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What Does a Bookkeeper Do?

A bookkeeper can be a great asset to any small business when it comes to managing financial transactions and documents. Bookkeepers use their knowledge of financial software, recordkeeping techniques, and financial principles to track and process financial transactions accurately.

What does a bookkeeper do?

Using an experienced bookkeeper, businesses will have peace of mind knowing they are keeping accurate financial records in line with accounting standards and taxation requirements. Ultimately, employing a bookkeeper can help small businesses save time and money in the long run due to their expertise and financial know-how.

Many small businesses don’t have the time or experience to complete their own bookkeeping and therefore hire the services of an external bookkeeper.

They can have many duties within the business, depending on the size. The job may include recording sales and purchase invoice, updating accounting records, paying suppliers, credit control and preparing financial reports.

A bookkeeper needs to ensure that their work is accurate and put procedures in place to run the accounting system.

Why Hire a Bookkeeper?

There may be many reasons why you want to hire an experienced bookkeeper. In my experience, most small businesses want to concentrate on what they do best, and that is the work. Others do not have enough time, and some are great at their trade but struggle with figures.

A bookkeeper will take the stress away from recording financial transactions, chasing clients for money, tax filing and preparing for year-end. If you get the right person, they might put procedures in place to make the system more streamlined.

What is a Bookkeeper – Duties and Responsibilities

Depending on how much you want to be involved in the accounts will depend on which duties you pass on to get completed. Duties include raising sales invoices, chasing customers for payment, entering purchase invoices, paying suppliers, VAT returns, payroll, and preparing management reports and year-end figures.

What does a Bookkeeper do for my Business?

Bookkeeper duties may include the following:

Implementing Accounting Software

One of the first things a bookkeeper will do is review the bookkeeping software and processes currently being used. They may suggest a change to an online accounting package, such as Xero or Quickbooks, as this will streamline the process and make it more efficient.

What Does a Bookkeeper Do?

Financial Data Entry

One essential job for a bookkeeper is financial data entry and ensuring that the transactions are kept up to date. This includes entering sales and purchase invoices, credit notes, preparing bank payments, and updating the accounting system with customer information.

Some systems will reduce the time it takes to enter data, including scanning documents using software like dext or auto entry and using a bank feed. These systems can help keep the accounting software updated with current financial transactions.

Bank Reconciliation

Ensure all the bank transactions are posted and allocated correctly. Check that the balance in the bank equals the balance in the accounts.

Produce Financial Reports

Business owners and accountants will require monthly financial statements to see the position of the business. These reports might include profit and loss, balance sheet, cash flow statements, debtors and creditors. There will be other reports required.

Accounts Receivable

Ensuring that clients pay business on time is an important role. Without controlling the cash flow, the company may get into financial difficulties.

Accounts Payable

Paying suppliers on time and reconciling their statements is an important part. Some businesses would have financial problems if suppliers cancelled their credit agreements.

Payroll

Some bookkeepers offer a payroll service in-house. The other options are using a payroll service or using the service on some good accounting packages, including XEROQuickBooks and Sage.

Tax Returns

Bookkeepers will be aware of the filing dates and the amount due. Depending on the business size, they may complete VAT returns, Companies House filings, or Self Assessment Tax Returns.

Some experienced bookkeepers will complete tax preparation and filing themselves, while others may pass this task to an accountant.

Do I still need an Accountant?

It might be that the bookkeeper deals with the business’s financial records and then employs an accountant to complete tax returns and year-end.

An accountant can give you expertise in finalising year-end accounts that need to be submitted and ensuring that the reports are produced correctly. The most important reason for using an accountant is for Tax purposes; they usually have expert advice that you can take on board and maybe even save you some money.

Why Hire a Bookkeeper

If you are looking to recruit someone to complete your books, there are several places you can look:

Internet: Complete a search on the internet looking for a local bookkeeper. If you already use accounting software, check the provider’s website for a directory. Check on business directories; there are many listed.

A recruitment agency: If you require a permanent staff member or someone to cover for the short-term, recruitment agencies can be an excellent place to start. They will have already interviewed candidates and will send suitable ones for your review.

Advert: Post an advert in local papers, jobcentre and even social media.

Accountant: Accountants often do not want to deal with general bookkeeping but may outsource the work and recommend someone suitable.

Speak to local businesses: Find out if other companies use a bookkeeper and if they recommend them.

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Bookkeeper Interview Questions

There are several questions worth asking when trying to recruit the right person, including:

Certification: What qualifications do they have? If they are a member of an accounting body, are they a member in practice? Accounting bodies can include the Association of Accounting Technicians and the Institute of Certified Bookkeepers.

Experience: Some can have many years of experience but not have a certification; this is OK as long as their knowledge is acceptable. Have they had experience in your line of work?

Insurance: All should have insurance in place; ask to see a copy if you need to.

Anti-money laundering: All bookkeepers and accountants need to register for Anti-money laundering; if they are a member in practice, they are covered; if not, they may be directly from HMRC.

Pricing: Cheap may not be the best, try and get a fixed rate agreed upon or an idea of the number of hours required to complete the work. Some will offer a monthly fee, which is spread over a year.

Software: There are many different accounting software packages available, and choosing the right one can assist with preparing the accounts. Are they certified with any software, and what do they recommend? If you already have software in place, ask what experience they have.

How much does a Bookkeeper Charge?

Several factors will influence the bookkeeper’s fee. It will depend on the level of support required, the number of financial transactions, their experience, qualifications and also the location they work.

When looking at bookkeepers’ fees, it is best to try and agree on a monthly fixed fee. It will reduce any shocks from any unseen adjustments that may be required. Most bookkeepers will have a minimum price, so it is worth comparing them to each other and looking at their services, as some may be willing to do more for the same price.

What does a Bookkeeper Do? Virtual Bookkeeping

Virtual Bookkeeping or office visit? It will depend on how the company deals with its paperwork and if you feel they can complete it away from the office. You may never see your bookkeeper and send them all the paperwork in the post, or they collect it from the business regularly. Some only work from home to complete their work around other customers and family commitments.

Professional Bookkeepers FAQ

Do I need to use a bookkeeper?

If you are confident in completing the transactions, producing financial statements and filing year-end and VAT returns, you can complete the accounts yourself.

Can a Bookkeeper complete tax returns?

Some bookkeepers can prepare accounts and complete tax returns, depending on their experience and what they are authorised to complete with their accounting bodies.

Can a bookkeeper Process Payroll?

Some bookkeepers can process payroll or outsource it to a payroll expert.

What Does a Bookkeeper Do? – Conclusion

Although some small businesses do not see the need to hire bookkeepers, it is a fact that most business owner needs one. Many small business owners say they would prefer to pay an accountant to handle their financial matters, but they find it costs too much.

Many business owners also use bookkeeper’s services if they become too busy to handle their accounting work or decide to sell their company. Bookkeepers can be highly specialised professionals who can only carry out specific tasks, but most can perform all the basic accounting tasks.

To read more about what a bookkeeper does, read our bookkeeping basics section.

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