14 Jun Bookkeeping basics: A guide for small businesses
As bookkeepers work closely with raw data, they tend to develop a good understanding of how a business works. Petty cash is essential to run day-to-day business operations smoothly. So, bookkeepers should maintain a petty cash book, write slips each time cash is taken out, enter petty cash entries into software, and reconcile it at the end of the month.
According to 81 percent of CBs who interviewed for a new job after becoming certified, having a certification contributed to getting the interview 4. With a certified bookkeeper designation, you are qualified to perform all critical functions through the adjusted taxable and tax exempt interest income trial balance and basic payroll for small to medium-sized businesses. Bookkeeping is a crucial function of accounting, and earning a bookkeeping certification is a great way to show employers your expertise.
A proper financial data management system can provide valuable, actionable insights and prevent problems, such as skimming fraud. As a bookkeeper, you oversee the first steps of the accounting cycle, while an accountant typically handles the last two. Financial institutions, investors, and the government need accurate bookkeeping accounting to make better lending and investing decisions. Bookkeeping accuracy and reliability are essential for businesses to succeed for staff, executives, customers, and partners. As a business owner, it is important to understand your company’s financial health. Bookkeeping puts all the information in so that you can extract the necessary information to make decisions about hiring, marketing and growth.
What does a bookkeeper do?
Your bookkeeper might also prepare other auxiliary reports for your business, i havent filed taxes in 10 years or more like accounts payable and accounts receivable aging reports. You can use these to make business decisions, but they should not be presented as audited, certified or official financial statements. You typically maintain accurate accounting records across all transactions while communicating with others. A bookkeeper’s job comprises maintaining and balancing financial records, including transactions from coworkers. Effective communication is essential for recording those daily transactions. Bookkeeping focuses on recording and organizing financial data, including tasks such as invoicing, billing, payroll and reconciling transactions.
Pathways to a bookkeeping career
As a bookkeeper, you will verify and balance receipts, keep track of cash drawers, and check sales records. Bookkeepers also deposit money, cash checks, and ensure correct credit card transactions. Though often confused for each other, there are key differences between bookkeeping and accounting.
Your financial transactions
- With this account, bookkeepers can predict revenue generation rates, control expenses, and take timely measurements to manage monetary resources.
- The size and scope of a business will determine whether the company needs a part-time bookkeeper, full-time specialist bookkeeper, or an entire accounting department.
- They are vital to managing a business’s finances by documenting transactions, generating reports, and assisting with accounting efforts.
- When there is a proper system in place that avoids problems such as skimming fraud, the recorded financial data can provide valuable, actionable insight.
Small businesses may prefer to handle their books themselves, but hiring a professional bookkeeper can be helpful. One of the best things you can do to ensure your books balance properly is to follow the three golden bookkeeping rules. A lot goes into it—from managing payables and receivables to balancing books. But what might seem like an overwhelming task isn’t so bad when you break it down to the bookkeeping basics. We believe everyone should be able to make financial decisions with confidence.
A bookkeeper may also help you run payroll, collect debts, free accounting courses generate invoices and make payments. There’s good news for business owners who want to simplify doing their books. Business owners who don’t want the burden of data entry can hire an online bookkeeping service.
Why Bookkeeping Is Important for Small Businesses
To set up a budget, gather your financial data, such as income statements, balance sheets, and cash flow statements. This will give you a clear picture of your business’s past financial performance and help you make realistic projections for the future. The core function of a bookkeeper is to ensure that all bills are paid on time, transactions are recorded correctly, payroll runs on time and taxes are filed correctly. So if you’re looking to hire a bookkeeper, it is essential to create a bookkeeper job description that fills your recruitment funnel with ideal candidates as quickly as possible.