a bookkeeper’s main tasks is to observe and update the latest government regulations and law changes, ensuring you have proper documents to file taxes, your business’s financial activities are up to date, and help avoid being audited or incurring tax penalties.

The bottom line

Bookkeeping is a fundamental aspect of corporate finances that can impact your company’s growth and profitability. Taking good care of your bookkeeping helps you plan your business budget, keep everything well organized, and get ready for tax season. It’s something you shouldn’t put off if you want to keep your finances in order and prevent the IRS from causing you extra headaches.

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!