Although a bookkeeper is often confused with an accountant, their definitions are not the same. Bookkeeping may be a part of an accountant’s duties; however, a full-time bookkeeper focuses solely on recording a particular business’ daily financial transactions. This activity is also known as writing the daybooks, involving the record of purchases, payments, sales, and receipts. A bookkeeper is responsible for recording these transactions in the appropriate ledger to bring the books to the trial balance stage, so the records are ready for an accountant to prepare a balance sheet and income statement.
Why Are Bookkeepers Necessary?
All businesses are required by law to keep books, or a record of all financial transactions. Properly kept books ensure businesses pay the correct taxes and accurately reflect the value of operations. The information found in the books also helps business owners to evaluate such things as how profitable certain products and services offered are and where those profits are allocated. These things are invaluable when owners make decisions on how to improve operations, so bookkeepers play a vital role in the success of any business.
Qualities of a Good Bookkeeper
A good bookkeeper pays great attention to detail and is handy with numbers. Although many people find mathematically-based work tedious, bookkeepers can keep attention focused on the most repetitive of tasks to ensure each number on the ledgers is accurate. Not all of a bookkeeper’s time is spent transcribing numbers from one place to another or adding sums; bookkeepers work with people at all levels of a business, so superior people skills are a plus as well.
Types of Bookkeepers
Bookkeepers generally fall under one of three types: general bookkeeper, full-charge bookkeeper, or certified bookkeeper. Using single-entry or double-entry methods, a general bookkeeper is responsible for keeping record in the general ledger of the financial transactions and postings for a business. This type of bookkeeper often starts at an entry-level position with little to no experience or specific education. A full-charge bookkeeper performs the duties of a general one and also prepares financial statements for accounting. Although not required, many full-charge bookkeepers have taken accounting classes. Certified bookkeepers are the most experienced and educated in the field. They perform all the duties of general or full-charge bookkeepers and prepare all financial and income statements. Certified bookkeepers must have a minimum of two years experience in the field and pass a four-part national exam.
Bookkeepers clearly play an indispensable role in the daily and long-term operations of businesses. They record each and every financial detail in its proper place, so financial reports and tax forms are simple to prepare when the time comes. The data bookkeepers record and organize also allows owners and executives to easily assess what works and what doesn’t, so improvements can be made in efficiency, profitability, and more.