What is bookkeeping?
Bookkeeping is a process that a company uses to keep a record of all its financial transactions. The name comes from creating and maintaining records in a book, although many bookkeepers now use spreadsheets and software to track any incoming or outgoing monies.
From small to large companies, bookkeeping is an essential part of a business. Although some startups might not employ a dedicated bookkeeper to start, most successful companies invest in this area, as it can help avoid issues with growing a business. There isn’t a set income level where a bookkeeper is needed, but tax filing, increased income, and employees could be reasons that necessitate hiring a bookkeeper.
Bookkeepers create a comprehensive record of financial transactions. By tracking this information, a company can spot errors quickly, apply for loans or funding, file correct taxes, and look for opportunities to save money. In doing this, a company has a detailed overview of how they make and spend money.
What does a bookkeeper do?
Bookkeepers organize their tasks in time periods, typically based on daily, weekly, monthly, quarterly, and yearly procedures that they need to follow. They record transactions in the appropriate spreadsheet or column and maintain and reconcile the transactions as needed. Although automation is changing the profession, bookkeepers continue to play a crucial role.
The system of recording details is also maintained and updated by bookkeepers. This work is done in line with the individual requirements of a company. As an example, this may be to track specific sums for tax deductions, keep a particular record of international sales, or uncover monthly employee expenses.
Transactions may include invoices, payroll, expenses, taxes, company overhead, and one-off costs. As each of these payment types has many details and could create unforeseen problems, a bookkeeper needs to check dates, understand if goods have been delivered and whether the sums correspond to previously agreed amounts. This part of the role involves communication and a clear understanding of daily activities in a business.
Bookkeepers can work alongside accountants. These roles differ although some smaller companies may ask more of their bookkeepers if an accountant is not on staff. Generally,
accountants are more involved in reports and analysis, so they’ll make recommendations to the director or CEO. Bookkeepers focus more on the details of tracking and recording. You’ll also see the role described as a full-charge bookkeeper, which means that they are the only person responsible for the accounts.
Requirements for a bookkeeping career
While you might be able to get a job as a bookkeeper with a high school diploma, most employers look for candidates with an associate or bachelor’s degree in accounting, finance, or business administration. These programs provide a strong foundation in general math, statistics, and economics.
Other requirements include computer skills, experience with particular programs and using accounting software. Prospective employers could also ask for experience in a specific industry, which could be obtained through internships or a practicum. As you progress to more senior roles, employers will require you to demonstrate your expertise in bookkeeping including the ability to prepare and understand financial statements.
In deciding to become a bookkeeper, you’ll need to consider education, experience, and the skills required to meet the responsibilities of the job. Earning a degree can help with all of these aspects.
Education pathway to becoming a bookkeeper
Earning a bachelor’s degree in finance, accounting, or business administration is an ideal way to make progress in your bookkeeping career. There isn’t a specific degree in bookkeeping, but the information and skills you’ll typically learn from these programs will provide a strong framework for fulfilling that role.
Most bachelor programs last for 4 years and have 120 to 130 credits when completed on a full-time basis. You can find online versions of these degrees, which can be preferable if you don’t want to commute, pay for accommodation, or if you have other commitments. Classes in finance and business administration programs include:
- Business statistics
- Risk management
- Business law
- Managerial accounting
- Money, banking, and finance
Entry requirements depend on the institution to which you apply. Most programs require a high school diploma with a grade point average (GPA) of 2.5. Typically, you’ll need to submit a letter of recommendation, a personal statement, and your standardized test scores with your application.
The 2020-2021 average tuition fees for a bachelor’s degree are around $10,500 for a public in-state school and approximately $27,000 for out-of-state applicants. Fees vary by program, institution, and state and don’t include other study costs, such as books and equipment, accommodation, and application fees.
Continuing education for bookkeeping
Graduate degrees are not usually sought after in the bookkeeping profession. These advanced programs are typically used to move away from bookkeeping and progress further in a finance career, which would mean becoming an accountant or finance manager. However, there are courses you can take to update or maintain your skills.
You can find in-person and online professional courses in bookkeeping. They range from level 1 to level 4 and include computerized bookkeeping, payroll, accounting, and cash management. Another way to enhance your knowledge and improve your career is to take courses that focus on accounting software, as knowing how to use different programs can help you apply for new positions.
Skills you need
A degree can help you acquire the knowledge you’ll need for a career as a bookkeeper, and you can also use the opportunity to enhance the skills required for the job. There are several attributes that will impress prospective employers and equip you to complete the role’s responsibilities.
Most bookkeeping systems are computerized, which means you’ll need to be able to use spreadsheets or specific accounting software to complete the majority of tasks in this role. You’ll need to be quick and efficient when it comes to inputting information, searching and sorting data, and using formulas. Confidence in using technology and new programs is a strong advantage.
When your job depends on data, the ability to work with colleagues and external contractors to receive and verify that data is crucial. You should have the capacity to explain what you need clearly and to listen and extract the information you want. You may need to chase purchases, resolve issues, and ask for paperwork, which will require patience, tact, and a calm but convincing manner.
Attention to detail
Bookkeeping is about recording and reconciling individual transactions. The nature of the job means that each piece of information is valuable to you, so you’ll need to improve your capacity to notice, store, and recall data. Instead of looking at the big picture, you’ll need to follow up on every strand to ensure that each number is in its column and every type of activity is tracked.
Although the software will help significantly in this area, advanced numeracy skills can make your job easier. You’ll need to look over your records and spreadsheets to make sure things add up. It’ll help if you can quickly spot an error, complete some quick calculations in your head, and generally understand how numbers and statistics work.
Bookkeeping involves many variables but also includes repetitive tasks that need to be completed on a weekly, monthly, or yearly basis. Bookkeepers need to organize their work and time accordingly to make sure that everything is in its place, so they are able to meet specific deadlines for payroll, tax filing, and any external audits.
Licensing or certification
There isn’t a specific licensing requirement to work as a bookkeeper. However,there are voluntary certificates available to enhance your career or help you get noticed by prospective employers.
You can become a certified bookmaker (CB) through the American Institute of Professional Bookmakers (AIPB). The institute offers courses to help you become a CB and continuing education programs to maintain your status. You’ll need to pass a national examination, demonstrate 2 years of experience in the field, and sign a code of ethics. The exam has 4 parts, and the entry fee for all of them is $200.
Career opportunities in bookkeeping
Bookkeeping is a core part of any company, which makes this a good career choice. You don’t have to limit yourself and work for a single firm; you could become a freelance bookmaker to provide services to several smaller businesses.