Wednesday, March 16, 2016

What Do Bookkeepers Do? (And Why Your Small Business Needs One)

So what, exactly, do bookkeepers do?

We’ll get to that in a moment. First, I want to address the second part of this article: Why does your small business need one?

All it takes to make a small business owner realize why they need a bookkeeper is one simple question: Did you start your business so that you could do bank reconciliations every month?

The answer, in the 15 years or so that I’ve been running Kildal Services LLC, has never been “Why yes. Yes I did.” Not ever. And that is why your small business needs one.

Now, besides reconciling accounts each month, what do bookkeepers do?

Bank Feeds

At a basic level, your bookkeeping service or bookkeeper should be managing the transactions brought in through your accounting system’s bank feed. This means they’re matching downloading transactions to existing transactions in the corresponding register, and adding those that aren’t already there. The transactions that need to be added will most likely be transactions generated outside of the accounting system: credit card or debit card transactions, any EFT/ACH, or even handwritten checks. It could also involve matching deposits as customer payments to help manage Accounts Receivable or outgoing transactions as payments against vendor bills.


This is generally all a micro-business needs: the core employees or partners are generating their own estimates/invoices and making deposits, as well as paying bills as they come in by handwriting or printing checks and making purchases with credit or debit cards as needed. They can continue to do the tasks they’ve always done. In this situation, the answer to “What do bookkeepers do?” is they manage the books after-the-fact and reconcile accounts against statements each month.

Accounts Receivable

A/R management can take on a few forms. As I mentioned above, the small business staff might be entering their own estimates and/or invoices, and they might be receiving payment against the invoices.

However, there’s another option. The client uses an industry-specific estimating program to calculate the job, then provides the bookkeeper with the total. They then enter the estimates into their QuickBooks Online account and create or progress invoices as the project moves along.

Creating invoices, sending to customers, providing statements, and assisting in collections is all part of the A/R services we provide for our clients. They let us know when they’ve been paid, and we enter that payment in QuickBooks Online, then create a deposit to match what the client takes to the bank. Here, when asked “What do bookkeepers do?”, my answer is all of the accounts receivable.

Accounts Payable

We just signed a great new client: Ware Landscaping & Snow Removal. Mike, the owner, is pretty tech savvy—he loves finding apps to help him run his business. He recently credited moving to QuickBooks Online and making use of the online invoicing system as major factors in helping manage his cash flow, and estimates that his business now gets paid in half the time they did prior to implementing these solutions.

So what are we doing for Ware? We’ll be managing all of his accounts payable. Right now, the company is in a transition phase and he wants to continue to be closely involved in the estimating and invoice processes. What this means is that we’ll be using to handle all of the vendor bills that the company receives. We’ll contact all of his vendors, give them the unique email and/or fax number for his account, and request they begin sending their bills to those addresses. Once we get them, we’ll assign them the appropriate vendor from his QuickBooks Online vendor list and expense account from his chart of accounts. Mike will be assigned as an approver, and once he approves the vendor bill, we know that it can be scheduled for payment.

Down the road, as the company grows, we’ll set the job supervisors as an additional approver so they can have more transparency in the profit margins of their projects, and keep Mike on so he can give the final thumbs-up for payment. For this landscaping company’s accounts payable, “What do bookkeepers do?” is answered with a collaborative process between us and management.


Bookkeepers are also, at times, the payroll manager—and HR, but that’s something that’s better left for an outsourced solution or an app like JuvodHR—as well as payroll processor. Your bookkeeping service might have a payroll offering, or they might assist you in the processing of paychecks and/or liability payments and returns. They could simply get the payroll data into your accounting system after your payroll service provider has submitted the reports to you, or they’re importing the data from a file provided.

So with regards to payroll, what do bookkeepers do? This depends on whether they’re in-house, outsourced, processing payroll, or a specific payroll company is creating checks and generating returns.

Technology Recommendations & Process Streamlining

Bookkeepers are also pretty good at keeping up with the latest and greatest technologies. It’s not unusual for your bookkeeper to find a new app specific to your industry. (My new favorite for my contractor clients is Knowify.) Or maybe it’s a way to help you cut your labor costs and reduce time theft—which happens to be the number one way that people steal from their employers—by suggesting a GPS-enabled mobile time clock like TSheets.

At the same time, a bookkeeper might be recommending some technology solution for your small business, they’re also always—well, almost always!—looking for ways to make your back office run as smoothly as possible. Developing efficient workflow pretty much goes hand in hand with any app solutions, since they’ve found an app by searching for a solution to a specific pain point. In my opinion, when asked “What do bookkeepers do?”, one of the most important aspects of their services is finding ways to save you and your small business time and money by attempting to streamline your processes.


One of the services that many bookkeepers fail to mention is that, by default, they’re going to serve as a sort of translator between you and your CPA or EA. Because bookkeepers have a much more intimate knowledge of your books, it’s sometimes easier to have your bookkeeper contact your tax preparer when you’re about to file your annual return. Or double-check to make sure that the estimated tax payment you’re about to send is correct. What do bookkeepers do, when we’re talking about your business dream or inner circle? They help you make those day-to-day decisions—how much can afford to pay your new employee, for example.


What I want you to take away from this is that your bookkeeper isn’t just doing simple data entry. When you start looking for one, please don’t put an ad on Craigslist that includes the line “Receptionist needed. QuickBooks experience a plus.”  Having been a receptionist, I’m certainly not disparaging that position in any way. But it’s an entirely different job than what a bookkeeper does, and small businesses need to be aware of that fact.

When you ask “What does a bookkeeper do?”, the answer can be anything from setting up your accounting system and processes to training and assisting your staff in day-to-day accounting tasks, or managing all of the above. It all depends on what you need.

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