When it comes to running a business, it doesn’t matter how big or small your company is, there are two things that are always the same.
Money comes in and it goes out. Keeping track of it all is both a legal requirement and essential for understanding your company’s financial health, spending habits and position.
Managing and documenting all the company’s financial transactions can be an arduous task, but luckily that is what a bookkeeper is for.
There are many things involved with keeping track of a business’s financial transactions and managing an accounting cycle, below are just five of the many things a bookkeeper or Online bookkeeping service areresponsible for.
Prepare Financial Statements
Financial statements communicate the financial activities, performance and position of a business. The bookkeeper will typically prepare these formal documents and distribute them to the appropriate staff.
Types of financial statements a bookkeeper may prepare:
- Balance sheet
- Cash flow statement
- Income statement
- Note to Financial Statements
- Statement of changes in equity
A tax accountant will use the information from the financial statements to provide your company with an insight into the financial health and position of your business.
Reconcile Your Bank Accounts
As mere mortals, we can be prone to making the occasional mistake or data entry error. This is why account reconciliation is one of the most important tasks a bookkeeper has to execute.
When the bookkeeper performs a bank reconciliation, they are cross-referencing the company’s records against the bank statements to confirm everything matches up.
Whether your business turns over $50,000 or $5,000,000 a year, expense tracking is an important step in understanding and managing your company’s expense budget.
As the name may suggest, expense tracking involves keeping a record of all outgoing expenses and properly documenting receipts and invoices.
Keeping an up-to-date and accurate record of a company’s expenses may help business owners improve the financial health of their budget, stay on top of their cash flow and prepare them for tax season.
The bookkeeper will handle the recording of bank transactions and also document any petty cash or credit card purchases. Your bookkeeper may also monitor the expenses, keep track of an individual’s spending habits and flag any excess expenditure.
Data entry is the foundation of a bookkeeper’s role.
From recording financial transactions to producing statements, everything a bookkeeper does involves data. Data that needs to be entered into the appropriate systems and recorded accurately.
Whether it is documenting sales revenue, tracking expenses, invoicing or processing payroll, the right numbers have to go in the right places and that comes down to a bookkeeper and data entry.
As it is very unlikely people are willing to work for free, if you have a company, you will need a system that manages wages. While larger companies may have specific payroll staff, some bookkeepers may also fulfil payroll functions.
When it comes to processing payroll, a bookkeeper may need to check timesheets, calculate any overtime, calculate payroll tax and apply superannuation. Of course, all of this will need to be processed through both the accounting system and the bank account.
Having a bookkeeper who can manage and process payroll may save your business an enormous amount of time and money.
Does Your Business Need A Bookkeeper Or An Accountant?
Bookkeeping is a part of the accounting process and depending on the scale of your business, you may need both services.
Bookkeepers typically focus on recording and organising financial data. Their role can be considered more administrative and transitional to that of an accountant.
Tax accountants utilise the information provided by the bookkeeper to provide business owners with financial insights to help make business decisions. Accountants may also manage tax returns, perform audits, analyse business performance and provide information on growth opportunities.
Whether you run a large corporation or have a small family company, managing budgets and keeping track of finances is vital to any business. Equally important is your bookkeeper or bookkeeping service who perform some of the most essential functions including the five duties mentioned above.