Business bookkeeping: what does it entail?

Whether you have your own small business or you planning to open your very own business soon, you might be wondering what bookkeeping is and how you need to manage it during your day to day business operations. You may also be wondering what are the advantages of outsourcing bookkeeping services.

Bookkeepers are the main people in a company that manages the financial accounts. They strive to ensure that all accounts can be reviewed easily and that they are accurate and consistent.

This guide will cover all the duties of bookkeepers as well as how they can help your business.

What is Business Bookkeeping?

When it comes to bookkeeping in businesses, the main goal is to keep track of all the financial transactions going in and out of a business. The bookkeeper will need to record all the money that is coming in and going out.

Most of this is done online with digital software although it used to be done in old-fashioned books with pens and paper.

Business bookkeeping is a part of all large and small businesses so you will find that businesses of all sizes have a bookkeeper as a way to keep track of all their financial transactions.

Is Business Bookkeeping the Same As Accounting?

Not exactly although they have some of the main functions and duties. The main difference is that bookkeepers do more administrative tasks while accountants do higher tasks with more responsibilities.

Bookkeepers focus on tasks like payroll, tracking outgoing finances, and recording all incoming finances.

Accountants interpret financial records to see if the company is doing well financially or not. They can also make audits and tax returns. Because of this, accountants usually have more training and they spend more years doing education since they generally have more tasks in the company and a higher skill set.

What Tasks Does a Business Bookkeeper Do?

Now that you know the difference between a bookkeeper and an accountant, you might be wondering what exactly a business bookkeeper does.

Here are some of the main tasks they perform:

Complete payroll for all employees to ensure they get paid on time and the right amount

File tax returns for the business

Review all financial reports to ensure they are accurate

Create income statements

Create balance sheets

Receive payments from customers and make invoices for them

Record transactions either with spreadsheets, accounting software, or databases depending on the size of the company and what the company uses

Check financial statements and reconcile them if needed

Organize financial records including loss statements, bank documents, cash flow statements, and bank documents

Track all credits and debits that are coming from all the business accounts

There are many tasks when it comes to someone doing business bookkeeping. This is why bookkeepers go through intense training and they have to be able to showcase their skills before getting hired.

Types of Business Bookkeeping

Business bookkeeping involves many different things including there being more than one kind of bookkeeping that people have to be aware of and train for.

Single-entry bookkeeping is one of the most common types of bookkeeping and it records all the transactions in one simple row. This is usually done for smaller businesses that only need to track their cash, their tax-deductible expenses, and their taxable income.

Double-entry bookkeeping puts all the transactions into the database two times. It uses both credit and debit entry. This is needed when your business needs to keep track of other things like revenue, expenses, equities, assets, and liabilities.

Both have their pros and cons. People use single-entry bookkeeping when they want to do something that is a little more simpler and they do double-entry bookkeeping when they want to ensure there are no errors.

Bookkeeping and Small Businesses

If you own a small business for the first time, you might be wondering how to do the bookkeeping process or if you need to hire a professional bookkeeper. It’s generally always easier to get a bookkeeper rather than trying to do all that work by yourself.

When you have a professional bookkeeper, they are also less likely to make mistakes and they allow you to devote more of your time to business operations and other important things.

Bookkeeping is very important to your business because you want to ensure you have all the information and knowledge you need to make the best financial decisions for your company.

This is why bookkeepers are essential and they will help you prepare for taxes, budgeting, and creating financial records as well.

How to Become a Business Bookkeeper

If you want to be a bookkeeper and work for a business, you will want to ensure you have all the proper training and credentials as this makes it much easier to get hired.

The first thing you want to do is take a bookkeeping course. This teaches you how to organize data, how to balance books, and how to make financial reports.

Some larger companies want their bookkeepers to have a degree, but smaller companies are okay with hiring someone who has done coursework in bookkeeping and accounting only.

Having a bookkeeping certification can also give you an edge. While not essential, it shows employers that you have more training and more knowledge than some of the other candidates who might be applying without certifications and degrees.

You also want to ensure you have all the right technical skills including:

Invoicing

Billing

Payroll

Spreadsheets

Debits and credits

Accounting software

Accounts payable

Accounts receivable

Final Thoughts

Business bookkeeping involves endless duties and tasks that you need to be prepared for. As a small business owner, this means you need to hire a professional bookkeeper with the right experience and the correct credentials.

You might want to ensure they have previous bookkeeping experience. If you are worried about overhead and training costs, you can consider outsourcing your bookkeeping jobs and duties. This allows you to have an experienced bookkeeper with years of experience but it saves you time and money on the hiring and training processes.