A bookkeeper is a professional responsible for maintaining the essential financial records of a business. These records are typically organized in journals or ledgers, which is the origin of the term “books” in the title “bookkeeper.” While bookkeepers perform some basic accounting tasks, they are not considered fully qualified accountants. This distinction arises from the fact that bookkeepers undergo significantly less training compared to accountants and are not subject to the same legal certification requirements.
Bookkeepers can work in various capacities. Some are employed directly by a single business, while others operate as independent contractors or small business owners, providing services to multiple clients simultaneously. In the latter case, they manage the financial records for several different individuals or small organizations concurrently.
The role of a bookkeeper comes with significant responsibilities. Their primary duty is to meticulously record every financial transaction a business undertakes. This includes documenting all payments received and made, along with the purpose of each transaction. Both incoming and outgoing funds must be carefully tracked. At the end of each accounting period, bookkeepers must ensure that all entries in the ledger books are balanced, resulting in an accurate and precise representation of the company’s income and expenses.
However, bookkeepers do not handle all financial tasks within a business. Often, at the end of a monthly or quarterly accounting period, they will hand over the books to a qualified accountant. The accountant then takes on more complex tasks such as calculating taxes owed to the IRS and preparing official accounting reports. Many larger or medium-sized companies opt to employ their own accounting staff and accountant rather than having a separate bookkeeper, as this is generally considered more cost-effective. Smaller businesses, on the other hand, tend to have an in-house bookkeeper and engage an accountant on an as-needed basis, typically for tax reporting and profit/loss statements.
Bookkeeping, like accounting, can become increasingly complex as a company grows. Competent bookkeepers must be adaptable, capable of handling a constant influx of data and unexpected issues. Additionally, strong interpersonal skills are crucial for bookkeepers, as they often interact with various employees across the company to ensure accurate tracking of all expenses, from office supplies to business-related travel accommodations.
In some cases, bookkeeping can involve unethical and illegal activities. This may include falsifying records in the ledgers to present misleadingly positive financial picture, a practice colloquially known as “cooking the books.” Such activities in bookkeeping are not only morally reprehensible but also strictly prohibited by law.
