Whether you have a small business or an established one every business has two things in common, you earn money and you spend it. The job of a bookkeeper is to track your business earning and expenses. In simple words bookkeepers ensure that all of your business income, expenses and transactions are recorded in your book and they reconcile your company’s financial accounts every month. In addition to that, bookkeepers can also help you prepare your company’s financial statement and financial report. In this blog we will be discussing about what a bookkeeper does for you in Canada and why they are an important part of bookkeeping services for your business.
What Does a Bookkeeper Do in Canada?
Business owners in Canada have a lot of things to manage including the government requirements. Bookkeepers play a major role in fulfilling all such requirements for your business and they make sure nothing goes unnoticed in this list.
Bookkeepers are mainly responsible for preparing four key financial statements
- Income statement (also called a Profit & Loss), that gives a clear picture of your income and your expenditure over a specified time period
- Balance sheet, that shows your current financial position
- Cash flow statement, which is a record of the cash and cash-like hard equivalents that come in and go out of your company
- Statement of changes in equity (also known as a statement of total recognized gains and losses) which reveals how your share capital, reserves, and retained earnings have changed in a reporting period
Here is a list of things that a bookkeeper does for your small business bookkeeping
1. Record and pay bills on time
An efficient bookkeeper does know the importance of maintaining the record of your business cash flow especially for start ups and small businesses. They also pay bills on time without any delay.
2. Reconcile your accounts every month
Surprisingly, there are a lot of businesses that simply avoid this step. Having reconciled accounts ensures that your business finances are up to date and you or your accountant can start the analysis process. Being a business owner it is your responsibility to make sure that they are not using any infamous suspense account which is a common practice.
3. Track, file and pay sales tax
It is the job of a bookkeeper to keep a record of the sales tax that you collect and pay to make sure that your tax returns are accurate and you do not need to pay any additional amount. Some provinces also offer you incentive to file your PST which can really add up.
4. Prepare reports
A bookkeeper prepares a detailed report of the accounts payable and accounts receivable along with a profit and loss report. However, an accountant offers a more detailed report. Another important report that is provided by a bookkeeper is the cash summary report that reveals the amount of cash you have in your bank. This report can be very much useful when you have multiple bank accounts.
5. Keep records of your cash balance
When you appoint a bookkeeper and hand over all your financial matters to him, you will get a clear picture of your cash balance and amount of money that is expected to go in and go out. A bookkeeper keeps these records and will inform you in case there is a shortage of cash to pay bills so that you can make arrangements for that.
6. Create and issue invoice
Established companies have separate department to track account receivable because their customers often require reminders to pay their invoice on which the life of your company depends. You can give this responsibility to your bookkeeper who would keep a watch on this matter and make sure that your customers pay invoices on time.
7. Process and reconcile payrolls
Although payroll is a more specialized skill that you may prefer to outsource separately but you need to ensure that you understand the aspects of payroll that your bookkeeper is capable of handling. These aspects include
- Filling payroll return
- Preparing slat pay
- Keeping a record of vacation pay
- Handling client expenses
8. Other responsibilities
Other responsibilities of a bookkeeper includes the following
- Gives you reminder to renew your municipal business license
- Follow up any information that has been missed
- File and pay your workers’ compensation report
- Bring in your notice if an expense does not make sense or you have been double billed for something
Accountants vs bookkeepers
A bookkeeper gets proper training on categorizing, recording and reconciling financial transactions. On the other hand, majority of accountants hold a bachelor’s degree in accounting and they have expertise in interpreting financial records to make business recommendations.
There are many people who are confused about the difference between bookkeepers and accountants as some bookkeepers are capable of performing accounting tasks. For instance the newly introduced accounting software has really made it easy for bookkeepers to prepare financial statements which are traditionally done by accountants.
Well, we can draw an example of a cook and food critic here where bookkeepers are the cook and accountants are the food critics. Bookkeepers generally prepare the financial records using accurate data and the accountants make thorough analysis of these records and the business finances. Accountants can also give you useful suggestions on ways to conserve costs and boost profit margins and help you better understand the financial impact of business decisions.
What a bookkeeper can do for your business
As mentioned above having a bookkeeper is very important for every business. Here is why
- You can make smarter budgeting decisions knowing exactly where your money is going
- You can have an audit proof business with thorough documentation
- You will get more time to focus on other important sides of your business
- You will have a better understanding of seasonal flow of your business
- You can sleep peacefully at night if you know your books are kept in order and the tax season won’t be a hassle for you as your book keeper will take care of it
- You can better understand the key metrics of your business including your earnings, expenditure, profitability etc
- To enjoy all these major benefits in your business all you need is a bookkeeper. Anyone who has ever handled the finances of his business including earnings and expenses, he would definitely understand the importance of the bookkeeper for a business.
The role of a bookkeeper is the perfect blend of curiosity, patience and the knack of getting to the roots of an unresolved issue. Besides this the trust factor is also an important aspect of the job as the entire finances of a company depends on this person. You not only rely on them with your business sensitive data but also depend on them for their accuracy. An efficient bookkeeper never cuts corner and they are an inseparable part of a business that aims to grow.