Bookkeeping Definition, Types and Importance of Bookkeeping

Users can access this cloud-based platform https://www.bookstime.com/ from anywhere, facilitating real-time updates to financial data. Managing business accounts is an intricate part of bookkeeping that involves the organization and tracking of financial transactions to maintain a clear view of a business’s fiscal health. The main types of bookkeeping systems are single-entry and double-entry. Single-entry bookkeeping records each transaction once, typically tracking only cash flow, making it suitable for small businesses.

What Does a Bookkeeper Do? Role, Key Duties, and Responsibilities

Bookkeepers quickly process incoming AP transactions on time and make sure they are well-documented and easy to audit. Entering bills into the accounting system allows for accurate planning and decision-making. Bookkeepers ensure that vendor and customer records are always up to date, even as people and businesses change. They may also need to coordinate with other departments to ensure that everyone is using the same data. Certifications aren’t necessary to become a bookkeeper but can signal to employers that you have the training and knowledge to meet industry standards. After you have a couple years of experience, you can earn a bookkeeper certification from The Certified Professional Bookkeepers of Canada.

Bookkeeping Job Outlook and Salary

Though having a two-year or four-year degree isn’t always required to be hired as a bookkeeper, some companies may prefer candidates who do. While it’s not always necessary to have a degree, some companies will look for candidates with coursework in accounting. If you’re organized and enjoy working with numbers, a job as a bookkeeper could be a good fit. According to Glassdoor, the median salary for bookkeepers in Canada is $47,285 per year 1. You can sometimes choose between full-time and part-time positions, and you may go to work in an office or work from home.

Certifications and Skills

• Since bookkeeping is a more straightforward process than accounting, it is something that many people can (and do) opt to take care of themselves.
• Accountants make a median annual salary of $81,680, significantly more than the $49,210 that bookkeepers earn.
• Tax preparers complete the tax forms for a business, assess tax liabilities, and ensure a business remains tax compliant.
• They maintain the general ledger, reconcile accounts, and prepare financial statements.
• Bookkeepers perform several types of bookkeeping, two of the most common being single-entry and double-entry bookkeeping.

These services include recording what money comes into and flows out of a business, such as payments from customers and payments made to vendors. Depending on training, bookkeepers might not be as equipped as accountants to offer what is a bookkeeper financial advice and strategy for the business. Accountancy training includes learning how to interpret financial reports and make projections to meet a company’s goals, while bookkeeping training is focused on maintaining accurate records. While a bookkeeper is a finance professional, they’re different from an accountant.

If you hire a full-time CPA, you might spend as much as $150,000 or more. Either way, outsourced services are usually much cheaper than hiring a full-time staff member. This equation always stays in balance—when one side changes, there’s a corresponding change on the other side. For instance, if you take out a business loan, your assets (cash) increase, and your liabilities (loan amount) increase by the same amount. If your business is ever audited by the IRS — or if it just has a question for you — your bookkeeper can act as your liaison. If there’s a discrepancy between the books and your bank, your bookkeeper will help you get to the bottom of it.

What Is Bookkeeping? A Guide for Business Owners

• However, they may not provide the same level of commitment and familiarity with your business as an in-house bookkeeper.
• Reconciling accounts involves comparing financial records to bank statements to ensure that they match.
• Venable already had experience as a bookkeeper before earning his degree.
• To help set your bookkeeper job description apart, you might also include details about your company culture and the benefits offered.
• Not only are you entrusting your bookkeeper with sensitive data, you are relying on their accuracy to maintain the financial records for your business.

At its heart, bookkeeping involves recording daily transactions in accordance ledger account with Generally Accepted Accounting Principles (GAAP). These help you track all your incoming and outgoing transactions in chronological order, giving you a good a picture of your business’s financial health. Bookkeepers pursuing professional certification can earn more money and take on additional responsibilities. The AIPB reports that 54% of its certified bookkeepers got a new job promotion or higher-level responsibilities after earning their credentials. Fifty-nine percent said they received a raise, and freelance certified bookkeepers said they were able to gain new clients and raise their rates. In its Payroll Fundamentals Training Course, you’ll learn payroll system procedures, gross pay computations and how to calculate payroll taxes and account for deductions and fringe benefits.

• A bookkeeper is a professional who records a business’s financial transactions, such as sales, purchases, payments, and receipts.
• In this day and age, the providers you contract with don’t need to be in the same city, state or even time zone as you.
• Accountants help businesses understand the bigger picture of their financial situation.
• On the other hand, if you have in-depth tax and finance knowledge beyond the bookkeeping basics, you may be able to get the job done.
• This article will explore what bookkeepers do, why they’re important to a business, and how you can get started in this role.

If you’re ready to take bookkeeping off your plate and delegate this task to someone else, it can be hard to know where to look. Start by reaching out to other business owners for recommendations, searching online for providers and checking out reviews on Google or Yelp. If you don’t feel comfortable with a freelancer, there are many firms that offer bookkeeping services as well.