What Does a Bookkeeper Do? 5 Essential Bookkeeping Tasks

Bookkeepers handle many of the daily financial tasks of a business, possibly including preparing bank deposits, verifying receipts, sending payments, executing payroll, making purchases, creating invoices, tracking overdue accounts, and more. You do not need a bachelor’s degree or certification to become a bookkeeper. However, any credentials to verify your knowledge will improve your ability to find job opportunities as a bookkeeper. Accounting and bookkeeping jobs involve similar functions, but certain aspects of the job differ: - __Education level__: While bookkeeping does not require a bachelor’s degree, accountants must have one to prove their qualifications. A bookkeeper may need to receive additional certification to move up in the industry. - __Certification__: On top of a degree, many accountants have a Certified Public Accountant license. CPAs receive the training to interpret financial records and offer guidance. Some accountants even specialize in specific businesses, such as [start-ups](https://www.masterclass.com/articles/what-is-a-startup). - __Daily tasks__: While bookkeepers focus on the daily tasks and track money moving in and out of the company, the accountant’s job is to monitor a company’s financial health and advise the business owners on how and where to expand. Like bookkeepers, an accounting clerk handles all the day-to-day financial statement preparation and other business needs before passing the financial information onto the accountants. There are two primary ways to break down bookkeeping information on spreadsheets:. - __Single-entry system__: This straightforward system records incoming funds and outgoing funds in the same column of a single-entry journal. Incoming funds are recorded as positive while outgoing funds are recorded as negative. Single-entry bookkeeping is only appropriate for very small businesses. - __Double-entry system__: The more sophisticated double-entry system records financial transactions in two accounts. Each account has two columns—one for credits and one for debits. A credit to one account must include a corresponding debit to another account. For example, taking out a loan would involve a debit to an asset account and a credit to a liability account. Bookkeeping tasks are essentially the first level of accounting that business owners can oversee. Business owners can do their own bookkeeping or hire a third party to run the bookkeeping services remotely. Some bookkeeping responsibilities include: 1. __Daily financial transactions__: A great deal of bookkeeping is data entry and overseeing the basic financial transactions that come up over the day. Bookkeepers track the accounts, including debits and credits, in a general ledger. Bookkeeping or accounting software allows small businesses to stay up to date on transactions. 2. __Invoicing__: Whether it’s creating invoices for accounts receivable or accounts payable, bookkeepers process all the invoices. 3. __Maintaining the books__: Bookkeepers use a single-entry or double-entry system, depending on the business with which they’re working, ensuring they complete the bank reconciliation. 4. __Creating financial statements__: Bookkeepers handle the general ledger, which helps form financial reports, including a balance sheet, the cash flow statement, <a href='https://masterclass.com/articles/how-to-read-and-understand-an-income-statement' target='_blank' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://masterclass.com/articles/how-to-read-and-understand-an-income-statement","linkCopy":"income statement","category":"automated-link"}' automatic='true'>income statement , and statement of changes in equity. 5. __Tax preparation__: Bookkeepers ensure that tax filing goes smoothly from preparation to filing and even potential auditing. A good bookkeeper can propel a business forward. Bookkeepers update business owners on the company’s bank accounts and track money, which can benefit the business in numerous ways. Some benefits of hiring a bookkeeper include: - __Delegation gives you more time to focus on the business__. By hiring someone to handle the bookkeeping, you can focus on other aspects of the business and provide excellent service. - __A professional lowers the chance of error__. Bookkeepers know what they’re doing and will be much less likely to create any errors in the system. - __Preparation for a possible audit__. Bookkeepers will create tax returns and oversee the general tax filing. Still, if the IRS audits a business for some reason, a great bookkeeper will have everything needed on record to go through the process quickly and smoothly. Without those well-maintained records, the auditing process can be very challenging. There is no formal bookkeeping training or education requirements for pursuing a bookkeeping career path, but bookkeeping courses can help you prepare for the role. - __Consider formal education__: Degree programs are not prerequisites for bookkeeping careers, but a high school degree and a two-year associate’s degree program may be helpful to showcase bookkeeping skills on your resume. If you are attending a four-year school, you may want to consider pursuing an accounting degree. These programs can be online courses, in-person, or on-the-job training. - __Pursue a certification__: You can receive certifications and licenses from organizations such as the National Association of Certified Public Bookkeepers Certification/Licensing and the American Institute of Professional Bookkeepers Certification. These certifications can help prove your knowledge and bookkeeping experience to potential clients and guarantee you’re up-to-date on accounting principles. These programs can also prepare you to open your own bookkeeping business. - __Begin with freelance work__: Freelance virtual bookkeepers work for a parent company and are typically paid hourly. Businesses can hire a remote bookkeeper without having to commit to a full-time employee in-house. All you need is a [MasterClass Annual Membership](https://www.masterclass.com) and our exclusive video lessons from the likes of Elaine Welteroth (the former editor in chief of *Teen Vogue* and host of CBS’ *The Talk*), Issa Rae (the powerhouse multihyphenate behind HBO’s *Insecure*), Robin Arzón (the lawyer-turned-head instructor of Peloton), and other luminaries who have have embraced the twists and turns on the path to professional success. With their guidance, you’ll learn how to lean into your strengths, follow your heart, and build the career of your dreams. A bookkeeper plays an essential role in the financial health of a company. Learn about bookkeeping job duties, plus how to pursue a career in bookkeeping.