Business Bookkeeping & Accounting: What is Involved?

Bookkeeping has evolved from hiring the accountant next door to enter transactions in a paper ledger and balance the books each month, to a critical team member that most business owners rely on to help them make profitable decisions and grow their businesses.

While the fundamentals of recording transactions and drawing conclusions for reporting has not changed over the years, the role of the bookkeeper certainly has.

Here is what today’s modern business needs to do each and every month (or week, or even day), to stay in business and remain profitable.

Bookkeeping and accounting tasks and responsibilities

Record sales transactions: Record cash and credit sales in-store, online, in real time, in batches, ech day, week, month, quarter and year.

Manage cash: Receive, deposit, and record flows of cash including, checks, credit cards, PayPal, ACH, wire, Shopify, EDI, and manage accounts receivable while calling customers to pay their invoices.

Reconcile accounts: Compare bank, credit cards, sales ledgers, expense reports and dozens more between your books and your bank accounts, third party providers, credit card companies, and receipts.

Store documents: Maintain years of document history for compliance, audits, and taxes including receipts, reconciliations, expense reports, regulatory filings, and more.

Pay bills: Create purchase orders, order supplies for clients and the office, pay all your vendors, manage accounts payable and balance payables, receivables, and cash on hand to make sure you have the working capital you need to run your business.

Run payroll: Collect time sheets, enter data into your HR system like ADP, pay employees, collect and remit payroll taxes, add and remove new staff, and stay compliant with staff records and state filings and annual W2 distribution.

Record accruals: Accrual accounting (GAAP) matches revenue and expenses with time periods and consumption and requires a deep knowledge of your industry, unique business processes, and tax and accounting laws to guide you in the right direction.

Pay taxes and maintain compliance: All businesses pay some form of taxes and must maintain accurate bookkeeping to calculate them. Examples include paying sales taxes, franchise taxes, state and local taxes, and other industry specific fees and tariffs.

Create reports for management: Business owners need to be updated regularly on cash flow, budgets and forecasts, and customer issues in order to make informed decisions to grow the business each month. Creating the right reports for each business requires knowledge and experience.

Other tasks: Believe it or not, most business owners have their “bookkeepers” do much more than bookkeeping. They answer phones, file paperwork, handle customer service and serve as hybrid employees who have many responsibilities. Many times, this creates confusion for new employees or when exploring outsourced accounting services, since a true bookkeeper or accountant handles just this: bookkeeping and accounting.  

What most bookkeepers are missing

The tasks listed above are primarily reactive in nature, and require a fundamental skill set that most bookkeepers already possess. This is good news for most business owners.

However the truth is, most bookkeepers are looking to make a good living, do a good job at work, and go home to their families without rocking the boat to upset normal flow of business. After interviewing hundreds of bookkeepers and helping dozens of companies, we know this is the truth!

So, what’s missing from your current bookkeeper relationship?

First, consistently taking action on these tasks and delivering a level of quality that would satisfy a CPA and a CFO is the first step. When you have been in the same position for many years, it is easy to get comfortable and miss critical errors and fraud, no matter how small at first.

Second, having accountability, and being able to execute, day in and day out, 7 days per week (not just Monday through Friday), is difficult for one person. Also, having a second or third pair of eyes to review this work and provide feedback would be a great benefit to most CEOs. A lone bookkeeper often has complete control over the finances without any controls over cash or reporting, and is a risk point you should beware of as a business owner.

And finally, providing proactive and meaningful financial reporting and analysis to make sense and draw conclusions from the transaction-level detail is the key function that most bookkeepers do not provide.

If we have posed interesting questions to you, please continue to the next page