Bookkeeping Job Description 101: Everything You Ought to Know

Efficient bookkeeping practices play a critical role in the success of any business. However, not only is it the practices themselves that contribute to the success of a business, but the individuals who are implementing those practices. That’s why it’s so important for business owners to find just the right person to fill their bookkeeping position.

Here we will cover bookkeeper roles and responsibilities and the tasks, skills, and qualifications that are often included in a bookkeeping job description.

What is a bookkeeper?

A bookkeeper is someone who tracks and records the daily financial transactions of a business. These transactions include keeping a detailed and accurate record of expenses, purchases, invoices, sales revenue, receipts, receipt books, cash receipt journals, payroll taxes, and payments. 

After this information is collected over a certain amount of time, the data is used to generate financial reports and statements that give business owners insight into how their company’s finances are performing. By doing this, bookkeepers are demonstrating how much money is flowing into the company, where it’s coming from, and how much is flowing out of the company and where it is going.

The general process a bookkeeper follows is to record transactions in a general journal, categorize the transactions in a general ledger, and then generate financial statements and reports to reflect what these numbers mean for the business. 

Bookkeepers are on the front line creating a foundation for business owners or accountants to have the resources they need to create budgets, identify trends, and plan for the future. Bookkeepers play an important role in a business by keeping the company’s finances in order. They collect, organize, and store the financial records of a business.

What tasks does a bookkeeping job description include?

Bookkeeping involves a variety of tasks. These include data entry, bank reconciliation, invoicing clients, paying bills, paying payroll, and creating monthly reports, accurately and on time.

Let’s break these tasks down to understand what is in a full charge bookkeeper job description:

1. Data entry

The process of recording the transactions flowing into and out of a business is called data entry. Bookkeepers will find that they do more data entry than anything else. It’s important that the data entered include specific information so that the data can later be easily tracked, validated, or cross-referenced, if needed. 

For purchases and sales, data entry typically involves recording the transaction date, who the money is going to or received from, the amount, and a description of the payment. From there, the transaction is assigned to accounts in the ledger. 

Since the data entry process eventually leads to reports indicating how the company is performing financially, it’s crucial that all data be entered accurately, otherwise, the numbers will not reflect a true representation of the financial position of the company. This could ultimately lead to making very poor choices and decisions for the business.

See also: Small Business Receipts: Pros and Cons to Digitizing Receipts

2. Bank reconciliation

Bank reconciliation is when you compare the transactions that you recorded against the bank statement to make sure all of the transactions match up. If they don’t, then that is a red flag that you have either made a data entry mistake or that a transaction has been overlooked. Now is the time to figure out what went wrong and make an adjusting entry, if needed. Bank reconciliation is also a method for detecting fraud. 

3. Bills and invoices

A bookkeeper handles all of the bills and invoices. Accounts receivable involves invoicing customers, tracking payments, and following up on payments that are overdue. This is an important task for a bookkeeper because where a business stands with its cash flow can make or break a business. If using accounting software, it creates invoices quickly and keeps track of your accounts receivable for you.

Bills fall under accounts payable. It’s important for the bookkeeper to pay the bills on time to avoid any unnecessary late fees. The bookkeeper should also maintain a good financial reputation for the business and stay on good terms with all suppliers. Sometimes there’s even a discount for making a payment early, which will save the business money. 

The bookkeeper or software will either create the entry, schedule the payment, and update the ledger when paid. Bills usually go through an approval process before being paid.

4. Payroll management

Managing payroll is a crucial bookkeeping responsibility since everyone’s livelihood depends on it. Payroll involves calculating the amount an employee has earned, figuring out deductions and how much to take out of each paycheck, and making sure the correct amount of money is distributed to the appropriate recipients by the expected date. On top of that, you need to prove to the government that it has been executed correctly. Failure to comply with regulations results in fines. Payroll is either handled by the bookkeeper, sometimes with the aid of top international payroll solutions, or the payroll is outsourced to a third party.

5. Monthly reports

Bookkeepers generally create monthly reports, while accountants generate the year-end reports. Monthly reports help keep a close eye on the company’s financial position.

The balance sheet summarizes assets, liabilities, and equity accounts. It compares the value of what is owned against what is owed. This report indicates whether the business is gaining or losing value during the month.

The income statement summarizes the income and expense accounts. It tracks the money earned versus the money spent. This statement reflects whether you ran the business at a profit or at a loss for the month.

The cash flow statement shows how much cash is or was available for the month. It tracks how much cash was earned by the business and lets you know how much money you have to spend.

Aged receivables tell you which invoices have not been paid and how many days they are overdue. It basically tells you who owes you, how much they owe you, when it is or was due, and which accounts need to be followed up on.

Aged payables show you what bills you still need to pay, if any are overdue, and if so, how many days they are past due. Aged payables track who you owe, how much you owe, and when it is due or was due.

As long as all of the numbers have been entered or recorded accurately, coded to the correct amount, and reconciled, all of these reports together will let the business owner know exactly where the company stands financially on a month-to-month basis. Bookkeeping software can generate these reports with the press of a button and, if updated daily, can be shown in real-time.

The above duties will likely be found in all found in a bookkeeper job description template.

What skills does a bookkeeper need to master?

Since the basic concept of bookkeeping is to record data, organize that data, and input the numbers into the indicated categories on reports, it is not required that bookkeepers have any formal educational training. However, a bookkeeper should be proficient in certain skills.

Here are the skills that will make life as a bookkeeper much easier:

1. Excellent with numbers

Bookkeeping is all about numbers. Basic math skills are essential for balancing the books, calculating errors, finding the source of the errors, making adjustments, and reviewing financial reports & statements with others.

2. Attention to detail

Attention to detail is crucial if you want the company’s financial data to be accurate. Being detail-oriented prevents mistakes that can lead to an inaccurate picture of the company’s financial standing, which can cause some serious issues if critical business decisions are being made based on inaccurate financial reports.

3. Good communication skills

A bookkeeper’s job is to present financial information so that it is transparent and can be easily understood. Sometimes that presentation may be face-to-face or through electronic communication. Either way, being skilled at verbal and written communication are very desirable qualities of a bookkeeper.

4. Proficient skills in accounting software

While bookkeeping can be done manually, accounting software can simplify and speed up the bookkeeping process. Proficiency in accounting software involves accurate data entry skills, proficiency in typing, and familiarity with basic computer skills, accounting software, and terminology.

5. Good at critical thinking

Critical thinking is essential in order to manage accounting figures, analyze financial reports, and solve problems that bookkeepers may run up against, such as interpreting data, identifying patterns or irregularities in business transactions, bank statements that don’t reconcile, or trying to find the source of things that have not been calculated correctly.

6. Very organized

A bookkeeper has to stay organized. Organizational skills make bookkeepers better at prioritizing tasks so that deadlines are met and they become more efficient at maintaining up-to-date transactions and records. Organizational skills play a key role in audits, preparing for taxes, and creating paper trails with receipts for cross-referencing and validation.

7. Time management skills

Time management is a valuable skill to have that will help bookkeepers pace themselves during work hours so that they can comfortably meet deadlines. It’s also essential when the company is waiting on reports that will be used in meetings or to make critical business decisions.

8. Handle confidential information appropriately

Bookkeepers must be able to keep information from work confidential since they deal with a lot of personal information and financial data. This also includes protecting any personal data entered into a computer. It’s important to respect any and all privacy expectations.

What are a bookkeeper’s responsibilities?

1. Reconciling entries to balance subsidiary accounts

Account reconciliation after each financial month or quarter is crucial for companies and individuals. This allows businesses to check for fraudulent behavior and avoid accounting information problems by ensuring each transaction adds to the required final account balance.

The amount of each transaction needs to be compared to the amount shown as entering or exiting the relevant account throughout the documentation review process. For example, small business owners can sometimes dismiss small expenses or use their business cards to pay for their personal expenses. The resulting unusual bank transaction statements can cause trouble with the IRS, so to avoid this, a bookkeeper will verify credit card activity with receipts and make adjustments if needed.

2. Maintaining a balanced general ledger

A general ledger is the cornerstone of a process used by bookkeepers to record and arrange accounting transactions necessary to generate income reports for the company. 

The transactions are subsequently closed or reported to the general ledger, and the bookkeeper prepares a trial balance, which serves as a summary of the balance of each ledger account. The trial balance is reviewed for faults and modified by posting additional required entries before being utilized to construct the income reports.

The bookkeeper collates and analyzes general ledger transaction information at several tiers to create financial statements, net income, balance sheets, cash flow, and other financial reports. This assists business owners, corporate management, auditors, shareholders, and other participants in continuously assessing financial operations.

3. Preparing a trial balance for the accountant

A trial balance is a list of all the accounting journal balance sheets. It helps to verify that a debit registered in one accounting system is balanced with another account in the credit. A trial balance also serves as the foundation for creating the cash flow statement, the income statement, and the statement of cash flow.

Bookkeepers must first finish or “balance off” the ledger accounts to produce a trial balance by displaying each closing amount from the accounting records as a debit or credit balance. The sum of the ledger accounts should always match the sum of the credit accounts. 

4. Monitoring for variances from the projected budget

A budget variance is a recurring metric used among authorities, organizations, and individuals to assess the difference between budgeted and actual statistics for a particular accounting area. 

A favorable budget variance denotes positive variations or benefits, while an unfavorable budget variance denotes negative variance, indicating losses or shortages. A favorable variance occurs when revenue exceeds budgeted levels or expenses are lower than expected, while an unfavorable variance happens when the income falls far short of the estimated budget or expenses exceed expectations.

Budget variations can occur as a result of both controlled situations (such as a poorly planned budget and labor costs) and uncontrollable situations (such as a natural disaster).

If there is a significant difference, bookkeepers will examine the financial records to find the cause. Then, they will decide whether to rectify the situation or not. However, if a significant disparity continues over a longer time, the business owner needs to review their planning approach.

5. Collecting and organizing financial data

Bookkeeping is the branch of accounting that handles the gathering and organizing of financial data. This implies that the bookkeepers’ responsibilities include collecting, arranging, and filing all financial data for your organization.

A bookkeeper is responsible for managing:

• Invoices/receipts

• Payroll records

• Bank and credit cards statements 

• Tax forms and other tax-related documents

Do bookkeepers need any qualifications?

Bookkeepers aren’t required to become certified, but licensing is available.

Here are two options for becoming a certified public bookkeeper:

American Institute of Professional Bookkeepers (AIPB)

AIPB requires bookkeepers to have two or more years of full-time work experience, pass a national exam, and maintain the credential by participating in continuing education.

National Association of Certified Public Bookkeepers (NACPB)

NACPB offers a bookkeeping license to those who pass the tests for small business financial management, small business accounting, bookkeeping & payroll. They also offer certification in payroll.

A certified public bookkeeper license can be earned with 2,000 hours of work experience, passing the exam, and signing a code of conduct form. To maintain the license, bookkeepers must engage in 24 hours of continuing education.

What is the average salary for a bookkeeper?

There are four factors that affect a bookkeeper’s rate or salary. These include services performed, the local market, credentials, and experience.

According to the U.S. Bureau of Labor Statistics, in 2021, the national average hourly rate for bookkeepers was $21.90 per hour, and the national average salary for bookkeepers was $45,560.

Infographic: What’s in a bookkeeping job description?

What’s in bookkeeping jobs description?

Frequently asked questions

What’s the difference between a bookkeeper vs. accountant?

A bookkeeper gathers, records, and organizes all of the financial transactions that take place in a business. An accountant takes that information from the bookkeeper and analyzes the financial data and makes recommendations on how the business should proceed in the future.

What should a bookkeeper’s resume include?

A bookkeeper’s skills should be highlighted in the objective section of the resume by describing any finance and record-keeping experience. Then a bullet list should be created including five to ten proficient bookkeeping skills using some of the keywords from the job description.

In closing

Employers, in their bookkeeping job description, are looking for bookkeepers who have a good balance of basic accounting knowledge and basic computer skills. Bookkeepers should be very organized, have a high attention to detail, and produce work with a high level of accuracy.

If you are curious, check out our guide for the details about virtual bookkeeping.

Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS.

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