What Does a Bookkeeper Actually Do?
Author: Russell SmithMay 25, 2012
Ever wondered what a bookkeeper actually does all day? Read this blog and learn from our expert bookkeepers based in Leeds
For some, the word ‘bookkeeper’ can be quite confusing. Often used interchangeably with the word accountant, bookkeepers and accountants actually have entirely different roles within a business.
The confusion between them is quite understandable, however, as both roles are focused primarily on finance management. The issue here comes from some business owners misunderstanding what a bookkeeper actually does, and therefore missing out on their benefits or expecting an accountant to do the job of a bookkeeping.
To help clear things up, our team of expert bookkeepers in Leeds are going to explain exactly what a bookkeeper does, and why you should consider hiring one.
What Is The Difference Between a Bookkeeper and an Accountant?
In the simplest of terms, an accountant in a finance expert, there to give you advice on all monetary aspects of business. A bookkeeper, however, is a data-entry professional, whose primary role is to make and maintain accurate business records. The data collated by a bookkeeper is often used by business owners and accountants to make financial decisions.
Bookkeeping is a subset of accounting — likely where the misunderstanding originates from — and can be carried out by an accountant or by an individual with bookkeeping training. They often prepare business finance reports and tax returns, providing the most basic and essential of financial infrastructure from which more advanced accounting practices can be carried out.
What Does a Bookkeeper Actually Do For My Business?
Recording and managing financial data is more complicated than copying receipts into a spreadsheet, and bookkeepers are responsible for a whole set of tasks outside of simple data input.
In order to be proficient at their job, bookkeepers must have a strong understanding and experience with specialised accounting software. This allows them to create advanced data records capable of producing a variety of detailed reports, looking at anything from gross profit to specific expenditures. Bookkeepers are also responsible for data reconciliation — ensuring records match bank statements and cash transactions.
Other responsibilities and tasks a bookkeeper will carry out include:
- Calculation of interest and investments
- Managing business repayments
- Maintaining a journal of asset depreciation
- Setting aside money for corporation tax
- Producing invoices
- Monitoring purchase orders
- Chasing debtors for payment
- Producing aged debtors and aged creditors report
- Paying in cheques from customers
- Paying suppliers and creditors, such as HM Revenue & Customs
Do I Need a Bookkeeper?
Bookkeeping is a vital business operation, without which you simply cannot make good financial decisions. Often it comes down to the accountant to point out the necessity of a bookkeeper, an accountant who may have even been hired to help manage a financial situation that could have easily been avoided by having a bookkeeper.
While bookkeeping can be done by business owners, we recommend that you employ a professional and qualified bookkeeper, to ensure the quality and accuracy of your financial data. This also ensures businesses owners aren’t tied down with paperwork and record management, freeing up time that could be better spent elsewhere.
Don’t Separate Bookkeepers from Accountants
While their jobs are separate, the bookkeeper and the accountant’s relationship should be close. Having a strong connection between accounting and bookkeeping — good communication and mutual support — is essential for smooth business operation. A bookkeeper can make the accountant’s life easier, by producing accurate, well maintained and easily accessible records An accountant can also make the bookkeeper’s life easier, by help them manage and record advanced financial data. Together, a bookkeeper and accountant can ensure business finances are well managed, allowing the business owner to focus on development.