Bookkeeping is not something you can eliminate from the day-to-day of your business. If you do, you’re walking blindly into the unknown and likely won’t last. According to the U.S. Bureau of Labor Statistics, 20 percent of small businesses fail within the first year - and after five years, only 50 percent of small businesses survive. There are many reasons why businesses fail, but almost one-third are due to cash flow problems, which can be caught and addressed with detailed, up-to-date books.
That leads us to the question, what exactly is bookkeeping and what does a bookkeeper actually do for you? The act of bookkeeping itself simply means the activity of keeping records of the financial affairs of a business. So, what exactly does a bookkeeper do? Let’s break it down.
Maintain and monitor records.
This is in the simplest terms. Someone needs to know where your business stands financially and no one is better for that than your bookkeeper, as they’re the ones who have access to all the ins and outs of your business financially.
Track debits & credits.
Bookkeepers track and record the money going in and out of your business based on the information you provide. From there, reports can be made to better show you where your business spends money and how your business makes money. Without the day-to-day tracking of the debits and credits, your business’ financial situation would be unknown, at best.
Adding new employees to payroll, taking any employees off of payroll, and making sure everyone is paid correctly and on time can also be a bookkeeper’s role. It only makes sense that the person who sees the financial ins and outs of your business is the one to make sure payroll is set up and runs correctly.
Accounts Receivable & Accounts Payable.
Bookkeepers make sure all your bills are paid and all your invoices are fulfilled. They send out invoices, payment reminders, and record accordingly.
At the end of every month, a bookkeeper will reconcile your records with your bank account to make sure everything aligns as it should. If there are issues or red flags arise, your bookkeeper will address these with you immediately and work to make the necessary adjustments so your books can be reconciled correctly.
Bookkeepers act as the go-to for all things when it comes to your company’s financial records. They can be the backbone to your business and offer potential advice and guidance based on your company’s unique records. Your bookkeeping isn’t something that can be left on the backburner until you have time - work with an experienced bookkeeper who makes time.