As a small business owner, you rely on your bookkeeper to organize and manage your finances, so that you can tend to more important matters. But what exactly is the most vital duty of a bookkeeper?
Bookkeepers have a handful of responsibilities that feed into the accurate maintenance of financial records, from producing insightful financial statements to safeguarding against errors and fraud.
However, there’s one duty of a bookkeeper that precedes the rest: maintaining precise financial records. By applying keen attention to detail and being prompt with their entries, bookkeepers can produce income statements, balance sheets, and cash flow statements that accurately reflect your business’s health, profitability, and future direction.
The financial professionals at NorthStar Bookkeeping have been providing small business owners with outsourced bookkeeping solutions for years, ensuring that their books remain error-free with a range of remote services. We understand the importance of accurate financial records, how they inform key business decisions, and why they play into fraud prevention.
Learn why maintaining accurate records is the primary duty of a bookkeeper, as well as other core duties that depend on error-free bookkeeping.
What is the Primary Duty of a Bookkeeper?
Above all else, a bookkeeper’s primary responsibility is to maintain accurate financial records. This establishes the foundation for subsequently accurate financial statements, which guide sound business decisions and help to safeguard your assets against fraud. So while producing financial statements and preventing fraud are still top-of-mind, maintaining precise financial records is the core duty of a bookkeeper.
[H2] Maintaining Accurate Financial Records
Timely Entries
The first key to accurate financial records is entering transactions in a careful and timely manner. By logging expenses, invoices, and other financial data as soon as possible, your bookkeeper can keep all data up-to-date and streamline the end-of-month reconciliation process.
Attention-to-Detail
As you can guess, bookkeeping calls for precise attention to detail. Even the smallest mistake can snowball into a major financial headache down the line. Knowing this, bookkeepers tend to double- and triple-check their work so as to keep a close eye on your business’s bottom line at all times.
Double-Entry Bookkeeping
To prevent errors and fraudulent acts, ethical bookkeepers use the double-entry method when recording transactions. This entails logging each transaction in two places – as a debit, and as a credit. The books are balanced once the total debits equal the total credits. It’s a common best practice that promises the utmost transparency and accountability.
Producing Key Financial Statements
Income Statements
One of a bookkeeper’s regular duties is generating income and profit and loss (P&L) statements, which summarize revenue and expenses over a set period of time. By monitoring your income statements, your bookkeeper can more accurately gauge your business’s overall health, profitability, and provide insights into what it means for the future of your company.
Balance Sheets
The balance sheet is another crucial item and duty of a bookkeeper. These reports offer a snapshot of assets, liabilities, and equity at a given time, essentially tracking your company’s net worth. With this data, your bookkeeper can open the door to smarter strategic decisions based on your business’s shape.
Cash Flow Statements
Cash flow statements round out the key financial documents produced by bookkeepers, and inform business owners of how much money is entering and exiting their business. It’s the ultimate report on how capital moves through your company from month to month.
Safeguarding Assets
Fraud Prevention
Guarding against fraud is another central bookkeeping duty that relies on accurate, accountable reporting. Strict processes like mandatory vacations and double authorization on payments act as checks and balances, serving to protect both your physical and digital assets.
Resource Optimization
Another way bookkeepers help to safeguard company assets is by optimizing resources and minimizing waste. By taking your business’s budgets and expenditures, you can maximize the use of limited funds if capital is tight.
Security Protocols
Your bookkeeper may also be in tune with digital security measures, such as encrypted software, password protection, and secure cloud backup of financial records. While it’s not the most common duty of a bookkeeper, it’s still in the realm and ensures that your sensitive digital files are properly sealed away.
Trust NorthStar with Your Bookkeeping
Maintaining accurate, readily-available financial records is undoubtedly the most important duty of a bookkeeper. At NorthStar, however, we take it one step further. By maintaining error-free books and being responsive to your needs, we save you countless hours of DIY bookkeeping so that you can shift focus to more important business matters.
Partner with NorthStar Bookkeeping for clarity and confidence in your financial records.