Bookkeeping can involve many different duties, but it mostly involves doing the accounting work for a business.  The act of recording the company’s financial activity and keeping that information in an organized accounting system is the major responsibility of a bookkeeper.  Every check that is written, every credit card charge, loan payment, bank deposit and more needs to be verified, recorded and reconciled on an ongoing basis.  Let’s look at the major areas of work involved.

Recording of transactions

A proper bookkeeping service will record every financial transaction that happens in the business.  This includes things like checks, cash withdrawals, credit card charges, payments to vendors, invoices issued to customers, payments received, accounts payable, accounts receivable, bank transfer, bank charges, bank deposits, loans and more.  All of this activity should be recorded in some type of accounting system.  Most modern businesses will have a computerized bookkeeping system like QuickBooks or Peachtree, but some still use old-fashioned paper-based systems or spreadsheets like Microsoft Excel.

Reconciling Accounts

After all of these transactions are recorded, they should be reconciled against some type of third-party statement.  The most common example of this is the monthly bank statement.  A good bookkeeper will compare the transactions that appear on the bank statement to the ones that they have recorded in their accounting system.  They will correct any errors or omissions and verify that the balance at the end of the statement agrees to the balance on their books.  This account reconciliation can be performed for bank accounts, credit cards, loans, accounts payable and notes payable and any other account where a statement is received from an outside party.

Reviewing the Trial Balance

A sample Trial Balance Report

The trial balance is a report that simply lists each account and it’s current balance.  It usually lists one column for debit balances and another for credit balances (I’ll explain the difference in a later post).  A good bookkeeper will review these balances regularly to see if anything looks obviously wrong or out of whack.  This is an easy way to spot major errors that if left unchecked for too long, could turn into a major problem that is more difficult to correct.

Filing and Organizing

A bookkeeper’s job doesn’t just involve keeping the accounting system in good shape, it also involves maintaining an organized, complete filing system of supporting documents.  Documents that a bookkeeper should keep on hand include bank statements, credit card statements, vendor bills, loan documents, car lease contracts, etc.  If there is ever a question about a balance or specific transaction in the accounting general ledger, a good bookkeeper will have a paper trail that explains everything in detail.

So that’s what a bookkeeping service is, in a nutshell.  Of course there are many, many more details involved but those will be covered in future posts here.  I would love to hear from you, dear readers.  If you have any questions or comments please fill out a comment below.