What Does a Bookkeeper Do for a Small Business?
Learn what a bookkeeper does for a small business, from recording expenses and reconciling accounts to preparing financial reports and organizing records.
Andrew Kim
10/12/20265 min read
What Does a Bookkeeper Actually Do for a Small Business?
Running a small business involves more than serving customers and generating revenue. You also need to keep track of income, expenses, bills, and other financial transactions. Without organized records, it can be difficult to understand how your business is performing.
That is where a bookkeeper comes in.
A bookkeeper helps keep your financial records accurate, organized, and up to date. This gives you a clearer picture of your business finances and makes it easier to work with your accountant when tax time arrives.
In this article, we will explain what a bookkeeper does, which tasks they typically handle, and how bookkeeping can benefit your small business.
1. Recording Income and Expenses
One of a bookkeeper's main responsibilities is recording the financial transactions that take place in your business.
This includes money received from customers, payments made to suppliers, software subscriptions, office expenses, and other business purchases.
Transactions are categorized using the appropriate accounts in your accounting software, such as QuickBooks Online. Proper categorization helps ensure your financial records reflect the actual activity of your business.
Keeping these records current also makes it easier to identify missing transactions and understand where your money is going.
2. Reconciling Bank and Credit Card Accounts
Recording transactions is only part of the bookkeeping process. Those records also need to be checked against your actual bank and credit card statements.
A bookkeeper performs bank and credit card reconciliations to confirm that the transactions recorded in your accounting software match the activity reported by your financial institutions.
Reconciliation can help identify duplicate entries, missing transactions, incorrect amounts, and other discrepancies.
Regular reconciliations are an important part of maintaining accurate financial records and catching potential problems before they become more difficult to resolve.
3. Managing Accounts Payable and Receivable
Accounts payable and accounts receivable relate to money your business owes and money owed to your business.
Accounts payable refers to outstanding bills your business needs to pay. Depending on the agreed scope of service, a bookkeeper may record supplier invoices, track payment due dates, and help organize outstanding bills.
Accounts receivable refers to money customers owe your business. A bookkeeper may record customer invoices, track unpaid balances, and prepare reports showing which invoices remain outstanding.
Keeping track of these amounts helps you understand your upcoming financial obligations and identify payments you are still waiting to receive.
Some businesses only need basic tracking, while others require more comprehensive accounts payable and receivable support.
4. Preparing Monthly Financial Reports
Bookkeeping is not just about recording transactions. It also helps you understand what those transactions mean for your business.
A bookkeeper can prepare financial reports that summarize your business activity and financial position.
Common reports include:
Income statement: Shows your revenue, expenses, and profit or loss over a period.
Balance sheet: Shows your assets, liabilities, and equity at a particular point in time.
Cash flow statement: Summarizes cash coming into and going out of your business, when prepared as part of the reporting service.
These reports can help answer important questions. Are your expenses increasing? Is your business generating a profit? Do you have outstanding customer invoices? How has your financial position changed over the past few months?
Reviewing your reports regularly can help you make more informed business decisions.
5. Keeping Financial Records Organized
Business owners accumulate receipts, invoices, bank statements, and other financial documents throughout the year.
A bookkeeper helps organize these records and maintain supporting documentation for financial transactions. Depending on the software and workflow used, documents may be stored digitally and linked to the relevant transactions.
Organized records make it easier to investigate discrepancies, answer questions about past transactions, and provide information to your accountant.
For Canadian businesses, maintaining appropriate business records is also important for meeting Canada Revenue Agency recordkeeping requirements.
6. Helping Prepare for Tax Season
A bookkeeper can help make tax season less stressful by keeping financial records current and preparing reports that your accountant can use.
This may include reconciling accounts, reviewing transaction categories, identifying outstanding bookkeeping issues, and providing financial statements.
However, bookkeeping and tax preparation are not the same service. A bookkeeper's responsibilities depend on their qualifications and the services they offer. Preparing corporate income tax returns or providing specialized tax advice may require a qualified tax professional.
Having organized books throughout the year can make it easier for your accountant to review your business finances and prepare the necessary tax filings.
7. Maintaining Your QuickBooks Online Records
Many small businesses use accounting software to manage their finances. QuickBooks Online is one option that allows businesses to track transactions, manage invoices, and generate financial reports.
A bookkeeper who works with QuickBooks Online can help maintain the accounting records, categorize transactions, reconcile accounts, and ensure reports are based on properly recorded information.
Simply having accounting software does not guarantee that your books are accurate. The software still needs to be maintained and reviewed.
Working with a bookkeeper can help you get more value from your accounting software without spending hours managing every transaction yourself.
Do Small Businesses Really Need a Bookkeeper?
Not every small business needs to hire a bookkeeper immediately. If your business has very few transactions and you are comfortable managing your own records, you may be able to handle basic bookkeeping yourself.
However, professional bookkeeping may be worth considering when:
You are spending too much time entering transactions and organizing receipts.
Your books are several months behind.
You are unsure whether your financial reports are accurate.
You struggle to reconcile your bank and credit card accounts.
You need reliable financial reports to help manage your business.
Your business has grown and its financial transactions have become more complicated.
The goal is not simply to have someone enter numbers into accounting software. It is to maintain organized, reliable financial records so you can spend more time running your business.
How Much Does Small Business Bookkeeping Cost?
Bookkeeping costs depend on the number of transactions, the complexity of your business, the condition of your existing records, and the services you require.
A business with a small number of monthly transactions may need only basic transaction categorization, reconciliations, and financial reports. A larger business may require more extensive support, including accounts payable, accounts receivable, and bookkeeping clean-up.
Some bookkeepers charge an hourly rate, while others offer fixed monthly packages. Before choosing a service, ask what is included in the price and whether additional work will cost extra.
It is also worth distinguishing ongoing monthly bookkeeping from catch-up or clean-up services, which may involve additional work to correct or organize historical records.
Looking for Small Business Bookkeeping in Edmonton?
Keeping your books accurate and up to date is an important part of running a successful business. With organized records, regular reconciliations, and useful financial reports, you can better understand your business finances and work more efficiently with your accountant.
YEG Bookkeeping provides remote bookkeeping services for small businesses in Edmonton and surrounding Alberta communities. Services include transaction categorization, bank and credit card reconciliations, monthly financial reports, and bookkeeping catch-up and clean-up.
If you would like help keeping your financial records organized, visit YEG Bookkeeping to learn more about our services.
