Bookkeeping is so much more than going through old receipts and reconciling bank statements.
- Bookkeepers are the superheroes who analyze your finances to ensure that all transactions are labeled, you’ve been paid and how much you were paid, all transactions match up with bank statements, and there is a record of receipts.
- Bookkeepers also ensure that you are able to get a complete picture of your finances by preparing various reports, such as your Profit and Loss, Balance Sheet and General Ledger.
If you’ve run your own small business for any length of time, you’ve probably realized that bookkeeping is something you need to know about. You may not be sure exactly what it entails, but you do know at some level that you should be keeping track of the money into and out of your business. Or, maybe you know you need help and have wondered whether a bookkeeper would fit the bill. Here’s a rundown on what a bookkeeper actually does.
Bookkeeping is so much more than going through old receipts and making sure all bank transactions are reconciled (though, to be fair, there is plenty of that). The IRS requires businesses to provide a record of all sales and expenses, for tax purposes. So bookkeeping is that detailed recordkeeping, and a bookkeeper is that much needed safeguard between you and the IRS, if say, numbers, reports and tax compliance just aren’t your thing.
They are the superheroes who meticulously analyze your finances to ensure that all transactions are labeled, you’ve been paid and how much you were paid, all transactions match up with bank statements, and, yes, there is a record of receipts.
All of the above-mentioned tasks collectively make up your books and paint a detailed picture of your business by helping you to see precisely where you are spending money, where revenue is generated, and which tax deductions you can claim. And, if you’re ever audited by the IRS, you’ll be able to share detailed documentation of your finances and prove that your deductions are legal.
Bookkeepers ensure that your accountant has all of the information he or she needs to file your taxes by preparing detailed end-of-year financial statements. This is where business owners who utilize a bookkeeper typically save big, because they don’t need a CPA (at CPA rates) to catch their bookkeeping up at the end of the year. Their reports are ready to email on over (and their accountants rejoice!)
A good bookkeeper is professionally trained with at least two years of experience or an associate’s degree. Professional bookkeepers are also organized, knowledgeable about financial topics, and have some knowledge of the accounting process (the more, the better!)
When you have a good bookkeeper in your corner, you will be able to make informed budgeting decisions, and understand the ebb-and-flow of your business. Plus, you’ll have more time to spend doing what you love – growing your business.