What Services Do Bookkeepers Provide?

Bookkeeping is the systematic recording of financial transactions for an organization. It provides a clear overview of a business’s monetary activities, documenting every financial event from income to expenses. This process is integral to understanding an organization’s financial standing.

Core Bookkeeping Functions

A bookkeeper’s primary role is recording all financial transactions, including income, expenses, assets, and liabilities. Source documents like receipts, invoices, and bank statements provide evidence for entries logged into ledgers or accounting software.

Central to this is managing the chart of accounts. This organized listing of all financial accounts a business uses helps categorize transactions consistently. Each account, identified by a unique code, ensures financial information is grouped logically for reporting.

Bookkeepers also perform regular bank and credit card reconciliations. This process involves comparing internal financial records with bank and credit card statements. The goal is to identify and resolve discrepancies, such as outstanding checks or deposits in transit, ensuring accuracy and helping detect errors.

Maintaining the general ledger is another responsibility. It serves as the complete record of all financial transactions, summarizing data from various journals. It tracks assets, liabilities, equity, revenue, and expenses, providing data for financial statements.

From the general ledger, bookkeepers generate basic financial reports. These include the income statement, which summarizes revenues and expenses over a period to show profitability. They also prepare the balance sheet, offering a snapshot of the company’s assets, liabilities, and equity at a specific point in time.

Expanded Bookkeeping Offerings

Beyond core functions, bookkeepers provide additional services. Accounts payable management involves handling outgoing payments, including tracking vendor invoices, scheduling payments, and ensuring timely disbursements, which helps manage cash flow effectively.

Bookkeepers often manage accounts receivable, overseeing incoming payments. Their tasks include generating and sending invoices to clients, tracking outstanding balances, and following up on collections. This service is important for maintaining healthy cash flow.

Payroll processing is another common service. Bookkeepers calculate wages, manage tax deductions (such as federal income tax and FICA contributions), and generate pay stubs. This extends to preparing and filing payroll tax forms, such as quarterly Form 941 and annual W-2s, ensuring compliance with regulations.

Bookkeepers also assist with sales tax filing. They help businesses calculate sales tax on products or services, ensure proper collection, and facilitate timely remittance to tax authorities. This helps businesses adhere to complex sales tax regulations.

Bookkeepers may offer basic inventory management, tracking inventory levels, recording costs, and monitoring the movement of goods. While not always a full inventory system, this support helps maintain accurate records for financial reporting.

Bookkeepers specialize in expense categorization and tracking. They assign each business expense to the appropriate account within the chart of accounts. Correct categorization is important for accurate financial reporting, internal analysis, and ensuring eligible deductions are recorded for tax purposes.

Preparing to Work with a Bookkeeper

Engaging a bookkeeper requires gathering and organizing financial information. Businesses should compile all relevant financial records, including bank statements, credit card statements, loan documents, vendor and customer invoices, and purchase receipts.

Providing secure access to financial accounts is fundamental. This involves granting read-only access to bank accounts, credit card accounts, and payment processors. If accounting software is in use, secure access credentials are needed for the bookkeeper to process transaction data.

Basic business information must be shared to ensure accurate record-keeping and compliance. This includes the business’s legal structure, Employer Identification Number (EIN), and any business licenses. If payroll services are required, employee data, including wage rates and deduction information, is needed.

Clear communication about business operations and significant financial events is important. Informing the bookkeeper of large purchases, sales of assets, or changes in business structure ensures transactions are recorded correctly and categorized appropriately. This sharing of information supports the bookkeeper in maintaining precise financial records.

Engaging and Collaborating with a Bookkeeper

Engaging a bookkeeper begins with an initial consultation to discuss business needs, service scope, and pricing structures. This meeting helps establish mutual understanding and ensures the bookkeeper’s offerings align with client expectations. Fees may be hourly, fixed monthly, or project-based.

A formal service agreement or engagement letter outlines the responsibilities of both parties, the services to be provided, and the agreed-upon fees. This document includes provisions for confidentiality and terms for terminating the engagement, providing a clear framework for the professional relationship.

Data exchange methods are established to facilitate the secure transfer of financial information. This involves using secure online portals, cloud-based accounting software, or encrypted shared drives. These methods ensure sensitive financial data is transmitted safely and efficiently.

Regular communication is maintained to review financial activities and address questions. This might involve weekly or monthly check-ins, depending on the volume of transactions and business complexity. Preferred communication channels, such as email, phone calls, or video conferences, are agreed upon to ensure timely interaction.

Clients are expected to review the financial reports provided by the bookkeeper, such as income statements and balance sheets, and ask questions for clarification. This collaborative review ensures financial data accurately reflects business operations and supports informed decision-making.