Why hire a Bookkeer? Here’s a simple explanation of how a Bookkeeper helps

The activities to be performed by a bookkeeper varies with the size and nature of an organization, for instance in a smaller organization a bookkeeper would have to perform a broader job role. Primarily a bookkeeper is responsible for managing all the documentation pertaining to the transactions that take place by collecting timely information about them and recording them in the book ledger. Apart from this, a bookkeeper may also be expected to help out with invoicing, account receivable follow-ups, payrolls etc. depending on an organization’s requirements and mutual agreement.

It might be difficult to distinguish between an accountant and a bookkeeper at first glance. Both an accountant and a bookkeeper need to know basic accounting fundamentals.

But the role of an accountant involves more analytical tasks, and the scope of work is broader. However, in a small organization, a bookkeeper may also perform certain tasks intended for an accountant such as the preparation of financial statements and reports. An accountant needs to be aided with accounting software to carry out their tasks.

An accountant handles almost all financial aspects of a business including taxes, financial reporting, risk assessments and so on. Meanwhile, a bookkeeper looks into the inflow and outflow of cash and doesn’t look into what these represent and mean to a business as such.

An accountant’s job scope is also more varied than a bookkeeper’s. An accountant is more important to large businesses than a bookkeeper. Accountants are sought by government bodies, tax authorities, consultancies etc. while bookkeepers often work with smaller organizations.

A bookkeeper is primarily responsible to track and maintain records of all monetary transactions of a firm accurately. When hiring a bookkeeper, it needs to be ensured that they are knowledgeable, systematic, detail-oriented, can meet deadlines and above all can be trusted. Trustworthiness is crucial since they deal with a lot of confidential data. A bookkeeper needs to also possess collaborative abilities since they would be working closely with accountants, auditors, managers and others.

Daily Accounts Management

The primary role of a bookkeeper is to track the daily transactions of a business. In order for them to do that you need to record each sale and transaction made either manually or using a software. The software can help avoid manual errors and make the data entry process less tedious.

Preparation of Data For Taxes

Tax payments and procedures are tedious. Having a bookkeeper ensures that you have all the required data documented accurately and are never caught off guard with respect to taxes even when your attention is on other aspects of running a business. You are always prepared and avoid heft penalties of missing deadlines, non-compliances or incorrect figures.

Preparation of Financial Statements

As discussed earlier, in a small firm a bookkeeper will mostly take on tasks traditionally handled by an accountant. These can include the preparation of various financial statements such as a cash flow statement, income statement, profit and loss statement, balance sheets etc. that helps understand how cash is flowing in and out of the firm and the overall financial performance.

Perks of Having A Bookkeeper

Saving your most scarce resource, time

As a business owner, there’s plenty on your plate. The process of bookkeeping is tedious and lengthy. This definitely doesn’t motivate you to put it at the top of your to-do list, but you start to wish you did when you race against time during tax season trying to figure it all out.

This time of yours can be invested into building your business’s core like product development, spending time with your customers etc. So having a bookkeeper on board takes the burden to track all financial transactions off your shoulder and stops this mechanical task from eating away your time.

Spotting Anomalies In Cash Flow

A bookkeeper becomes so well acquainted to your accounts that they’d know your usual expenses, incomes, spending patterns etc inside out. This familiarity gained through handling invoices, receipts and other monetary operations will help them detect any cash flow concerns.

Assist With Business Growth

Due to their understanding of your business and technical knowledge of accounting, bookkeepers can help you make informed decisions that will aid in business growth. They can help you maintain resources to tap into during low financial periods, help you make good investments, help you better save by reducing avoidable expenses and improve spending behaviour even during financially well-performing months and so on.

Flexible And Cost-Effective

When you entrust an external bookkeeper with your bookkeeping task, you are assured that they perform their duty aided by accounting software meticulously in a time-bound manner. They are not involved in your internal company affairs allowing them to carry out tasks unaffected and unbiased. As your company grows, you can either increase or decrease the involvement and duties assigned to your external bookkeeper.