In this post, we discuss:
- What is Bookkeeping
- Bookkeeper’s Responsibilities
- Non-Profit vs For-Profit
- Treasurer vs Bookkeeper
- Accountant vs Bookkeeper
- Typical day
The Bookkeeper’s Roles
Every business big or small needs a bookkeeper. Any business type: sole trader, limited company or partnership needs a bookkeeper. Any sector: public (government) or private (companies) needs a bookkeeper. Although some tasks vary depending on the role, the main responsibility to accurately record transactions remains.
How different is a company’s bookkeeper from a service bookkeeper? The company’s bookkeeper processes the transactions for the business that employs him or her. A service bookkeeper is employed by a company and assigned to help its clients with their needs.
What is better in-house or outsourced bookkeeper? In-house bookkeepers are employees of the business and outsourced – are contractors. The contract is a professional who has a signed agreement to perform tasks for the company for the agreed payment. The contractors are not employees of the business and do not receive a salary. They would charge either per month or per hour, and send an invoice for payment as supplier.
The contractors do not have the same advantages as in-house bookkeepers for statutory leave (holidays, sick leaves) or pension.
Bookkeeper’s Responsibilities
Regardless of the sector, the main responsibilities include recording of the financial data into software. As well as maintaining the records accurate and up to date. Below are the key tasks:
- Transaction Recording: Logs income, expenses, and other financial data.
- Bank Reconciliation: Matches bank statements with the organization’s records.
- Accounts Payable/Receivable: Manages invoices, payments, and collections.
- Payroll: Processes employee payments and related tax filings.
- Data Accuracy: Ensures the accuracy and completeness of financial records.
Non-profit vs For-Profit
Your role as a bookkeeper may be different, depending on the business entity type. For-profit examples of companies are limited, partnerships to create financial benefits to its stakeholders. Stakeholders are related parties, such as shareholders, employees, tax authorities, banks, and suppliers.
Non-profit entities are focused on social, education, health and charitable work. The main goal of a non-profit is to deliver value to the community. Tasks will depend on the charity’s needs, but able to organize grants and donations, record expenditures, and manage petty cash.
Treasurer vs Bookkeeper
Treasurer role is often required in the community, club or charities. Often this role overlaps with a bookkeeper if the entity is small. The main difference is the scope, the treasurer has the following responsibilities:
- Financial Oversight: Ensures the organization’s funds are managed appropriately.
- Budgeting: Develops and monitors budgets.
- Reporting: Presents financial reports to the board or stakeholders.
- Strategic Planning: Helps shape financial policies and long-term goals.
- Compliance: Ensures adherence to legal, tax, and regulatory requirements.
- Approval Authority: Often approves significant transactions or expenditures
The treasurer is a part of the revision and decision making Board members and therefore has an active participation. The treasurer would be asked to attend the meetings and give their view on questions by the Board or members.
Accountant vs Bookkeeper
Bookkeeper records data onto software and the accountant will analyze this data to prepare annual accounts and calculate tax due. Accountant is certified and has as better understanding of journal entries, tax law and how to resolve more complex issues. Here are the examples of tasks done by the accountant:
- Financial Reporting
- Prepare detailed financial reports like balance sheets, income statements, and cash flow statements.
- Tax Preparation and Filing
- Calculate and file taxes for the organization, ensuring compliance with tax laws.
- Financial Analysis
- Analyze financial data to provide insights into business performance.
- Budgeting and Forecasting
- Create budgets and predict future financial performance based on trends.
- Auditing
- Conduct or oversee internal and external audits to ensure accuracy and compliance.
- Regulatory Compliance
- Ensure financial activities adhere to legal and regulatory standards.
- Strategic Advice
- Advise on financial decisions, such as investments, cost-saving measures, or expansion plans.
Accountant fully relies on the bookkeeper’s work and that is why accuracy is so vital.
Typical day
As a part of the daily routine, the bookkeeper can be involved in various tasks. Depending also on the timetable, it could be a payroll day. During the payroll run, the bookkeeper :
- The bookkeeper also enters information on the payroll system about new or leaving employees and produces specific forms for them, required so by law due to change of employer.
- Set up a pay run (process of payment to employees) on Xero or QuickBooks.
- Calculates and checks income tax and other deductions.
- Submit the file to the tax office for payroll reporting.
- Prints and sends the payslips to each employee of the firm.
- The bookkeeper ensures that all documents, related to that pay run are kept on file either electronically or in a paper folder relevant to the Payroll Year XX.
The payroll tasks are allocated once per month or biweekly. Other tasks are involved in sales and purchases.
For sales, the bookkeeper will be required to create a sale document and send it to the client. Then print regular statements with overdue amounts from clients as well as due amounts to suppliers. According to the overdue sales report, the bookkeeper contacts customers to confirm the payment date. Otherwise, a reminder with a statement is sent via email or by post.
For purchases, the bookkeeper arranges the payment to the suppliers upon agreement with a line manager.
Some days, there would be a return of goods, so the bookkeeper needs to arrange a credit note.
Every other day, the bookkeeper checks the bank statement and allocates the expenses and receipts to the existing invoices. Once a month, a bank reconciliation is done to ensure all transactions in the bank match the software.
It is also common for bookkeeper to assist with sales tax filing or Value-added tax report. If you are not comfortable with this task or you are new to this, it is best to ask an accountant for advice. Sales tax or VAT can be a complex topic and your bookkeeping responsibilities generally do not cover it.
You now should have an idea about the work bookkeepers do.
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