Role of Bookkeeping in a Small Business

In some situations, you may need to consult an expert when it comes to the financial side of running a business. In addition to accountants, bookkeepers play a vital role in keeping your finances organized. Can you tell me what the difference is between an accountant and a bookkeeper? What can a bookkeeper do for your business? Get to know more about bookkeeping service.

Bookkeepers and accountants are not the same

Being a small business owner means juggling multiple tasks. In addition to keeping things running, you have to generate revenue, satisfy your customers, and maintain your finances. Accounting can be a chore, and one of the biggest questions you might have is who can assist you. Are you in need of an accountant, a bookkeeper, or both? Let’s start by clarifying a few points.

Bookkeepers and accountants have different jobs and responsibilities. Among the main responsibilities of your accountant are:

Statutory returns are prepared and lodged
Providing advice on the structure of legal entities
Advice on business and finance in general

The majority of accountants belong to a statutory association. Accounting professionals may call themselves CCAs (Chartered Certified Accountants), CAs (Chartered Accountants) or other titles.

It is possible for bookkeepers to handle many different responsibilities within a small business. As part of a small business’s operational life, the main focus is on organizing, recording, and reporting financial transactions. Recently, some bookkeepers have expanded their duties to include:

Teaching clients how to use accounting software
Creating efficiency within the organization by implementing document management and inventory control processes
In a retail environment, implementation of POS (point of sale) systems captures daily transactions
Internal business processes must be developed, implemented, maintained, and reviewed
It’s a good idea to ask a bookkeeper about their specialization before hiring them for services when you’re considering their services.

What do bookkeepers do?

Bookkeepers perform the following tasks to help your business run smoothly:

Tracking daily transactions

Keeping track of day-to-day bank transactions can be handled by a bookkeeper. Your bookkeeper will benefit greatly from daily automatic bank feeds provided by your accounting software. Bank statement lines fed into your accounting software make it easier to keep track of cash flow and save time on data entry.

Managing the accounts receivable ledger and sending invoices

It is usually the bookkeeper’s job to prepare invoices and send them to clients. Your bookkeeper will also manage the accounts receivable ledger and chase late payments.

Managing the accounts payable ledger

In most cases, bookkeepers will make business payments up to a certain amount. Expenses, supplier invoices, and petty cash payments all fall under this category.

Keeping an eye on cashflow

Ensure that the company doesn’t run out of money on a daily basis is one of the most important tasks for a bookkeeper. By monitoring the revenue to expense balance, they can do this. If the business needs more ready cash, they can offer advice or take action.

Getting the accountant’s books ready

A bookkeeper’s job is to ensure that accounts are accurate and up-to-date when an accountant needs them. Using their skills and knowledge, the accountant can make business recommendations, report to the board, and complete company tax returns.

Bookkeepers handle the day-to-day work so that accountants can concentrate on strategic financial operations. Accountants cannot do their jobs properly without bookkeepers.

Accountants and bookkeepers working together

Both accountants and bookkeepers are usually employed by a well-run business. There is a need for division of labor. The following could be done:

Company formation

In our guide about hiring an accountant, we recommend hiring an accountant to help you set up your business. An accountant can help you create a business plan and set up a company structure that meets your needs.

Accounting systems

Accountants and bookkeepers can also help you choose the right accounting software and set it up so that everyone – especially your bookkeeper – can benefit from it.

Bookkeeping work

A bookkeeper can then focus on keeping your company’s accounts up-to-date on a daily basis after completing the above tasks.

Accounts reconciliation

Perhaps once a month, accountants and bookkeepers will meet. Using cloud accounting software with shared access, they may meet in person or work remotely. In either case, the accountant will examine the accounts and the bookkeeper will explain any numbers and decisions that are unclear.

Reporting

An accountant will report to the business owner and the board of directors. In order to get a clear picture of the financial health of the company, the accountant will report on the state of the accounts to the board and owner. With management accounts, a bookkeeper can provide reporting in a less formal manner and on a more regular basis. A weekly report is often used by the business owner as a checkpoint to see how the business is progressing.

Strategy

An accountant can make informed recommendations to the business owner and board with up-to-date figures. An accountant can provide advice on expansion and investment plans. As well as advising on financial strategies, they will also determine whether the business can afford to enter new markets.

Legal compliance

A bookkeeper will prepare information for the accountant to use in writing company reports. In addition to income and expenses, net profit, assets, liabilities, and taxes, these reports will include information about income and expenses. Additionally, the accountant will file and pay company tax returns.

Sharing the workload in this way is a sensible idea. Bookkeepers provide the necessary financial data, while accountants perform their training.

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