What is a Bookkeeper?
A bookkeeper is an accounting professional primarily responsible for maintaining a detailed record of purchases, sales, and other financial transactions. The kind of transactions accounted for and how they are recorded can vary significantly depending on the preferences and practices of different institutions or individuals.
A bookkeeper is a person who processes and records the financial transactions of a company on a day-to-day basis. Often employed by small or medium-sized businesses, a bookkeeper will provide accurate and efficient input and processing of key data.
What Does Bookkeeper Mean?
Although the terms are typically conflated or used interchangeably, bookkeepers and accountants have distinct roles and obligations. Bookkeepers are, essentially, on the front line; they maintain an account of how finances flow into and out of an entity from day to day.
Accountants are more concerned with the larger picture and use the data bookkeepers keep track of to generate reports, identify important trends, and make projections. In addition, bookkeepers are not required to have an undergraduate degree; accountants typically are expected to have, at least, four years of formal training.
A Bookkeeper is responsible for recording and maintaining a business’ financial transactions, such as purchases, expenses, sales revenue, invoices, and payments. The bookkeeper will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The bookkeeper is generally responsible for overseeing the first six steps of the Accounting Cycle, while the last two are typically taken care of by an accountant. While there is a general overlap between the two professions, there are a few distinctions that are later discussed in this article.
What Does a Bookkeeper Do?
A bookkeeper will often focus on managing one or more types of accounts. For instance, one bookkeeper might focus on accounts payable and accounts receivable, whereas another will focus primarily on payroll. The level of responsibilities often correlates with the size of the institution. There are many aspects of a business’s finances that a bookkeeper may touch from travel expenses to taxes. This answer may beg the question, “What is bookkeeping, then?” It relates to data entry, math, maintaining accurate records, communicating issues, and watching an inventory or budget. The bookkeeper job duties vary, but are usually focused on getting data into the system correctly and on time.
Bookkeepers are data entry wizards with daily duties that are often centered on the proper entry and processing of financial information. They use bookkeeping software, spreadsheets, and databases to process information. Bookkeeper duties can occasionally be automated, but many forms of the practice still require a set of human eyes. Data is managed by a team, a firm, or one specific person.
It’s important to write up a clear bookkeeper job description before you hire. Doing so will help you recruit a qualified candidate. But how much bookkeeping experience is needed? If you also have a trained accountant working for you, then you may be able to pear down the responsibilities of a bookkeeper in order to save some cash.
Bookkeeper Job Description
Being consistent, accurate, and minimizing errors are key characteristics that employers are seeking for this position. It is indispensable to have a knowledge of accounting and to understand how to use accounting software systems. In larger businesses, a bookkeeper is responsible for overseeing and reconciling hundreds of financial transactions. This is typically done with the assistance of various software systems, and for this reason, technology literacy is incredibly valuable for the profession. A few other relevant skills and job duties would include the following:
Relevant Skills and Knowledge
- Basic accounting knowledge
- Understanding accounting best practices
- Knowledge of IFRS, U.S GAAP, or another accounting framework
- Data entry skills
- High attention to detail
- Proficiency in Microsoft Excel
- Produce work with a high level of accuracy
- Professionalism and organization skills
- Associates degree or at least one year of experience
- Knowledge of XERO, Quickbooks, Zoho, Fresh Books, or other applications
Job Duties and Responsibilities
- Maintain an accurate record of financial transactions
- Update and maintain the general ledger
- Reconciliation of entries into the accounting system
- Recording of debits and credits
- Maintain the trial balance, by a reconciliation of general ledgers
- Account reconciliation to assert the accuracy of transactions
- Use knowledge of local laws to comply with reporting requirements
- Monitor any variances from the projected budget
Bookkeepers vs. Accountants
There are some financial tasks that bookkeepers aren’t equipped for; that’s where accountants come in. While bookkeepers record daily transactions, accountants use the information compiled by a bookkeeper to produce financial models. Bookkeeping is straightforward and transactional, while accounting is more subjective and calls for skilled interpretation—like helping you understand when it’s time to incorporate, or filing your taxes to get the best return possible.
Bookkeepers offer a literal look at where you stand financially at the moment, and accountants help you see the bigger picture and the path your business is on.