What Are the Roles of Bookkeeping in a Business?

Bookkeeping is mistakenly considered to be the same thing with accounting. This confusion is quite understandable as the accounting process includes the bookkeeping function, but is just one part of the accounting process.

Bookkeeping, commonly referred to as keeping the books, is actually the day to day process of keeping full, accurate, up-to-date business records of the financial transactions of a company. These transactions include sales, purchases, income, receipts and payments by an individual or organization. And the value of these transactions is expressed in certain currency, defined by laws of particular country. Bookkeeping is usually performed by a bookkeeper.

In small to medium sized enterprises (SMEs), a bookkeeper may be the only sole financial member of staff.

A bookkeeper is one of the most important human assets of a company or SMEs as it's the bookkeeper's responsibility to handle and keep on track the company's entire financial records, ensuring all the details of their business' day-to-day financial transactions, the money flowing in and out a business, are recorded in the correct "daybooks": supplier's ledger, customer ledger and general ledger and bringing these recorded financial transactions to the trial balance stage so that the accountant can used them in preparing the company's income statement and balance sheet.

Depending on the size of the business and how duties are distributed among employees, a bookkeeper's duties and responsibilities may vary significantly from one company to the next.

So here are some of the common duties and responsibilities of a bookkeeper in business:

- Keeping Financial Records Updated. One of the key roles of a bookkeeper is to make sure that company's financial records are current and up to date and there is a regular reporting system in place. These entail keeping records of every financial transaction of the business and reconcile the accounts to make sure they balance every month.

- Accounts Receivable. The bookkeeper records and processes the accounts receivable of the company. This includes invoicing customers, receiving payments that must be tracked and deposited, and if necessary, initiating debt collection proceedings.

- Accounts Payable. The bookkeeper processes purchase orders and matches them against supplier invoices, keeping track of vendor invoices as they come in and preparing checks to be signed by you and pays them before they are due.

- Bank Reconciliations. The bookkeeper is required to balance the company's books every month. This is done by going through all the deposits and withdrawals that went through the bank and then reconciles them to make sure they match up with the company's bank accounts. One of the most important jobs for the bookkeeper, the bookkeeper must make sure to regularly check the account to ensure that it's in positive territory and to watch for any strange activity like fraud.

- Keeping Abreast and Updated of Changes in Regulation. This is one of the key duties of a skilled bookkeeper as this is important in reducing a company's tax liabilities and making sure you are compliant with current tax legislation. The bookkeeper should also be aware of any important lodgement dates and ensure that your bookkeeping is up to date in order to send to your accountant in a timely manner to help them prepare for lodgement.

- Prepare Monthly, Quarterly And Annual Financial Statements. When it's time for the company to publish its monthly, quarterly and annual report, the bookkeeper is responsible in creating and submitting financial statements for the business. This includes an income statement, balance sheet and cash flow statement. The bookkeeper is responsible for maintaining a record of all of the company's financial statements for each quarter and year.

As it is the responsibility of the bookkeeper in handling the company's entire financial records, which could be in huge amounts of money, it is important to choose a good bookkeeper that is organized, capable of being extremely flexible, working with a constant influx of information and surprises and serious about his work as even a small mistake in the matters of money can cause legal problems for the business.