What Services Does a Bookkeeper Provide?

A bookkeeper plays an important role in maintaining the financial health of any business. They organize and manage an entity’s financial transactions. Accurate and systematic handling of financial records provides the foundation for informed business decisions and ensures compliance with financial regulations. This record-keeping is essential for understanding a business’s financial position and performance.

Daily Financial Record Keeping

Bookkeepers perform day-to-day tasks that form the backbone of a business’s financial data. They record all financial transactions, including sales revenue, purchases, payments, and receipts, into an accounting system or traditional ledgers. This process demands precision and timeliness to ensure financial records reflect the business’s true state.

Transactions are categorized into appropriate accounts, such as income, expenses, assets, and liabilities. Proper categorization is important for generating accurate financial reports and for tax compliance. This classification ensures every dollar entering or leaving the business is accounted for and assigned to its correct place.

Bookkeepers maintain ledgers, including the general ledger, which is the central repository for all financial transactions, and subsidiary ledgers like accounts payable and accounts receivable. These ledgers provide an organized system for financial data, allowing for easy retrieval and comprehensive oversight. Maintaining these records ensures data integrity for financial analysis and reporting.

Periodic Financial Reconciliation and Reporting

Beyond daily tasks, bookkeepers perform periodic activities, typically monthly or quarterly, to verify financial information accuracy and produce reports. A primary periodic duty is bank reconciliation, where the bookkeeper compares the business’s internal cash records with bank statements. This process identifies and resolves discrepancies, such as outstanding checks, deposits in transit, or bank errors, ensuring the company’s books align with bank records.

Reconciliation also extends to credit card statements and other financial accounts, providing a comprehensive check on all financial movements. This systematic review helps detect errors, identify unauthorized transactions, and safeguard against fraud. The goal is to ensure financial data is accurate and reliable for informed decision-making.

Bookkeepers generate financial statements, such as the Profit & Loss (Income) Statement and the Balance Sheet. The Profit & Loss Statement summarizes revenues and expenses over a specific period, revealing profitability. The Balance Sheet presents a snapshot of the company’s assets, liabilities, and equity at a particular point in time, indicating its financial position. Bookkeepers also prepare data for cash flow statements, which track the movement of cash within the business. These reports provide clarity on the financial health and performance of the business, assisting owners in strategic planning.

Supporting Business Operations

Bookkeepers often provide direct support for business operations. They manage accounts payable by tracking incoming bills, processing vendor invoices, and ensuring payments are made on time to maintain good vendor relationships. This includes monitoring due dates to avoid late fees and managing the flow of outgoing funds.

Similarly, bookkeepers handle accounts receivable, which involves creating and dispatching invoices to customers, recording incoming payments, and following up on overdue accounts. Efficient management of accounts receivable helps maintain healthy cash flow by ensuring timely collection of money owed to the business.

While specialized payroll services or accountants typically handle the final filing of payroll taxes, bookkeepers frequently provide support for payroll processing. This support includes collecting employee time data, calculating gross wages, and tracking deductions for taxes, benefits, and other withholdings. They help prepare information for accurate and compliant payroll runs, ensuring employees are paid correctly and on schedule.

Bookkeepers can also assist with sales tax obligations by compiling data for sales tax reports. They help ensure sales tax collected from customers is accurately accounted for, preparing the groundwork for proper reporting and compliance with local tax regulations. While they typically do not file the sales tax returns themselves, their role in data organization is important for avoiding penalties. Bookkeepers often manage and troubleshoot accounting software, assisting with setup, ongoing maintenance, and ensuring the system functions efficiently for financial record-keeping needs.