Bookkeeper – understand what they do before you hire one
A bookkeeper is a person who’s main duty is to collect financial data within a company, organisation or government institution.
If you want to understand what a bookkeeper really is, we have to look back in time before IT was as much a part of our lives as it is today.
The word bookkeeper originated from a time when all financial records was kept in physical books and a person was in charge of keeping all financial records going in and out of the business accounts.
Today it is a lot easier keeping the books up to date with the help of computers and bookkeeping software.
This is the most commonly used practice today in developed countries. But in case of an emergency, where systems failure or power shortages can occur, bookkeepers have to know the manual procedure – otherwise a company could rapidly lose track of its money.
That is why the bookkeeper is still important profession and is a key person in a financial departments.
What work does a bookkeeper do?
A bookkeeper is responsible for keeping track of all financial transactions like sales, payments, purchases, receipts, calculation of salaries, accounts payable and receivable, interest payments and rebate calculations.
In smaller businesses a bookkeeper may have multiple functions or roles in respect of assisting with accounting procedures.
Some of the requirements for bookkeepers: a basic understanding of financial statements and skill-sets to manually do entries by using spreadsheets or bookkeeping software.
Although bookkeepers do not need a license, they can obtain optional certification or licensing through national organisations and institutions.
There are different certifications a bookkeeper can hold such as payroll certification, tax certification and many of these course you can take online.
Many new entrepreneurs start out this way to keep costs low but, if you don’t deliver your books the right way it can backfire.
What is the difference between a bookkeeper and an accountant?
A bookkeeper is a data entry professional. The data is then used by an accountant or business owner to make financial decisions.
Roles often related to bookkeeping:
- Credit and debit management
- Book entries
- Journal entries
- Fixed asset register
- Drafting of statements
Usually a bookkeeper has shorter education with a secretarial, financial controller, or administrative background.
An accountant on the other hand is a finance expert, who can give you advice on all financial aspects of your business.
Roles related to accounting:
- Revises or produces financial statements
- Acts as an an advisor on monetary decisions
- Often a key player in any business
- Makes sure a company adheres to relevant national and international laws and regulations
Accountants have a deeper academic background and it is a protected title. So an accountant has to have a license before he can call himself accountant. The two most known titles are CA (certified accountant) and CPA (certified public accountant), which requires 3-5 years of academic training.
They very often specialise in different areas such as tax, auditing, advising, economic, forensic and many more.
Do I need to hire a bookkeeper?
In many cases you can actually do the daily bookkeeping yourself, especially because there are so many awesome bookkeeping software products available.
If you are in a business startup and decide to do it on your own its important that you know the basic skills, rules and regulation.
Many new entrepreneurs start out this way to keep costs low but, if you don’t deliver your books the right way it can backfire. The issue comes from misunderstanding what a bookkeeper actually does, and therefore missing out on the benefits or expecting an accountant to do the job of a bookkeeper. Therefore an accountant might charge you a hefty price for the extra work that could have avoided by outsourcing your bookkeeping.
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