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4 Facts Everyone Should Know About Bookkeeping

4 Facts Everyone Should Know About Bookkeeping

Bookkeeping is the bane of all entrepreneurs across the world. It is dull, boring and always left to be done last. It is more than just keeping a list of debts and credits. It is the single language of business around which all parties can reach an understanding. Bookkeepers keep track of all of the company’s expenses, incomes and transactions, typically on a monthly basis. This serves multiple purposes. From fulfilling legal demands to keeping a record for future reference, the role of a bookkeeper is an invaluable one. Still, it is a picky trait and varies from jurisdiction to jurisdiction. The laws and standards are different. Here are some of the must-knows when it comes to bookkeeping that everybody should be aware of.

Obligations and responsibilities

The tasks that are presented to a  bookkeeper are plentiful. Not only that, but they are different from company to company, jurisdiction to jurisdiction. There are some common tasks that every bookkeeper has to know how to accomplish. Some of those are, but are not limited to: keeping records of financial transactions, reconciling bank accounts, managing bank feeds, handling accounts receivable and payable, working with tax preparers and assisting with tax compliances, preparing financial statements, payroll and some human resources functions, making recommendations regarding process streamlining ant technology, etc. We could go into great detail what all of these points stand for. Some might be self-evident, while others may require clarifications. For more detail on what are the responsibilities of a bookkeeper, consider consulting with professional companies like the Plus Minus Accounts for detailed and accurate information.

Differentiating bookkeepers from accountants

Some people use these two terms simultaneously, but that is a mistake. A bookkeeper has licenced skills in recording, categorizing and reconciling financial transactions. Accountants, for the most part, have a bachelor’s degree in accounting and are versed in interpreting those financial records for the sole purpose of optimizing future business operations by providing calculated recommendations. Some bookkeepers actually perform certain tasks meant for accountants. As we can see, there are overlapping tasks and responsibilities, but it all depends on an individual basis. Accounting software does accommodate bookkeeper’s tasks of preparing financial statements, a task that is originally designed for accountants, as we have mentioned. To put it plainly, the bookkeeper prepares the books, does the calculations and makes accurate financial records. The accountant digs through the said records in order to analyze the business’ finances and provide the company with solid advice for future operations. They advise you on ways to save money by either increasing profits or reducing expenses. In conjunction, bookkeepers and accountants for a complementary skillset and provide a whole package on how to do business.

Costs

Bookkeepers can be found everywhere, even as freelancers. Their fees vary from person to person, depending on their qualifications and previous experience. They usually charge by the hour about $30 – $50 an hour for the most basic bookkeeping needs. Prices can drop if you only have a need for a part-time bookkeeper to do simple tasks around the company like punching in data. For the more complicated and involving tasks like tax preparation, you need someone experienced who knows what they are doing. Naturally, with added tasks and responsibility the price does go up. There are some factors that we can list that affect the price of a bookkeeper. The types of tasks they need to be doing, the complexity and volume of it, their prior experience, number of hours required per month to achieve these tasks, support infrastructure like accounting software, location of the business itself, etc. These factors need to be taken into account when considering hiring a bookkeeper.

Double-entry bookkeeping

Most businesses today use accounting software instead of actual, physical books. The principles of modern, double-entry bookkeeping are still the same and are the bedrock of doing business. The point of this principle is to give you a rounded, holistic view on where the money is coming and going to and from. It is sort of a failsafe from making a mistake. If one entry is miss entered, the other side of it will show. This way we can correct the entire entry accordingly. It is an entire science in itself but that is the short of it. All businesses use this common language so that all transactions are clear and visible to all for future reference.

Bookkeepers help us go back to our business by offloading these particular tasks in a professional manner. They are a backbone, a support structure to any and all enterprises that are always mandatory by law. Get your self a bookkeeper today and sleep soundly knowing that you will have a very clear perspective on where your business is headed for a long time.

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