Bookkeeping…we’ve all heard of it, but what exactly is it? In simple terms, bookkeeping is defined as creating and maintaining the financial records and reports of a business. In short, bookkeepers take care of all the mundane tasks that are required to keep a business’ financial information in order. This includes making entries of financial transactions like accounts payables and receivables, payroll amounts, and petty expenditures. But it doesn’t end there.
While entering data is one of the primary responsibilities, the role of a bookkeeper goes beyond that. In practice, the bookkeeping definition or process is much more complicated than simple data-entry. It also extends to gathering data from different sources like business bank accounts and developing basic financial reports such as income statements, balance sheets, cash flow statements, and the like. Furthermore, bookkeeping includes reconciling actual bank account balances with amounts in the general ledger and financial reports like balance sheets and income statements.
Sound like a lot? That’s because it is. But there’s good news—today, bookkeeping software can handle all of your time-consuming bookkeeping tasks, from mundane data-entry to complex data reconciliation. We’ll show you how.
What’s the Difference Between Bookkeeping and Accounting?
Before we break down what a modern bookkeeper does, it’s important to know the difference between bookkeeping and accounting. The confusion between the two largely stems from the fact that they’re both related to financial reporting in one way or another. But these two functions are quite different.
The definition of bookkeeping is managing the books of an organization, while accounting requires evaluating financial information. While bookkeepers record and maintain financial records by entering and monitoring day-to-day transactions, accountants use the financial information compiled by bookkeepers to create advanced financial reports that help business owners make strategic decisions.
Bookkeepers provide a snapshot of the financial health of a business at a given point of time, say a week or month. Accountants, on the other hand, help reveal where the business stands overall and where it is likely to go. This offers a much bigger picture.
But don’t be fooled into thinking that these two functions are completely distinct from one another. They often overlap, and bookkeeping is in fact a subset of accounting. Bookkeeping provides the information that accountants need, while accountants help bookkeepers maintain advanced financial information, requiring a close collaboration between the two.
Bookkeeping Is a Crucial Task for Any Business
As you know, bookkeepers develop and maintain basic financial information and reports, which are used by accountants to create advanced financial reports. The advanced financial reports developed by accountants are, in turn, used by business owners and upper management to make informed and strategic business decisions. Now that says a lot about the significance of the process of bookkeeping, doesn’t it?
It may come across as unremarkable but there is magic in the mundane and at the end of the day, bookkeeping is a crucial task for any business.
To perform the basic accounting and finance related duties with precision, bookkeepers are expected to possess integrity, attention to detail, and accuracy. Without the bookkeeping function, a business’ financial information would be one giant mess that would entail significant time and effort to untangle. It’s no secret that bookkeeping is mundane, but it’s integral to any business.
What Does a Bookkeeper Do? A Day In the Life
An average day for a bookkeeper includes a bit of everything: documenting and updating daily financial transactions, depositing checks, making payments, generating financial reports, reconciling accounts, and recording and planning for expenditures, just to name a few.
Bookkeeping is quite comprehensive, but this overview gives a categorical look at some of the primary bookkeeping responsibilities.
Manage Account Payables & Receivables
Bookkeepers produce invoices, prepare checks, and make payments. This includes making bank deposits, monitoring digital payments, and making payments to suppliers and creditors. Bookkeepers also manage collections by recording defaulters and ensure that payments are received.
Manage Expenditures & Overall Budget
Bookkeepers are responsible for setting aside money for planned expenditures like scheduled purchases, monthly office rent, and corporation tax. They also process payroll, ensuring all employees are paid accurately and on time. During tax season, they calculate and prepare tax payments while also calculating interest and investments.
Data Collation and Categorization
Data collection and categorization is a huge part of any bookkeeper’s day to day. They’re responsible for maintaining a record of all financial transactions and collecting financial data from various sources like PayPal, payroll, and any apps or software. Bookkeepers also gather and manage all financial data including accounts payables and receivables, sales revenues, payroll, and other expenditures. Finally, they must categorize all financial transactions appropriately.
Data Reconciliation and Financial Reporting
Bookkeepers work to reconcile all bank accounts with amounts in accounting software and generate basic financial statements like balance sheets, profit and loss, and cash flow statements.
Modern Bookkeeping is Changing the Industry as We Know It
With the advent of bookkeeping and accounting software, the role of bookkeepers in most organizations has undergone a significant transformation. In most large corporations (and some smaller companies too), bookkeepers have software to assist them in their daily tasks so they no longer have to manually make data entries or run payroll, among other things. While certain tasks are automated, bookkeepers or accountants are required to make sense of the data.
In the digital age, with the availability of bookkeeping software, one of the essential requirements of a modern bookkeeper is a deep understanding of bookkeeping and accounting software. But sometimes, a modern bookkeeper is the actual software. The right bookkeeping software can be your bookkeeper, work together with your current team, or even replace the need for an entire accounting department.
The Benefits of Automated Bookkeeping
Automation rules every aspect of our lives now, including how we chat, with bots beating us by even completing our sentences! When they’ve taken over something as social as human interaction too, why are we still manually keeping our books?
Rapid advances in technology, especially artificial intelligence, have made it possible for computers to undertake human tasks and do them with more accuracy and within seconds! At Botkeeper, the emphasis lies in maximizing the benefits of artificial intelligence so that the bookkeeping is entirely automated.
It’s no doubt that automated bookkeeping touts many benefits. These are just a few:
Automated bookkeeping software minimizes the risk of errors, which can be quite expensive, given the time and effort spent detecting and correcting them.
The right bookkeeping software will work with you. Botkeeper, for example, provides bookkeeping software that is tailored to meet your organization’s needs, so you don’t have to worry about training and monitoring your staff to do it your way.
Automated bookkeeping software handles all bookkeeping tasks, which can be cumbersome and time consuming. This is a significant benefit, given the fast-paced digital economy of today. Botkeeper delivers the complete end-to-end bookkeeping experience, so you focus on growing your business.
Botkeeper creates comprehensive financial reports that are just as beautiful to look at as they are informative, and in the format that you want.
Gone are the days when you’d have to wait for days on end, even weeks, to get the report that you want. With Botkeeper, your staff can access data whenever and wherever.
A Comprehensive Solution
The right bookkeeping software can replace the need for a bookkeeper at all. This means you won’t have to worry about recruiting, interviewing, vacations, sick time, payroll taxes, poor quality, or fraud risks.
What bookkeepers do is evolving, which is why Botkeeper’s bookkeeping software uses human-assisted AI to perform all tasks of a bookkeeper in a faster, cost-efficient, and more accurate way. We know that no two businesses are the same, which is why we have automated bookkeeping solutions for every business. Our automated solutions are great for real estate accounting and bookkeeping and can help track income from commissions, fees and dues, education credits, marketing and advertising, and vehicle mileage costs. When it comes to restaurant bookkeeping, Botkeeper can help manage inventory and track expenses for payroll and food and liquor costs.
Visit Botkeeper to find the right bookkeeping software for you and click below to reach out to a Botkeeper rep to see how you can save time and money by Botkeeping!