What Does a Bookkeeper Do?

What does a Bookkeeper do?

A bookkeepers role generally falls into certain responsibilities and day to day tasks, although in some cases can involve complex duties such as payroll, financial reports and even business strategy. In this article we look at the the basic duties of a bookkeeper and the complex duties which may overlap with accountancy.

• Data Entry
• Supplier Payments
• Reconciliations
• Petty Cash
• Accounts Receivable – Credit Control
• Accounts Payable
• Business Reports
• VAT
• Payroll
• Day to Day Duties

Whether you sell healthy eating plans, technical drawing software, or legal services. You will sell and you will buy. Recording and monitoring these business transactions is the job of a bookkeeper.

Most businesses use double entry bookkeeping software to manage their day to day business financial activities. This article will focus on the use of modern accounting systems which use double entry accounting.

Data Entry

Looking firstly at the core activities of the bookkeeper data entry is at the top. Companies create business transactions these transaction create documents. It is the responsibility of the bookkeeper to enter these documents into the companies accounting system.

This may sound simple on the face of it. In reality this is one of the most important bookkeeping activities. Not only do the document details need to be entered correctly they need to be entered into the correct accounts.

The documents a bookkeeper uses are called source documents, these are original transaction documents, such as a supplier invoice, a fuel receipt, or a bank statement etc.

• Modern Bookkeeping Data Entry

The task of manual data entry can often be bypassed by linking of all of your business systems. This means that the information flows straight to your sales to your bank account and to your expense accounts via receipt scanners.

Reconciliations

Bank reconciliation is the most common type of reconciliation the bookkeeper will perform. This type of reconciliation involves matching entries from the bank statement with the cash book.

This process is normally carried out when the bank statement is received usually once a month. With modern banking systems the bookkeeper can make this process much easier. Logging into the banking system on a regular basis will keep the records up to date which mean the monthly reconciliation will be quicker.

Petty Cash

Petty Cash is a small amount of cash that is kept on the premises of a business. This cash is used for items such as fuel, stationery, tools etc. The job of the bookkeeper is to issue cash and record receipts as well as tallying up the cash with receipts at the end of month and reconciling with the accounts system

What do Complex bookkeeping activities include?

Bookkeepers may be required to carried out basic duties as well as some complex duties. Below we will look at some of the more complex duties which the bookkeeper may be responsible for.

Accounts Receivable – Credit Control

An important task for the bookkeeper is issuing invoices and keeping track of the payments. Invoices are entered on to the accounts system or sales ledger and normally the customer is given credit terms which can range from 7 days to 60 days end of month.

The main object of credit control is to keep a close eye on when invoices are due for payment and to follow up when payment isn’t may or is overdue. This can be easily done by printing an aged creditor report on a regular bias and chasing up customer who are outside the agreed credit terms.

Accounts Payable

The data entry task of a bookkeeper will include entering supplier invoice onto the accounting system. These are recorded as money owed by the business to suppliers, which is called accounts payable – the opposite of accounts receivable (which is money owed from customers to the business).

Bookkeepers will print a list of suppliers age analysis and from this choose suppliers who are falling due for payment. These are entered onto the bank for a scheduled payment. The supplier account is updated by selecting the invoice/s to be paid and posting it to the bank account, this generates a remittance which is emailed or posted to the supplier.

Business Reports

There are countless reports that a bookkeeper could create. But there are a few that tend to be standard, these ensure that the business is performing as well as it should be.

On a monthly basis the most common reports produced are the cashflow statement, the profit and loss and the balance sheet. On a weekly basis aged receivables and aged payables

VAT Returns

A VAT registered business will account for input VAT on purchases and output VAT on sales. VAT will be recorded by the bookkeeper and submitted quarterly to the HMRC

Payroll

Another complex duty that a bookkeeper may perform is payroll. This involves calculating and distributing pay to employees. It also involves creating journal entries for payroll liabilities such as PAYE and National Insurance. This task can be carried out weekly, fortnightly, 4 weekly or monthly.

Journal Entries

In manual bookkeeping the entry into the books is called a journal entry, this is required for every transaction. In computerised bookkeeping there is still as requirement for manual journal entries.

Journal entries include, recording depreciation, writing off bad debts, payroll liabilities, accruals and prepayments.

Additional Day to Day Bookkeeping

Primarily, a bookkeeper’s job is to update and complete various aspects of managing ledgers and handling accounts. The bookkeeper may also have the more complex task of running the payroll issue salaries to employees. 

A bookkeepers job may also include submitting taxes and other payroll deductions to agencies responsible for implementing these.

Another aspect of a bookkeeper’s job is to coordinate with the bank to pay deposits, to pay off loans, update the company’s account, or demand from borrowers what they owe from the company. They may even pay the bills for the company or business. Different companies have different demands and responsibilities for their bookkeepers.

What type of person can be a bookkeeper?

Due to the importance of bookkeeping, a special type of employee is hired to do the work. The responsibility of documenting and monitoring these important transactions goes to a company’s bookkeeper.

The nature of a bookkeeper’s job is quite sensitive. Bookkeepers have direct access to the company’s well-guarded financial records. Therefore, they follow strict confidentiality and privacy requirements. In fact, they know a lot more about the company’s financial situation than other department managers themselves.

What Skills are Needed?

A bookkeeper’s job is quite demanding. First, they must be proficient in maths. Just like writers who have a passion for the written word, bookkeepers must have a passion for numbers.

Also, a bookkeeper should have at least basic knowledge of accounting and bookkeeping principles. He/she should also grasp and understand business procedures.

Bookkeepers also keep themselves updated by acquiring enough information regarding payroll changes; worker’s compensations; statutory wage changes, pension percentages increases.

Bookkeepers should also know how the government, especially the finance sector, works. Familiarity with the different reporting documents such as Tax and National Insurance information, that must be submitted regularly to the government is essential.

Bookkeeping can be a very versatile profession. There are various options for a bookkeeper in terms of where they work and how the work and who they work for. Some opt to work in a company full-time getting paid a regular salary. Others will start their own bookkeeping business or join a franchises, check out our single entry accounting system guide.