What is a bookkeeper and what do they really do?

Have you ever seen one…?

Do you know what they even look like?!! These mysterious beings that can be found deep within accounting practices working their magic. You might not even realise they’re there. But look closely and you will see them with their heads down, quietly, busily, beavering away.

You might think of them as enigmas. You’ve heard of them… but you don’t really understand exactly what they do, or why their work is so important.

What do bookkeepers do?

A bookkeeper deals with the day-to-day organisation, recording and reporting of financial transactions within your business.

Here are some of the tasks a really great bookkeeper can take on;

• racking daily transactions – they keep track of daily transactions, such as customer sales and business expenses. If your accounting software has daily automatic bank feeds this is a great tool and can save time and money on data entry time.
• Preparing and sending invoices – preparing invoices and sending them to clients is another bookkeeping responsibility, as well as chasing late payments.
• Accounts payable – they can also add purchase invoices to your accounting software and set up payment runs.
• Monitoring cashflow – one of the most important tasks of a great bookkeeper is making sure the company doesn’t run out of day-to-day money by watching the balance of cash in and cash out of the business.
• Preparing the books – it’s the bookkeeper's job to ensure that the accounts records are correct and up to date when the accountant needs them.
• VAT returns – as bookkeepers are tracking and coding your daily expenses they are also best placed for processing and filing your VAT returns.

Essentially, an accountant can’t do their job properly without good quality bookkeeping.

Why is bookkeeping important?

Bookkeeping creates a strong financial foundation that allows your accountant to work with your business strategically. This helps you build a healthy, profitable business for the long term.

These are some of the reasons why good quality bookkeeping is essential:

• Rubbish in, rubbish out - you’ve probably heard this expression before. If your bookkeeping is poor and has been badly managed it can impact the quality and accuracy of your financial reports, which can potentially impact the future success of your business.
• Good quality management reports – with regular, accurate bookkeeping you can instantly generate the financial reports you need to help you understand and make important decisions in your business.
• Healthy cashflow – it also helps you to proactively manage your cashflow by monitoring the cash in and out of your business so you can avoid running out of money in the bank.
• HMRC compliance - using an experienced bookkeeper ensures that your financial transactions are correctly coded and keeps you out of trouble with HMRC. After all, one of your responsibilities as a Limited Company Director is to ensure accurate record keeping of your accounts and VAT returns.
• Mind freedom – handing over bookkeeping to someone you trust will free up your headspace and give you some time back to focus on other things.

Is it time to invest in a bookkeeper?

Below we’ve listed 5 indicators that it might be time for you to consider employing an internal or outsourcing to an external bookkeeper for your business.

1. It feels like a chore – there’s enough to do running your business without doing things you don’t enjoy and drain your energy. Give it to someone who loves doing it!
2. You need more thinking time – you’re not spending enough time sourcing new business or making strategic plans as you’re too busy trying to keep up with your bookkeeping.
3. You feel out of your depth – the world of bookkeeping can be complex and full of nuances so if you’re feeling confused or overwhelmed it might be time to hand it over.
4. Your accountant is charging you extra to sort it out – accountants can’t do their jobs properly unless the bookkeeping is accurate and so there could be extra charges from your accountant if your bookkeeping isn’t up to scratch. And paying an accountant to do this is a lot more expensive than paying a bookkeeper to manage it up front.
5. You’ve reached a certain size – it might have been easy to manage your own bookkeeping in the early days but now your business has grown and there’s significantly more daily transactions. Give yourself the gift of someone to do it for you.

If you’re unsure about whether to invest in a bookkeeper, speak to you accountant for further advice. A good accountant will be able to review your accounting software and advise how often you need bookkeeping help, how long it will take and whether your business can afford it.

Don’t forget, next time you visit your accountant, keep an eye out for those mysterious, all-knowing, important foundation-building bookkeepers…