In order to get a better idea of what a bookkeeper does, let’s start by dispelling one myth. They don’t actually keep books, that would be the job of a librarian. Instead, they keep financial records.
Sure, all of these records were stored in some massive book-shaped ledger once upon a time. However, most of this information is now stored digitally. They are still called bookkeepers even if they don’t actually work with physical books for tradition’s sake.
Nowadays they use computer programmes from companies like Reckon to get the job done. And while you might not know exactly what they do, you still probably heard about them.
So, what does a Bookkeeper do? The role of a bookkeeper at a small business could best be described as a finance supervisor. They will keep track of all of a company’s finances, recording them and making sure everything adds up. Here is what you can expect should you choose to hire one.
Keep a Company Legal
The Australian Securities & Investment Commission (ASIC) requires small companies, defined as those with fewer than 50 employees and less than $25 million in revenue, to keep hard copies of financial records that correctly record and explain its transactions, financial position and performance. These records must also enable financial statements to be prepared and audited.
A bookkeeper’s primary duty is collecting, organising and maintaining this information. It is possible for a small business owner to do this him or herself, but chances are you don’t have time to keep an eye on this 24/7.
Should the ASIC come calling for this information and it is incomplete or inadequate, “I didn’t know” or “I didn’t have the time to gather this information” aren’t excuses they will accept. This is one reason it is better to have a bookkeeper look after everything.
Track All Expenses
On any given day your company will be required to pay for essential goods and services. These can be anything from a utility bill to an employee claiming back petrol for travel to a meeting. Tracking these expenses is important since it is the only way you can know if you are getting what you pay for.
Keeping an eye on all of these day-to-day transactions can be time consuming and labour intensive. A survey from Constant Contact showed that 40 per cent of small business owners aren’t able to go on holiday while 40 per cent aren’t able to see their family and friends as much as they would like. Tasks like expense tracking are the reason for this since weekends and nights are just about the only time you have available to get it done.
Delegating this job to a bookkeeper allows you to know exactly where money is being spent without having to track down every last cent yourself.
Make Sure Everyone Gets Paid
Most owners handle payroll themselves during their first few months in business. It is the only way to ensure finances are balanced and there is enough money to cover wages. As an organisation grows, it will likely add workers and eventually the task becomes time consuming and unwieldy for a small business owner with a million other things to do.
A bookkeeper is better suited to handle all payroll matters. They can check timesheets, pay necessary taxes, allocate any commission-based payments and process the payroll as you would. And since they will oversee finances, they can warn you about any cash flow issues before money is paid out.
Entering the Numbers
As was mentioned at the start of the article, there was a time that all financial transactions were entered into a book. Nowadays, everything is entered into a computer programme. In reality, this task is repetitive, manual labour that many small business owners will put off for months.
Not only must this be done regularly, but it also has to be completed by someone who is skilled at using the software. If one payment is entered incorrectly or one expense is missed, it can skew your financial information and take hours, or even days, to find and correct the error.
Bookkeepers are skilled in entering this data and while mistakes can still happen, they are also able to find them far quicker than you will. And having a bookkeeper doing this regularly means you won’t end up wasting a weekend entering all of these numbers because you kept putting off the task.
Help with BAS Returns
Most bookkeepers in Australia are registered BAS agents, meaning they can assist with the preparation and submission of BAS forms. Additionally, a bookkeeper can help with other taxes such as payroll tax and the compilation of reports as required by the government or banks you may have received a loan from.
And unlike a business owner, who is likely storing financial records using Rafferty’s Rules, a bookkeeper will know where all records are located at any given moment. They can quickly organise and prepare BAS forms and other tax documents quickly and easily. If dealing with the taxman causes you to drop your bundle, having a bookkeeper around to prevent this is a good idea.
Keep Track of the Petty Cash
Petty cash ensures small businesses have money on hand to cover any emergencies that may arise. It can also fund any small purchases you or your employees might have to make on a daily basis. Much like all other accounts, it is important to track how much petty cash is used and what for. It usually makes sense for the bookkeeper to handle this along with their other duties.
They can monitor expenditures and replenish the petty cash as required while also ensuring no one is going crazy on things like birthday cakes or client lunches. Should you still want to know about cash purchases, you can always have the bookkeeper require your approval for petty cash disbursement.
Don’t Go It Alone
Now that you know the answer to the question “what does a bookkeeper do?” you can see how much work it entails. Small businesses need to be vigilant when it comes to pulling the belt in these days. While employees may not be concerned with the day-to-day finances of your company, it’s the only thing a bookkeeper cares about.
In the current economic climate, it has become more important to properly manage finances than ever before. Business failures were up in Australia last year with more than 15,000 closing for good in the third quarter of 2016 alone, according to business services firm Dun & Bradstreet.
“I’m not surprised at the failure rate because you need money, resources and customers to survive. If you run out of any one of them, it’s over,” Karen Lawson, CEO of corporate start-up accelerator Slingshot, told the Sydney Morning Herald when presented with the business failure statistics.
Having a bookkeeper work for you will guarantee you have an accurate idea of your firm’s financial situation while letting you focus on attracting and retaining clients. Some business owners wrongly assume spending money on a bookkeeper to be an unnecessary expenditure. But if you hire a good one, you’ll find they have paid for themselves in a few short months.
You’ll no longer have to spend countless hours on the financial record keeping tasks you dread. Instead, a professional will be doing all of this for you and reporting back with the details. You can focus on growing your business instead of entering numbers into a computer and tracking down expenses. And maybe, just maybe, you can finally take that holiday you’ve been dreaming about after hiring a bookkeeper.