No matter what industry you are in, keeping track of your revenues and expenses is key to making smart business decisions. Bookkeeping may not be the most glamorous part of running a company but it is one of the most important aspects. It goes beyond budgeting and spreadsheets. As a business owner, you already have your hands full with other activities, which is where hiring a professional bookkeeper can give you an advantage.
Keeping the books can take a lot of time and energy, which you’ll want to spend building your business. A professional bookkeeper can save you a lot of hassle and ensure that your company stays financially strong. But what exactly does a bookkeeper do? And, how do you know what to look for when hiring one?
What is a Bookkeeper?
Simply put, a bookkeeper tracks all your business transactions, inputs them into an accounting software solution, reconciles balances, and produces a set of financial reports each month. They are responsible for ensuring that your accounts and records are up-to-date and complete.
In Canada, bookkeepers often handle sales tax filings but they do not file your income taxes. At Rooks, we have built partnerships with trusted accounting firms who can handle your business tax filing.
There are several benefits to working with a professional bookkeeper including:
- Accurate and comprehensive financial records for investors or the Canadian Revenue Agency
- Allows you to focus less on the manual record-keeping tasks and more time on business development
- A professional bookkeeper can offer a lot of financial insight to your business as they often become deeply aware of your business transactions and numbers
What Are The Duties of a Bookkeeper?
A bookkeeper provides you with a monthly rundown of your businesses’ financial health. To do this, a professional bookkeeper is responsible for doing several tasks including:
- Handling all bills and invoices, which often includes managing a company’s accounts receivables and accounts payables
- Process all business transactions in the bank and credit card accounts. They input this into accounting software such as Quickbooks, which is what Rooks uses. They are responsible for ensuring each transaction is categorized correctly. For example, they might categorize a Google Adwords transaction as being “Advertising Expense”.
- Reconcile bank accounts. It’s easy for transactions to get missed, duplicated, or categorized incorrectly. Part of the bookkeeper’s job is to ensure all these balances agree with each other every month
- Prepares financial reports. Generally, this includes the Balance Sheet and Profit & Loss reports, but depending on the scope of work, it might also include other things like Cash Flow Reports, Burn Reports, and Budgeted vs Actual reports.
- Sales tax filings. This can vary from business to business, but in Canada, it’s common for the bookkeeper to handle all the provincial sales tax filings as opposed to the accountant since many provincial filings are monthly or quarterly
Accounting vs Bookkeeping - What is the Difference?
While both accountants and bookkeepers deal with your financial records, there are some key differences between them. These include:
- Certification. Accountants need to be certified and their work is regulated. Bookkeepers don’t need to be certified to do their job.
- Financial data. Bookkeepers are responsible for keeping records and managing all your financial information. Accountants need to know how to interpret a company’s financial position based on records, receipts, etc.
- Taxes. Accountants are in charge of filing taxes for a company. A bookkeeper does not do income tax filings.
Accountants and bookkeepers sometimes work together but have different responsibilities. A bookkeeper’s role is to provide accurate financial records for business owners regularly. An accountant will go much deeper into the financial situation of a company. They interpret the financial information, file taxes, and may be responsible for creating a business budget.
Do I Need a Bookkeeper if I have QuickBooks?
There are some great software solutions on the market, but they can’t replace having a bookkeeper. Software like Quickbooks can help you to record transactions and collect financial information. However, software will not be able to ensure the accuracy of the information or to make sense of the numbers. Moreover, Quickbook entries often need to be manually organized and even corrected.
Think of it this way, Quickbooks is to your business what Photoshop is for designers. It is a great piece of software with amazing capabilities, however, it can’t replace a professional graphic designer. In the same way, software like Quickbooks can help you record your financial data digitally but it can’t take the place of a professional bookkeeper.
Consider what can happen if a small business owner uses Quickbooks or other accounting software to manage their books but they do it incorrectly. In the end, they will end up paying an accountant a lot of money to fix the mistakes that were made. It is less expensive and time-consuming to have the process done correctly from the start.
As a business owner, your time is valuable. Even if you have the financial knowledge to manage your books, it is better to spend your time on more important business development activities.
What Makes a Good Bookkeeper?
Hiring a bookkeeper can be an advantage for your company. However, it is important to find the right bookkeeper to do the job. Here are some qualities that all good bookkeepers have:
- Reliable. Your bookkeeper should deliver your financial reports on time, every month.
- Passion. A good bookkeeper takes their job seriously and is committed to helping your business grow.
- Clarity. The right bookkeeper can help you understand and make sense of the numbers in your financial reports.
- Helpful. Good bookkeepers go beyond producing your reports and managing your books, they help you to make use of the financial reports so you understand what the next steps are to grow your business.