Bookkeeper Definition
A bookkeeper is an individual who maintains company books and makes them correct and accurate. This person helps to protect a business from costly filing errors and helps to keep it compliant with the tax laws and regulations. The bookkeeper interacts with a business accountant, ensuring they have the most accurate information.
If the business uses a bookkeeper, it allows it to use financial statements to make good and solid decisions about the company with confidence because it knows the numbers are correct. The bookkeeper:
- looks after all business papers, sorts and organizes them;
- inputs the data (receipts and invoices) into a software;
- prepares draft copies of business Profit and Loss Statement and Balance Sheet;
- makes sure a business does not miss any receipts or expenses;
- makes sure payroll records are accurate.
What a Bookkeeper has to Know
If you’re looking to become a bookkeeper, you should know the basics of bookkeeping and accounting. Generally, bookkeepers do not need tax training and should only know the basics. Knowledge of computer and bookkeeping software is also a common requirement. To do a good job, the bookkeeper should also have a basic understanding of an industry a business he or she works for is in.
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Bookkeeper Salary Range
The salary you receive as a bookkeeper largely depends on your experience, skills, education, certifications, and work location. In the United States, it will range between $38K and $48K. An average Cost of a Bookkeeper is about $43,000.
If you are looking for hourly pay for a bookkeeper, the lowest you would get is about $12 an hour, and the highest you should expect is about $25 an hour. Most bookkeepers get on average, $17 an hour. Bookkeepers can also receive bonuses and commissions.
How to Become a Bookkeeper
To become a bookkeeper, some form of bookkeeping training is necessary. You can start with an internship in a bookkeeping/accounting office. You will have to learn the bookkeeping basics and familiarize yourself with accounting software. You can do this on your own or attend bookkeeping courses.
Afterward, you might consider getting additional education. Usually, the bookkeeper will have a certification of his or her training, and some employers require an associate’s degree in a related field. If you want to make bookkeeping your career, you might want to become a Certified Bookkeeper or even a Certified Public Bookkeeper.
What does a bookkeeper do?
Let’s look a little closer at what the role of bookkeeper entails. The daily tasks of a bookkeeper include paying supplier invoices on time and issuing client invoices, making bank deposits, and collecting receivables and cash receipts. They also maintain a general ledger, chart of accounts, and budget. Petty cash funds are also their responsibility.
Every month, the bookkeeper would process payroll, reconcile every bank account, calculate budget variances, and report issues. At the end of the year, they will prepare financial statements, highlight items for special tax treatment, and back-up in case of an audit.
Difference between Bookkeeper and Accountant
It is empowering for business owners to understand the difference between bookkeeping and accounting. Since bookkeeping is part of accounting, the work of a bookkeeper and accountant often overlap. Most importantly, they both help the company make sound decisions.
As explained above, the bookkeeper records financial transactions, such as sales, bills, and payroll. To accomplish that, they need to classify, measure, and identify transactions. Accountants, on the other hand, interpret and analyze the data provided by the bookkeeper. They give management advice based on financial reports. Overall, accountants overlook accounting processes, such as bookkeeping, and perform more advanced tasks compared to bookkeepers.
Learn more about the differences between bookkeeper vs accountant or how to become a bookkeeper in our blog.
