If you haven't worked with a bookkeeper, it might be hard for you to imagine the benefits of working with one. Maybe this example will help: imagine a time you went to a restaurant with a large group of people - like twenty, or more. Everyone orders different things, and of course, when the bill comes, everyone in the party wants to split the bill according to what they consumed. If you're like me, this might sound like your own personal hell. But others might have a natural affinity for figuring out the best way to divide twelve bottles of wine unevenly shared with 27 people. That insane person, who willingly takes on this math problem, spots errors like getting charged for things that never came and can figure out how to divide tip and tax fairly would be the bookkeeper for the party.

A bookkeeper's job is the get into the transactional weeds and to keep accurate accounting records. Accounting records need to be correct because business owners use them to make decisions. Accountants use them to file taxes. This article is going to walk you through all the things your bookkeeper will do for you, from managing financial transactions to supporting your accountant with filings and even making sure their workflow is a good fit for their clients.

Let's dive in.

The Tools: Here are the things your bookkeeper needs to do their job

Your bookkeeper will need access to your bookkeeping software program, like QuickBooks or Xero. If you don't have one, they can set it up for you. If you've ever tried to set up your books before, you know that it pays to have experience and to have some general accounting knowledge. Your bookkeeper will set up and manage the bank and credit card transaction feeds that connect your bank and credit cards to your bookkeeping software. Sometimes the feeds will get disconnected, and your bookkeeper will make sure to get them back up and running. They'll also be the person who oversees the incoming data, like a bouncer at a bar or host at a restaurant.

Most banks and credit card companies allow your business to set up restricted access for your bookkeeper. Limited access enables your bookkeeper to view your bank and credit card transactions and statements but generally prohibits them from making transfers or payments. The limits are both for your protection and your bookkeepers. Lawyers around the world are cheering at how this helps limit everyone's risk.

Your bookkeeper will also need access to the various payment platforms your business uses like Stripe, PayPal, and Square. They'll need to know all the ways you get paid, so they can make sure they're keeping track of payments and any processing fees associated with those platforms.

If you already use a system for keeping your receipts, like Expensify or Shoeboxed or Paco's Paper's method, you'll need to get your bookkeeper in the loop with access to those platforms as well. If you don't have a system yet, your bookkeeper can help you figure out a method that works best for how you like to work. There isn't a perfect solution for everyone when it comes to this. The ideal solution is a solution that you will use.

Here's a shortlist of some other things your bookkeeper might need:

access to the payroll service provider your business uses,
an introduction to your accountant,
details for any loans your company has,
tax details for any taxes your bookkeeper might be handling on your behalf, i.e., if you are responsible for collecting and paying sales tax, what schedule are you on, and what is the login details you use to pay these taxes?

The Tasks: Here are the tasks your bookkeeper will complete for you

They'll complete these tasks on a regular schedule, kind of like pool maintenance. Running the pool filter is a daily task, vacuuming and brushing the pool might be a weekly task, and cleaning the pool filter and testing the water might be a monthly task. Bookkeeping is like accounting maintenance for your business.

Labeling and categorizing transactions (usually weekly or monthly, sometimes daily)

The transactions will get pulled into your bookkeeping software, and your bookkeeper will need to either manually categorize each transaction or approve any automatically categorized transactions. While technology and AI are learning and advancing at an alarming rate, when it comes to bookkeeping, both are still not as reliable as our old human brains. A real-life human can oversee all the transactions and catch any errors. Categorization matters because how a transaction is labeled will impact where it shows up on your financial reports. Accurate reporting relies on accurately recording transactions.

Reconciling your statements and records (monthly)

Your bookkeeper will reconcile the internal recording keeping (your books) with the bank, credit card, and loan statements at the end of every month to make sure the transactions and balances match. Reconciliation is necessary because it helps to detect errors, discrepancies, or fraud.

Keeping track of income (usually monthly)

On the income side of things, your bookkeeper might help you keep track of incoming and outstanding payments by sending you a monthly report of unpaid invoices or balances due from customers. Some bookkeepers will even handle creating, sending, and collecting on invoices on your behalf.

Preparing your monthly financial reports

Here are the key reports your bookkeeper should send to you each month:

The profit and loss statement (AKA the income statement)
The balance sheet
The statement of cash flows

Your bookkeeper should be regularly preparing and sending you monthly financial reports. If you're not receiving them each month, I would strongly recommend that you have an open conversation with your bookkeeper about changing this. Imagine if a bank or credit card company didn't send you a monthly statement. How would you know where your finances stand? These financials allow you to look at the business finances from an accounting perspective.

An excellent bookkeeper will do more than deliver reports monthly; they'll also give you vital commentary on the reports. For example, if they see a significant increase in spending, they might mention that it was a slightly abnormal change. They might recommend that you save a portion of your profits for taxes. They may give you feedback on other ways you can optimize business operations.

Here is a short list of some additional tasks your bookkeeper might handle for you:

Processing payroll for your;
Recording payroll in your bookkeeping software, including all the various taxes paid by you (the employer) and the employees;
Filing and paying different taxes like sales taxes, local city and county taxes, worker's compensation taxes;
Helping you find answers to tax and business questions you might have (a good bookkeeper usually works with your accountant to help you find these answers);
Creating a business budget or cash flow projection and updating these things

The Benefits: Here are some of the ways a bookkeeper can improve your business life

Tax time should go a lot smoother

Without fail, every tax season, our bookkeeping firm gets an onslaught of emails from small business owners and freelancers freaking out about the bookkeeping they didn't do and the tax returns that are due soon. A bookkeeper does your books throughout the year, so you avoid having to do twelve months of bookkeeping in one miserable week or weekend. If you're lucky, while your bookkeeper has been maintaining your books, your accountant has been advising you to make quarterly tax payments based on the reports, so your tax bill shouldn't come with sticker shock.

You can make better financial decisions and learn more about your business

Having your financial reports sent to you regularly can help you make better decisions about where and how to spend and invest in your business. Having the historical data can help you create a budget or forward-looking projections so you can strategize instead of just winging it. You'll be able to learn about the seasonality of your business and prepare for the slower times during the busier times. You'll learn key metrics for your business. Key metrics are fantastic because it's like having a short-hand for knowing how your business is doing. Understanding your revenue and costs from last month to this month is like a runner measuring how their mile time has improved - from 10 minutes to 8:30.

More space to focus on what matters to you

Hiring a bookkeeper doesn't just free up some of your time, it can free up some of your focus and mental bandwidth because you have the peace of mind that your business finances are being tended to and looked after. You won't have to fear an audit because you know your records are reliable. Instead of having the constant, dull hum of worry that you aren't doing what you ought to be doing for your business finances, you'll be able to be fully present to the other important things in your life.

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Here Are the Things Your Bookkeeper Will Do For You /March 18, 2020 by Paco de Leon