What Does a Bookkeeper Actually Do?
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A bookkeeper stays on top of your day-to-day finances and makes sure your business runs smoothly! If you don’t have one, you’re exposing your business to all kinds of risk. But what does a bookkeeper actually do?
Many people don’t realize that bookkeeping and accounting are two distinct professions, both of which are vital to your business. Let’s take a closer look at bookkeepers and what they do all day.
What is bookkeeping?
Bookkeeping focuses on maintaining a general ledger. It sounds fancy, but a general ledger is just a company’s main accounting record. Maintaining the ledger requires a few responsibilities:
- Recording transactions and producing invoices.
- Maintaining payroll.
- Posting debits and credits to keep the ledger up to date.
- Recording each of these transactions accurately and consistently.
What’s the difference between bookkeepers and accountants?
Bookkeeping sounds pretty similar to accounting, so what’s the difference? Accounting takes the daily financial statements and builds models to determine the health of the business. An accountant needs to:
- Prepare company financial statements.
- Analyze operational costs in specific business units.
- Provide extensive financial forecasts.
- Understand the financial impact of strategic decisions.
Accountants provide a lot of analysis and forecasts while bookkeepers maintain the day-to-day operations that make that possible. The ledgers they create and maintain are the primary source of truth for all other financial statements and analysis.
Why you need a good bookkeeper
Hiring bookkeepers will cost you, but good bookkeepers will more than earn their keep. Catching invoice errors and making sure bills are paid on time can save you from a lot of unnecessary expenses. Aside from catching mistakes, bookkeepers are critical to managing the cash flow of your business and staying on top of your tax filings.
Bookkeepers record critical day-to-day business transactions that require a great deal of time and effort, such as small business banking and securing loans. A good bookkeeper stays on top of those issues so you can stay on top of your business. Bookkeepers are often the unsung heroes (no, they don’t wear capes… usually!) that keep the lights on and make sure everyone gets paid each week.
Making sense now? Let’s recap. Bookkeepers and accountants work hand in hand to keep your business running smoothly. They are like business doctors constantly checking to make sure that your finances are healthy.
That’s critical for any small business relationship because healthy cash flow is often the only way to demonstrate creditworthiness. Bookkeepers make your business possible, so next time you see them make sure to give them a high-five!
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1 Minimum $50 deposit required. See your Deposit Account Agreement for more details.
North One is a financial technology company, not a bank.
Banking services provided by The Bancorp Bank, N.A., Member FDIC.