This seems like such a simple question up front but we get asked it all the time.  So, what exactly does a bookkeeper do?  Is Accountix only bookkeeping?

Local Accounting Business

And, these are important questions to ask.  When a business is getting started out they often get advised to turn to outside financial help, especially if they do not have much experience in finance themselves.  But often business owners can feel tossed into the deep end in terms of financial jargon and end up with more questions than answers after a quick google search.  You know you need financial assistance but how do you know you’re getting the right sorts of help?

Outsourced Bookkeeping

These are the two most basic questions we think anyone starting up should ask:

What is a bookkeeper?

Bookkeepers do almost exactly what they sound like they do: they keep the books.  In other words, they do accounting.  Sokanu gives a great, detailed rundown of the functions of a bookkeeper on their website. But, just to give you a good brush up let’s break it down. Bookkeepers traditionally handle the day-to-day management of business functions. This includes:

  1. Posting debits and credits
  2. Payroll management
  3. Recording transactions
  4. Reconciling debit/credit transactions

What is an Accountant?

Accountants, traditionally, would say that they do accounting that is more complex than what a bookkeeper would do.   Some accountants do more of the financial analysis side of business financial management, but they could also do the work of a bookkeeper. They can run financial statements and assess operating costs to help business owners understand the impact of financial decisions.

What is a CPA?

CPAs (or Certified Public Accountants) are what most people might think of when they think of an accountant.  CPAs can complete income tax returns on top of the aforementioned tasks and are also held to certain requirements in terms of their relationships with clients.  CPAs are expected to keep up with continuing education and work experience as well.  In order to be able to provide an opinion on Public Entity SEC filings, a CPA must be licensed with the State. The IRS provides a detailed listing of requirements for Tax Return preparation which includes CPAs, Enrolled Agents, and Attorneys. Bookkeepers and Accountants can be considered Enrolled Agents depending on if they are licensed by the IRS.  If someone is doing your taxes for you it is important that you should make certain your preparer has a PTIN and enters it on your return filed with the IRS.

What’s Changed?

As technology has grown and business owner’s needs have increased, it has radically transformed the field of bookkeeping services and opened up the possibility for bookkeepers to do much more than just those four things.  The line between “bookkeeper” and “accountant” has blurred rapidly.

Santa Barbara Bookkeeping

This has transformed the field and allowed bookkeepers to take on more and more of an accounting role. For some established bookkeepers, this has been a difficult transition to weather because automation has replaced some of the more time-consuming tasks. This has, however, done nothing more than open up the potential for business owners to get better returns on their bookkeeping investment.

Cloud-based or remote bookkeeping (the kind you see here at Accountix) has captured the positives of this trend toward automation.  Our Financial Operations Associates spend less time on reconciliation and therefore can spend more time on financial projections and understand the bigger pictures in the numbers.

This means that clients get the positives of an accountant in the same house as a bookkeeper, and our employees get to engage in interesting financial operations questions.  It’s a win-win.

Now bookkeepers at Accountix (we like to call them Financial Operations Associates in order to highlight the added functionality but we don’t think of “bookkeeper” as a dirty word so that’s fine too!) do so much more!  Here’s a better answer to the question at hand:

Bookkeepers in cloud-based firms handle:

  1. Bank account reconciliations & credit card reconciliations
  2. Accounts receivable
  3. Bill pay
  4. Customer invoicing
  5. Payroll and 1099s
  6. Year-end CPA support
  7. Forecasting
  8. Meetings with consultants to discuss financials
  9. Inventory management

Whew, that’s a lot that bookkeepers can do these days!  Any business owner can benefit from having someone else on their side looking at the numbers.  It’s important to have someone who can catch the things that might fall through the cracks, to predict how certain financial decisions might impact the future of the business, and to take some time-sucking steps off the hands of busy business owners.

So, when do I start?

Accounting and Management Services

It’s important to get started ASAP because it’s much costlier (in time and in money) to get caught up on poorly-kept books than to be on top of finances the whole time.  This isn’t to say that you shouldn’t get started if you’re already behind (we offer catch-up services) but better managerial decisions come from being ahead of the game!