What does a bookkeeper do? Well, the answer has changed a bit since your grandfather’s days. The invention of bookkeeping software has made the life of a bookkeeper both easier and more complex. Maintaining financial records is no longer a matter of endless filing cabinets and a single bookkeeper can be held responsible for an enormous amount of data. And yet, surprisingly, the duties outside the ledger are the ones that pose the greatest challenges for most bookkeepers. Here are all the essential responsibilities of the modern bookkeeper, from the nitty-gritty to the interpersonal. For an even more in-depth look, check out this comprehensive introduction to bookkeeping course.
Let’s develop a general understanding of the responsibilities of a bookkeeper. We’ll look at the broader roles, such as the way you would see them on a job listing, and then I’ll discuss the more intricate duties in detail. Keep in mind that all the organizational aspects will be managed through bookkeeping software.
- Maintain and prepare financial statements and reports.
- Receive and record invoices, checks, cash, vouchers, etc. Bookkeepers are also typically responsible for paying vendors/bills.
- Adjust ledgers as needed; record debits and credits by account and date.
- Reconcile trial balances (by using unadjusted trail balances) and find, analyze, confirm and correct discrepancies.
- Monitor client assets and activity.
- Aid in the preparation of tax documents, including 1099s and W-2s.
- Help determine and manage budgets.
- Monitor office inventory. Ensure vital supplies and materials are stocked.
- Draft purchase orders for materials/equipment requests.
- Organize schedules for employees, clients, partners etc. Make travel arrangements as necessary.
- It is common for a number of miscellaneous duties that are unique to an organization to be required of the bookkeeper.
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Dealing With The Financials
- Lump Sum
If you lump all the financial responsibilities together, they are far and away the most time consuming aspect of a bookkeeper’s job. It is a rigorous, daily task. The larger the organization, and the more business they do, the more work it is for the bookkeeper. Every payment, every deposit, every invoice, every bill; in short, every time money “moves” the bookkeeper needs to record it with absolute accuracy. This probably sounds easy, but keeping track of complex transactions that evolve over several months requires a devoted and meticulous mind.
- Expanding Responsibilities
A growing business can have hundreds or even thousands of accounts (by “accounts” I do not mean bank accounts; an account refers to a sub-section of debits or credits, such as “Employee Wages” or “Gas and Electricity”). Many businesses balance their ledgers monthly or quarterly, which means that every one to three months all the debits and credits must be analyzed and confirmed; often there are changes to invoices or voided checks or other errors that need to be located and corrected.
Even a very well-organized bookkeeper can be driven to madness trying to hunt down an unaccounted for transaction. If the balance is off by one cent then it is inaccurate. Avoid petty mistakes with this finance and accounting course for startups.
- Outside the Office
Bookkeepers also need to spend some quality time at the bank. Don’t expect the CEO to make deposits and request statements. Naturally, deposits are recorded in bookkeeping software, but depending on what the deposits are for, they make require special treatment. For example, a large credit of, say, $100,000 might be used to balance a dozen accounts. It is the bookkeeper’s duty to know which payments correspond to which accounts. It would not be considered excellent bookkeeping if you had to ask your manager how to enter every credit and debit into the system. That’s what you’re getting paid for, after all.
It’s not enough to just keep track of financial data on a computer. Bookkeepers have to be able to understand what they are doing and analyze the basic state of a company’s financials. Often an experienced bookkeeper will regularly meet with managers and/or department heads to discuss budget. Needless to say, this is of the utmost importance. A company needs to be well informed on where it stands financially so that it knows whether or not there are any constraints on its spending. Get some free advice on how to approach these issues with this blog post on the objectives of financial management.
A bookkeeper is also responsible for monitoring the location of funds in different bank accounts. Typically a business will always make certain payments from certain accounts. Even if the company is flush with cash, the bookkeeper needs to ensure that appropriate funds are available for all foreseeable expenditures. Again, this sounds easy, but when a lot of money is moving back and forth, simply looking at an “available balance” isn’t going to provide a truly accurate reading of funds.
Inventory is a thankless task, but mismanaging it is completely unacceptable. The bookkeeper bears the brunt of this burden, as well. Just like with budgeting, regular meetings with the heads of departments are vital to staying on top of inventory.
Every company will have its own protocol, but bookkeepers are historically in charge of inventory as it pertains to the office; if a bookkeeper worked for an engine manufacturer, for example, he or she would not be responsible for ordering new cooling fans but would be responsible for ordering more printer ink. So there isn’t much glamour when it comes to inventory. It really boils down to the bookkeeper maintaining enough supplies and materials for everyone else to do their job properly.
The X-Factor: Communication
Bookkeepers are up there with librarians in terms of perceived “professional isolation,” but communication is actually a large part of the job. This article examines the importance of communication in bookkeeping, but what it comes down to is being able to organize communication in a way similar to organizing financials. I don’t want to make it sound robotic, but so much of the information a bookkeeper receives is from colleagues and co-workers. Communicating clearly and concisely is therefore just as important as maintaining pristine records, and this is where most bookkeepers are weakest.
If we revisit the reconciling of accounts that I mentioned earlier (which, to remind you, usually occurs monthly or quarterly), then you can also see where communication is vital. When there are errors or discrepancies in the balances, the bookkeeper is often unable to solve the mystery by his or herself. It might require communication with an employee in another department, and as these matters tend to be stressful and tedious, communication is important to making the process as focused and pleasant as possible. Even if communication has never been your strongest attribute, you can use this class to improve your communication skills in one day.
There are also smaller but more regular interactions with colleagues. Collecting receipts, funds, invoices, etc. from other departments is essential for accurate bookkeeping. And as the bookkeeper often has to reimburse employees for expenditures and help them make travel arrangements, effective communication is a necessary tool for performing at a high level.
For all this tedious work, you must be wondering what kind of money a bookkeeper can make. The answer, as usual, is that it depends. A certified bookkeeper highly trained (and experienced) in accounting software can make between $50,000 and $65,000+ in a year, but your average, competent bookkeeper is making a more modest salary in the range of $35,000 to $50,000.
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