The Wonders of Bookkeeping for Small Business

Bookkeeping is a function of accounting. But there can be no accounting if nothing is counted. Thus, a bookkeeper is to a CPA what oxygen is to our bodies; a vital necessity. A bookkeeper’s task is to report all of the financial data that is accumulated over time by a company to the accountant in an organized, comprehensible manner. In order to accomplish this, the bookkeeper first sets up a Chart of Accounts which contains all of the different types of transactions that the business under examination is expected to transact during the course of operations. Once the chart of accounts is set up the bookkeeper will either start fresh (because you hired him right from the start) or he will work with the financial records you hopefully have kept since the business began to operate. He will recreate the activity that took place in the periods prior to his coming onboard and once he is up to date, he can begin to do his job.

With the advent of new technology that has swept the world in the past 20 years, business owners, more than ever have access to low cost, powerful accounting software than can facilitate the entire bookkeeping process tremendously. Point of Sale systems can be automated to record each and every transaction that takes place and the data collected can be sent periodically to be input by the bookkeeper into the accounts where they should go. Businesses that don’t have a need for a Point of Sale system can also use software to manually input transactions that are later easily reconciled with bank statements electronically by simply linking the business bank account with the accounting software. Of course, this requires that the user have some technological prowess which may not always be the case. But any skill can be learned if it is properly taught, and practiced sufficiently. The input of financial data is no different. And so the diligent bookkeeper, adamant about the importance of proper financial record keeping, temporarily takes a break from his duties and engages the client, utilizing all of the knowledge he gained in the Quickbooks Pro Advisor Program to prepare his client to take control of the financial reigns of their business. The satisfaction of knowing that they have been properly trained by an expert, and are now ready to steer their business with accurate information borders on exhilaration.

The bookkeeper drives home that night. He arrives at his home and greets his wife and children. Supper is ready. Tired from the long day but longing to see the fruits of his labors he quickly excuses himself from the table and heads over to his home office where his computer awaits him. He logs in to his website portal and sees there right in front of him, the summary of the transactions for the day. The bookkeeper smiles, happy to see that the system that he has implemented is being followed.

As the days pass, more and more transactions are recorded by the business owner and transferred to the bookkeeper for review. The bookkeeper places every transaction in the proper accounts, making sure to input an offsetting transaction for each transaction recorded. They called it double-entry accounting when he was in school. Now it’s just a way of life. Finally, the month comes to an end and the bookkeeper takes every single transaction and reconciles them with the bank statements that were electronically updated as the month progressed. The bookkeeper makes sure that every single penny balances out, and once this is achieved, the accountant puts the month behind him and closes the book for the period, inviting the new chapter that the next month brings.

Three months have passed and now Uncle Sam is patiently waiting for his dues. The bookkeeper, has kept track of every single payroll transaction that has taken place during this time. Every W-2 is accounted for, every withholding is reported. The bookkeeper makes sure that the tax man gets what he is owed, and all is quiet on the western front.

The cycle repeats 3 more times, and now, the tax man wants more than just the withholdings, he wants a piece of the income too. The business owner knows it is his duty to his fellow countrymen to contribute to the coffers of the great nation he calls home. Naturally, however, he wants to pay his fair share as indicated by the law, and nothing more. Luckily, his bookkeeper is just a phone call away. He lifts the handset and dials. A friendly voice comes on the other line. The business owner is glad to hear that comforting voice. He never thought this would happen, but his bookkeeper is not just a bookkeeper anymore, he’s his associate, and his friend. Who better than a man like that to do his taxes?