As I have begun this new direction in my life, I have found that their is a confusion as to what a bookkeeper does and does not do. Many of the individuals I have spoken to have the idea that a bookkeeper and an accountant are synonymous. With the technology we have today, it is easy to see how this confusion can happen.
Today, a bookkeeper can do many of the tasks that only an accountant performed just a few years back. For example, preparing company financial statements like the Profit and Loss or the Balance Sheet. These have become very easy to produce using the accounting software and cloud-based applications. At the same time, if you want an in-depth understanding of what is happening on these statements, you might rather talk to the accountant than the bookkeeper.
Some basic tasks of the bookkeeper are as follows:
- Recording financial transactions
- Posting debits and credits
- Producing invoices
- Maintaining and balancing subsidiaries, general ledgers, and historical accounts
- Preparing company financial statements
Some of the basic tasks of the accountant are as follows:
- Preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded in the bookkeeping process)
- Analyzing costs of operations
- Completing income tax returns
- Aiding the business owner in understanding the impact of financial decisions
From these two lists one can easily see why it is important to have a good bookkeeper. The bookkeeper prepares everything that the accountant needs to complete their job with accuracy and in a timely manner. It is of utmost importance that the two work well together. When looking for a bookkeeper, please keep this in mind. The perfect bookkeeper is one that knows how to collaborate with you, the business owner, as well as the accountant to make sure the financial side of the business is running smoothly and productively.