What Does a Bookkeeper Do for a Small Business?

When you first think about hiring a bookkeeper, you might be unsure of what to look for or what a bookkeeper even does for a small business like yours. Understanding what a bookkeeper does for a small business can help you make a more informed and confident decision on when you’re ready to hire a bookkeeper and why.

There are layers to this and I like to think of it as a garden with lots going on in multiple different areas. With the right soil, light, plants, and team together - you can create something beautiful that you can come back to enjoy and harvest from time and again.

When it comes to the various aspects of bookkeeping, there’s the classic information needed for tax filing and general compliance; reports for assessing business health and decision making; and underneath that there are all the individual day-to-day transactions that occur any time you spend or make money in your business. Every time something happens related to money in your business it needs to be recorded and synthesized to be able to fit properly into the overall money garden you are growing.

A bookkeeper can record and organize your financial data for you so 1) you don’t have to 2) it actually gets done and 3) it gets done correctly and on time. A bookkeeper can support you in doing this so you can focus on the areas of your business that rely the most on your direct contribution. We work in the background (with a bit of input from you of course) to get financial tasks done and bring the data together so you can continue doing what you do best AND get a clearer understanding of what’s going on with your finances and how that impacts your business and your life.

With that in mind, I’m going to share all the details below on the role of a bookkeeper and why bookkeeping matters for your business. So what does a bookkeeper do for a small business? Here’s the specifics so you know exactly how a bookkeeper can help you!

Categorize Transactions

Whether you are using a spreadsheet or a software, you need to categorize transactions. This is one of the most important steps that makes all of the exciting insights and information possible after the fact. But what does categorizing even mean?! I like to think of categorizing as organizing all of the different ways you used your business money. We take the information from your bank and organize it to show how much you spent and earned in each category. For example, one expense may be categorized as advertising & marketing expense while another would go under office supplies. Sales can also be categorized to organize transactions into different types of revenue streams. Categorizing transactions properly sets you up for a smooth tax time and stellar reporting.

Reconcile Accounts

Before we can confidently move on to running your reports, we need to reconcile your accounts. This is where we compare what we’ve recorded in your software to what actually happened in your bank account (for every. single. transaction.) to ensure we have included everything that should be there and that we haven’t added anything that shouldn’t be there. We don’t want to double count anything or miss something and this final step really helps confirm the data is as accurate as possible before we start relying on it for reports. We do this for any bank account (including credit cards).

Prepare Reports

Now that we’ve organized every single dollar and completed our accuracy check of reconciling, we can confidently run your most important financial reports for your review. We primarily focus on the Profit and Loss (also known as P&L or Income Statement) and the Balance Sheet. The P&L shows how much money you earned and spent and the Balance Sheet presents your assets (what you own: think cash, and any expensive equipment), liabilities (what you owe: any debt or credit cards will show up here), and equity (your stake in the business: a combo of what you’ve invested, and taken out of the business along with what the business has earned over time). We’ll go line by line through each report to double-check our work and make sure that it's as accurate as possible and presented in a way that makes sense for your business. We can customize the account names and order to make it most usable for your unique business. Once we’ve got everything sorted just so, we’ll send over the reports for your review with a helpful video overview so you know exactly what’s going on and can respond with your best questions. This is where you can spot trends and really see your financial state more clearly and use that information to make the best decisions possible for your business.

Expert in your Corner

One of the best things a bookkeeper does for a small business is being the expert in your corner ready to support you. Have a question about anything money or compliance related? Reach out to your bookkeeper and they will do their best to help you. As you progress and grow in your business you quickly realize that you really can’t do it all nor do you want to! When you hear people talk about delegating in your business…this is one of the ways you can make that happen. Once you experience the feeling of having an expert you can rely on to help you with something for your business you really see the value and come to appreciate it as an worthwhile investment.

Tax Time Prep

One of the best known ways a bookkeeper can help your small business is to assist you in preparing for tax time. Whether it’s consistent bookkeeping throughout the year or a catch-up/clean-up project, we can help lighten the load on one of the most dreaded tasks of a business owner. This is an area many business owners stress about (we get it!) While we don’t actually file the taxes (we’re bookkeepers not tax preparers) - we put together a lovely package for your tax preparer (all tied up with a bow) and liaison with them to make things as smooth as possible for you. Although we don’t file taxes, we do prepare and file annual any required Form 1099s with the IRS and state.

Odds & Ends

At the end of the day, as a bookkeeper we love seeing our clients succeed and that means we’re looking out for you and for any way we can support you in that goal. If we see a tool or a process or a system that we think could help your business, we’re going to let you know. We are always looking for ways to make your life easier and your business systems more efficient and effective. We can’t wish away all of the legal and tax requirements, but we can stay on top of the best ways to ensure you maintain compliance and your business finances are organized, profitable, and useful.

Hopefully you enjoyed this real life, real deal explanation of what a bookkeeper can do for a small business. If you have any questions or want to learn more about what a bookkeeper can do for your small business, you can reach out to me directly here.