Bookkeeping basics

Understanding bookkeeping in the time that it takes to order takeaway.

By the time you find the number of the local pizzeria and argue with the kids over what to order, we’ll teach you about bookkeeping.

We’ll satisfy your curiosity over what a bookkeeper actually does, how they’re different to an accountant and how to work with your bookkeeper.

And we’ll do it in about three minutes of reading time.

If your business isn’t making money, it won’t last.

It’s important to make sure you have someone in your business who knows exactly what financial state it’s in. That’s why bookkeepers can be a huge help.

Bookkeepers are the people who deal with the cash flow of your business on a day-to-day basis. Having a good bookkeeper and establishing good bookkeeping practices will help your business thrive.


What’s the difference between a bookkeeper and an accountant?


It can be hard to understand the difference between a bookkeeper and an accountant – especially since many accountants may perform bookkeeping duties as well as accounting duties.

A good way to think about the difference between the two is that the bookkeeper keeps financial records about your business activities, while your accountant will analyse these records and give you advice on how to act accordingly.


What do bookkeepers do?


Bookkeepers are the financial record-keepers of a business. They’re the ones that collect invoices and receipts, record cash flows, pay wages and prepare tax documents.

Some of the tasks bookkeepers perform include:

  • Managing accounting systems
  • Processing invoices, receipts, payments and other financial transactions
  • Managing payroll
  • Preparing financial statements
  • Reconciling accounts and preparing reconciliation reports
  • Managing any loans or debt repayments
  • Calculating GST
  • Preparing and lodging your BAS
  • Preparing forecasting for your business

When should I hire a bookkeeper?


Getting your financial processes set up as soon as you start your business is one of the best things you can do as a business owner. Due to this, a bookkeeper should be one of the first people you hire.

Much like accountants, bookkeepers often work as freelancers, so you can employ them on an hourly basis. In the start-up phase of your business, you may only need them for a few hours a week.

Beyond an initial consultation with an accountant to set up the legal and tax structures of your business, a bookkeeper will look after the day-to-day running of your business.

We’ve put together a list of things you should look for in a bookkeeper, which you can find here. We’ve also prepared a list of qualities you should look for when hiring a bookkeeper, which you can find here.


How to work with your bookkeeper


One of the benefits of hiring a freelance bookkeeper is that you can work with them remotely. Many bookkeepers work from home or online, which will help you keep your business overheads down.

Here are some tips for building a good working relationship with your bookkeeper:

1. Work out the terms of your arrangement

Whenever you start working with someone, discuss the responsibilities and expectations of both parties.

Discuss the tasks you need done and ask for an estimate of how much that will cost you. They’ll probably want set boundaries around their working conditions and how available they’ll be for your business on a weekly basis.

2. Find out how you prefer to communicate with each other

Good communication is crucial for any professional relationship to work.

Whether you prefer to communicate via email, text message or phone call is something you should discuss with your bookkeeper.

As your business grows and their role in it evolves, keeping communication open and honest will help maintain a good working relationship.

3. Have semi-regular catch ups

Even if they work from home, having face-to-face meetings, either in real life or via video call, will go a long way towards making sure you’re both on the same page.

Consider catching up every fortnight or once a month.

Top 3 takeaways

  1. Bookkeepers are involved in the day-to-day financial running of a business. They typically record revenue and expenses, prepare wages and maintain accounting systems.
  2. One way to remember the difference between bookkeepers and accountants is that bookkeepers record business data and accountants analyse the data.
  3. Consider hiring a bookkeeper as soon as you start your business to get your financial records right from the start.

 

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