Who is a bookkeeper?
Let's assume that you own a small business which you have set up few months back. As your business is new and also small and you have few employees to work for you, hence you do not need any expert to support your financial transactions. Being the owner of your business you can keep all the financial records of your company.
Now let's take a trip five years ahead of the current time. So, within five years you have flourished your business in different locations and you have some hundreds of employees in your company. However, do you think that it is possible for you to maintain your fiscal records properly and exactly as you used to do five years back?
This is the situation when a bookkeeper becomes very important. A bookkeeper is a professional who performs common accounting duties, like maintaining complete set of fiscal records, daily transactions, keep track of your business related funds, retain invoices in a systematic way etc.
Some basic terminologies related to bookkeeping
Transaction- it is the exchange of financial worth.
Account- when similar financial records are accumulated together, it is called account.
Report- the financial transaction statements for a certain time or a certain period.
Balance sheet- it is a report of the economic condition of a business on a particular date.
Assets- they are the comprehensive items on a balance sheet, particularly in relation to liabilities and capital.
Liabilities- it is the debt and money owned by a person or business.
Equity- it is the monetary value of assets or business beyond any quantities payable on it in mortgages, claims, liens, etc.
Income statement- it is the report of expenses and incomes which determines the net profit and loss of a company or business for a certain period of time which is generally one year.
Revenue- it is the combined amount of earnings of a person or a company.
Expenses- they are the charge incurred during a business assignment or trip.
Accounting period- it is the time during which a financial transaction statement is estimated.
Accounts payable- it is a liability to a customer, carried an open account generally for obtaining goods and services.
Depreciation- bookkeepers use the term while attempting to go with the cost of an asset to the income that the asset assists the company earn.
Interest- it is the tariff for the privilege of having a loan typically articulated as an annual percentage rate.
Inventory- it is the resources, work-in-process goods and totally over and done goods that are considered as a part of a business's assets that are all set or will be set for sale.
Payroll- it is the amount of all the reimbursement that a business compensates to its employees for a set phase of time or on a particular date.
Trial balance- it is an accounting database where the bookkeepers bring together the balances of all record-books into debit or credit columns.
Profit and loss- it is the economic declaration that sums up the revenues, expenses and operating costs incurred for a certain period, usually a fiscal quarter of a year.
Income- it is the economic possessions that is generated in exchange for an individual's accomplishment of any project or work or through investing capital. It is generally used-up to meet daily expenditures.
Debits- it is a bookkeeping entry that results in either an increase in assets or a declining in liabilities on a company's balance sheet or in someone's bank account.
Credit- it is a written agreement within which a recipient receives something of worth now and agrees to refund the lender at some date in the upcoming days, usually with interest.
Double entry- it is the reality that every monetary transaction has equal and opposite effects in no less than two different accounts.
How can I understand that I need a bookkeeper?
Once more let's assume that you have maintained all your financial data for a long time by yourself. But recently you have started facing problem with the huge volume of accounting as you have grown your business within the last couple of years or months and you have more employees now. This is the time when you really need a bookkeeper. But during this period you can outsource bookkeeping service from a bookkeeping firm or a freelance bookkeeper. But after few months or years when your business will be much developed and you will have a good number of employees and larger financial transactions, then you will need to call your freelance bookkeeper again and again, on daily basis to take care of your work properly. This is the exact time when you need a bookkeeper on permanent basis or contact a reputed firm to have full-time bookkeeping services.
Your bookkeeper will do the following job for you
- Will save your time
- Will keep up your books properly
- Will complete your vat returns, income tax returns and annual accounts return in a faster pace
- Will process all the formalities of your business accurately within time
- Will keep all the records within the company's general account book
- Will bring up to date and keep all the financial statistics
- Will maintain records of accounts payable, accounts receivable, bill payment, payroll and check registers, bank reconciliation, financial statements, customized reports, budget preparation, Business and Workers' Compensation Insurance, employee health insurance, tax audit representation etc.
Moreover, a bookkeeper's specific responsibilities will depend upon the company profile, company size and company turnover. You can spend more time on strategic planning when you have handed over all your bookkeeping responsibilities to a professional bookkeeper.