Have you ever wondered about a business's financial standing or how companies keep track of their complex transactions?
The term “bookkeeper” might make you picture an antiquated clerk writing in a huge book of records. But this role is far from out of date. In fact, bookkeepers are the backbone of business today.
While often overlooked, bookkeepers are essential to a business's financial standing and the smooth operation of any organization, small or large. What does a bookkeeper do? There’s a good deal more than books for these financial professionals to keep track of!
From ancient civilizations to modern corporations, record-keeping has been essential. Today, bookkeepers are the modern-day scribes, ensuring the financial integrity of businesses.
So, what does a bookkeeper do?
Professional bookkeepers play a crucial role in maintaining a business's financial health. A bookkeeper's job, at its core, involves handling a company's finances by recording transactions, keeping accurate records and summarizing a business's financial transactions.
Bookkeepers keep the business's financial records organized and precise. They keep track of all the money coming in and going out of a business, primarily handling its financial records.
They also often handle recording financial statements. They record all financial transactions, from sales and purchases to payments and receipts. By organizing these documents, bookkeepers ensure the business's economic data is easily accessible and accurate.
As a financial professional, one of the most crucial tasks in this career is generating financial statements. Bookkeepers use accounting software to create essential financial reports such as income statements, cash flow statements and balance sheets. Accounting software helps a bookkeeper manage accounts receivable, accounts payable and other financial transactions.
Common bookkeeper tasks include...
- Maintaining financial records: Accuracy and organization of all financial records, including invoices, bank statements, and receipts, are reviewed and confirmed.
- Processing payroll: Bookkeepers often process payroll and employee salaries, manage tax filings, and process payments. They calculate employees' wages, deductions, and taxes and ensure timely payments.
- Preparing tax documents: Bookkeepers assist in preparing necessary tax documents, such as tax returns and records, and meet tax deadlines to comply with tax regulations. Bookkeepers may work with tax professionals to gather essential documents and prepare tax returns.
- Generate financial statements: Bookkeepers prepare essential financial reports, including...
- Income statements (Profit and Loss Statement): The profit and loss statements show a company's expenses, net income (or loss) and revenues over a specific period. It helps businesses understand how profitable their operations are.
- Balance sheets: These financial statements provide a company's financial health snapshot. This statement shows assets, liabilities, and equity.
- Cash flow statement: This financial statement tracks the inflow and outflow of cash. This helps businesses manage their liquidity and make informed financial decisions.
- Managing accounts Payable and Receivable: Tracking and paying bills owed to suppliers. As well as monitoring and collecting payments from customers.
- Double entry bookkeeping: This is a process where every financial transaction is recorded in two accounts: debit and credit. This system allows bookkeepers to maintain accurate and balanced financial records.
Additional bookkeeper responsibilities could be...
- Bank reconciliations: Ensuring the company's bank records match all internal records.
- Depreciation calculations: Determining the value loss of assets over time.
- Journal entries: Record financial transactions in general accounting ledgers.
- Budgeting and forecasting: Assisting with creating budgets and financial analyses
- Inventory management: Tracking stock costs and levels.
By accurately maintaining financial records and managing business accounts, bookkeepers are the anchors for success for small business owners. It is vital to keep the finances organized.
Why does bookkeeping matter?
Bookkeepers play a crucial role in managing business finances. Bookkeepers focus on the management of a business's finances. How bookkeepers manage financial transactions can directly impact the profitability of a company. Up-to-date and accurate financial records are critical for a business's financial health; bookkeepers play a crucial role in...
- Making informed decisions: Bookkeepers help business owners make informed decisions about expenses, investments, and future growth by providing accurate financial data.
- Identifying financial trends: Bookkeepers help business owners take proactive measures by analyzing financial data to identify trends and potential issues.
- Ensuring compliance: Bookkeepers help business owners to comply with tax laws and regulations, avoiding costly penalties.
- Preventing errors and fraud: By maintaining strong internal controls, bookkeepers help to avoid financial errors and fraud, protecting the company's assets.
- Risk mitigation: Identifying potential financial risks early can help businesses take preventative actions.
Bookkeeping is a vital asset to any business's financial growth and stability.
What skills do bookkeepers need?
Do you wonder what it takes to be a successful bookkeeper? You will need a few essential bookkeeping skills to do this job. You'll need a blend of soft and technical skills.
Technical skills for bookkeepers
- Accounting knowledge: A solid understanding of accounting principles, including double-entry bookkeeping.
- Attention to detail: Meticulous accuracy in recording and analyzing financial data is imperative.
- Accounting software proficiency: Knowledge of accounting bookkeeping software platforms such as Sage®, Xero®, or QuickBooks®.
- Problem-solving skills: The ability to identify and resolve financial discrepancies.
- Mathematical skills: A solid understanding of basic math is necessary for recording and analyzing financial data.
- Tax knowledge: Basic knowledge of tax laws and regulations is necessary for accurate tax preparation.
Soft skills for bookkeepers
- Organizational skills: Obtain and organize numerous financial documents and deadlines. Keeping the book organized is crucial. Tools such as bookkeeping software assist with organizing and recording financial transactions.
- Time management skills: Track and maintain tight deadlines and prioritize. To perform appropriately and efficiently, time management skills are vital. Financial management requires a keen eye on timelines and deadlines.
- Communication Skills: Effective communication of financial information to business owners and other stakeholders.
- Attention to Detail: bookkeeping requires accuracy and precision.
What does a bookkeeper's career path look like?
A career in bookkeeping can lead to various opportunities. Some bookkeepers may seek specific areas, such as tax preparation or small business bookkeeping. Others may pursue professional certifications to enhance their skills and career prospects.
Many bookkeepers work independently or for small businesses. Some bookkeepers may also advance into accounting roles with further education.
What makes a bookkeeper different from an accountant?
The main difference between bookkeeping and accounting is the level of education and skill required and the scope of responsibility.
Bookkeepers don't need a formal degree necessarily. The Bureau of Labor Statistics (BLS) writes that most employers expect bookkeeper applicants to have a high school diploma (or equivalent) and some college training, such as completing an accounting course. Though they do need the skillset to perform tasks of the job. An education could open up more opportunities.
Many colleges or vocational schools offer certificate programs in business or accounting. These programs typically take less than a year and should provide you with the knowledge that is needed to work as a bookkeeper.
Becoming an accountant typically requires a bachelor's degree in accounting, according to the BLS.
An associate's degree in accounting or business management can provide a more comprehensive understanding of accounting, finance, and management principles. These degrees can benefit those who want to advance their careers or specialize in a specific bookkeeping area.
A bachelor's degree in accounting or finance can offer the most comprehensive education in bookkeeping and related fields, and these degrees can also lead to more career opportunities.
4 Ways bookkeepers can expand their career options
Some bookkeepers thrive in their roles and don't necessarily intend to return to school for an accounting role. Others use more education to further hone their career journey, stepping into accounting or financial positions.
1. Become an accountant
Plenty of bookkeepers get started in the field, realize they like the work, save some money and eventually return to school to pursue an accounting degree. Once you have some exposure to what Certified Management Accountants (CMAs) or Certified Public Accountants (CPAs) do, and once you've gotten a taste for these work environments, it's easier to see how you'd fit. For more on that, check out How to Become an Accountant: A Guide for Prospective CPAs, CMAs and More.
Rasmussen University’s Accounting Certificate, Accounting Associate’s degree and Accounting Bachelor’s degree programs are not designed to prepare graduates for any state-issued professional license or certification. Rasmussen University’s Accounting Certificate, Accounting Associate’s degree and Accounting Bachelor’s degree programs do not meet all educational prerequisites for licensure as a Certified Public Accountant (CPA) in any state.
2. Go for certifications in bookkeeping
There are also several ways to expand your responsibilities and opportunity as a bookkeeper without becoming a full-fledged certified public accountant or financial accountant.
Obtaining additional certifications and experience can enhance credibility and increase earnings. Here are some good options.
Certified Bookkeeper® (CB)
The American Institute of Professional Bookkeepers® (AIPB) offers this professional certification and requires passing an exam.
Additional work experience may be required to sit for the Certified Bookkeeper certification examination.
Certified Public Bookkeeper® (CPB)
CPB's specialize in bookkeeping and accounting. The National Association of Certified Public Bookkeepers® (NACPB) offers this certification and requires passing an exam.
Specific education credentials/coursework , certifications and relevant work experience are required to sit for the Certified Public Bookkeeper certification examination.
3. Join a professional bookkeeping association
Never overlook the power of networking! Bookkeepers can also join the ICB, the Institute of Professional Bookkeepers. The ICB is the largest global professional body for bookkeepers worldwide.
By joining the ICB, bookkeepers can enhance their professional development, build networks and stay up-to-date on industry regulations and trends. The ICB offers a range of qualifications and certifications, ongoing support with resources, training, networking opportunities and so much more.
4. Train in specific bookkeeping software
Many employers offer on-the-job training to help new or aspiring bookkeepers learn the software and procedures used in their company. This hands-on experience can be an invaluable tool in developing practical bookkeeping skills and the opportunity to learn how to perform bookkeeping tasks.
But as you go, you may find elements of bookkeeping software that are especially challenging or lesser-known. Getting extra training in these areas or developing niche expertise can be good for your work and job prospects.
The future of bookkeeping
Technology continues to evolve in this fast-paced, ever-changing world--as does the role of a bookkeeper.
Times have changed over the years. Modern bookkeeping increasingly relies on bookkeeping and accounting software, cloud-based solutions and automation. These tools streamline bookkeeping tasks and increase efficiency. However, the human touch remains essential in handling accounting tasks, especially in complex decision-making.
Whether you're an aspiring financial professional or a small business accounting specialist, understanding the role of a bookkeeper is crucial. Bookkeepers can contribute significantly to the financial health of small businesses by ensuring accurate financial records and providing valuable insights into their financial statements and analyses.
A bookkeeper is a cornerstone of financial management in any successful small business.
If you're passionate about numbers, have a keen eye for detail, and enjoy solving puzzles, a career in bookkeeping could be the perfect fit.
Rasmussen's Certificate in Accounting can be completed in as few as 9 months and can get you started on the path to becoming a bookkeeper!3
Rasmussen University’s Accounting Certificate, Accounting Associate’s degree and Accounting Bachelor’s degree programs are not designed to prepare graduates for any state-issued professional license or certification. Rasmussen University’s Accounting Certificate, Accounting Associate’s degree and Accounting Bachelor’s degree programs do not meet all educational prerequisites for licensure as a Certified Public Accountant (CPA) in any state.
Sage® is a registered trademark of Sage Software, Inc
Xero® is a registered trademark of XERO LIMITED
QuickBooks® is a registered trademark of INTUIT INC.
AIPB® is a registered trademark of American Institute of Professional Bookkeepers
Certified Bookkeeper® is a registered trademark of The American Institute of Professional Bookkeepers
1How to Become a Bookkeeping, Accounting or Auditing Clerk, Bureau of Labor Statistics, [accessed 11/4/2024] https://www.bls.gov/ooh/office-and-administrative-support/bookkeeping-accounting-and-auditing-clerks.htm#tab-4
2How to Become an Accountant, Bureau of Labor Statistics, [accessed 11/4/2024] https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm#tab-4
3Completion time is dependent on transfer credits accepted and the number of courses completed each term.
