Interested in outsourcing your day-to-day financial tasks to a professional as your business grows? Want expert advice on business processes and operations to allow you to work smarter, and stay profitable? Bookkeeping is a vital process for every profitable business… but what is bookkeeping? And how does bookkeeping differ to the stuff you’re paying your accountant to do?

What is Bookkeeping?

While bookkeeping has traditionally been defined as the methodical recording, organising and storing of financial transactions within a company or organisation, modern bookkeeping has evolved to include all this, as well as support with operational performance.

Nowadays, bookkeeping isn’t just about the books! New generation bookkeepers don’t only help you keep track of the incoming and outgoing cashflow of your business in an organised way – they also provide experience and expertise to help you keep your business moving forward. Like a personal trainer at the gym, your bookkeeper offers day to day, week by week month by month support to help you focus on – and work towards – your goals.

What Does a Bookkeeper Do?

An important part of bookkeeping is the recording of your company’s financial transactions – and ensuring those records are accurate, comprehensive, and up-to-date. Regardless of whether you have an in-house member of your team taking care of bookkeeping duties, or you’re outsourcing these to a bookkeeping professional, your bookkeeper will record and keep track of common operational transactions and tasks such as:

  • Invoicing for products or services
  • Recording Business transactions
  • Payroll processing
  • Monitoring accounts receivable
  • Monitoring accounts payable
  • Preparing monthly or bi-monthly tax returns

Today, bookkeepers also provide business owners with support finding the best software applications and technologies to suit your needs, as well as practical advice on business processes. They can offer operational insight, and advice on trends, opportunities, and threats to help you stay ahead of the curve and manage any hurdles. Their job is to work with you, so you can focus on your strengths.

Why is Bookkeeping Important?

Every business must be mindful of cashflow and operational performance to stay profitable. Thorough bookkeeping is crucial for businesses of all sizes because it allows business owners to keep an up-to-date record of the current incoming and outgoing amounts, amounts owed by customers and by the business, and more.

In addition to the financial aspects of bookkeeping, today’s bookkeepers can also provide valuable advice and insight into business operations.

While it might seem obvious to keep these details in order – and many start-ups and SMEs launch with the intent of maintaining their own bookkeeping records – bookkeeping can quickly become more complex with the introduction of tax, assets, loans, employees and investments, as a business grows.

How is Bookkeeping Different from Accounting?

While bookkeeping and accounting both deal with equally important functions in managing your finances – and can appear to be quite similar at first glance – there are a few key differences. Bookkeeping and accounting have considerable overlap, but generally, bookkeepers will lay the groundwork for accountants – providing data that is essential to the performance of their role.
A great bookkeeper will work with your accountant to provide insight into the past, present and future of what your business is doing, and what you’ll need to do to drive it towards your goals.

In addition to this, bookkeepers can also offer add-ons, such as providing ongoing business insight throughout the year, advice on operations, processes and technology, and a fresh set of eyes and experience to bring to your attention earlier opportunities or warning signs.

While a bookkeeper will typically take care of day-to-day recording and organising of financial data (payroll processing, invoicing and recording business transactions), an accountant will be responsible for higher-level and less frequent tasks such as financial statements and financial advice, analysing business overall performance, setting budgets, and filing income tax returns.

While both deal with the finances of a business, bookkeeping is primarily concerned with accurately recording business transactions data, while accounting involves interpreting on that data, and forecasting your tax requirements.

Want to learn more about bookkeeping for your business? Contact the friendly local experts at Team Bookkeeping Ltd today to make an enquiry!