When you think of a bookkeeper, what probably comes first to your mind are numbers, mathematics and accounting. Typically a bookkeeper performs many accounting and even administrative tasks on a day to day basis. The accounts a bookkeeper manages may be for small individual businesses or large corporate businesses. But when we break it down beyond generalizing what is a bookkeeper’s role in a business? Read on to find out.
Bookkeepers maintain financial records, which include bank and credit card account balancing and updating to make certain that all deposits and payments are reported accurately. Bookkeepers need to allocate payments which have been received by customers against the invoices for which the payments are applicable on the debtor’s ledger. Cash and cheques are then deposited at the local financial institution for the company. Statements are then usually issued at the end of the month to ensure customer records remain verbatim with the company’s records. Lastly, any overdue invoices are followed up with customers for payment to ensure the company maintains a high level of liquidity.
Bookkeepers often serve as a liaison between the sections or departments of a company, interacting with department heads to ensure that payroll information is provided in a timely and accurate manner. Payroll is then executed by the bookkeeper who keeps track of employee entitlements where applicable, the right amount of tax is withheld and the superannuation guarantee is calculated in accordance with Australian workplace laws. Payments are then submitted to the bank in accordance with the payroll calculations and payslips are issued to employees. Superannuation is also required to be paid either on a monthly or quarterly cycle depending upon what the employer has nominated.
Bookkeepers will often maintain the creditor’s ledger for a company in order to accurately determine what is owed by the company to suppliers at any point in time. Once an invoice is received, the bookkeeper will determine whether the invoice is legitimate by liaising with the individual responsible for purchasing the goods or services or matching the invoice against internal paperwork. If the invoice is legitimate it will then be recorded in the accounting system for payment at the determined time. Payment is then issued as required and remittance advice is then issued to the supplier to close the invoice or account.
Bookkeepers ensure that inventory levels in the accounting software reflect the amount of inventory which the company possesses by liaising with the warehouse to stay on top of anomalies and errors. Often inventory adjustments will be required due to dispatching errors, receipting errors and breakage. This is important as the purchasing officer needs to be aware of current stock levels in order to reorder in the right amount of time to receive the goods for sale and the sales department also needs to know how much stock is on hand in order to facilitate sales.
Bookkeepers are often responsible for calculating and managing the GST, Fuel Tax Credits, Wine Equalisation Tax, Fringe Benefits Tax, Payroll Tax, Pay As You Go Withholding Tax and Business Income Tax Instalments where these taxes are applicable. This is vitally important for the business as miscalculations can involve under or overpayments of the relevant taxes and incur interest and other penalties from the taxation office.
At a higher level, bookkeepers are responsible for the collation and preparation of financial statements for their superiors in order to keep a handle on the financial matters of the business. This typically involves the following reports:
- Ageing Debtors Report
- Ageing Creditors Report
- Profit & Loss Statement
- Balance Sheet
- Cash Flow Statement and Or Projection
- Budget
These reports are vital to ensure the longevity of the business and increase performance capability in an ever increasingly competitive marketplace.
Bookkeepers are the financial backbone of a company and as such, it is important that you engage a knowledgeable and experienced bookkeeper for the industry you are in. This will ensure that you pay the minimum you need in taxes but also remain compliant from the taxation office’s point of view. Employees are paid properly but not overpaid and entitlements are calculated correctly. All money is received from invoices which are issued. Suppliers are not overpaid but also paid in a timely manner to ensure supply. Inventory levels are tracked correctly to help reduce internal theft and fast supply to customers.