Is bookkeeping hard to learn? And other common questions are answered below.
The process of recording the company's financial transactions is generally known as bookkeeping. The companies refer to the information tracked in the books and make key operating, investing, and financial decisions.
In simple words, Bookkeepers are individuals who manage all the financial data of a company. If bookkeepers were not there, the company would not be aware of their financial position and the transactions within the company. Bookkeeping is also crucial to external users like investors, financial institutions, and government, including people and organizations that need reliable information to make better investments or money lending decisions.
When you keep transaction records updated, you can generate accurate financial reports that help to measure the overall business performance of a company. The details which these bookkeepers record also become handy when it comes to paying tax audits In conclusion, business completely relies on accurate and reliable bookkeeping for both internal and external users.
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What do Bookkeepers do?
Bookkeepers have different responsibilities depending on the requirement of company's requirements. Most of the bookkeepers often work for companies but, few of them may also work for non-profit organizations. A bookkeeper usually deals with the recording of a company's financial transactions.
For example, a person who made the purchase usually gives the bookkeeper a purchase order that includes the details of the transaction done. The bookkeeper then makes sure the transaction is properly categorized and then records it in information systems accounting.
Bookkeepers also deal with outbound payments. Some bookkeepers in larger organizations or firms are called accounts payable bookkeepers. These bookkeepers specialize in making sure all of the organization's bills are paid on time.
Bookkeepers also record inbound payments, the money an organization receives from clients and other businesses. Several bookkeepers do a combination of things; once again, what they do depends on the company's needs they work for. A bookkeeper may record the details of credit cards, bank accounts, and bills the company has received for later payment, they make sure that the payments are processed promptly and take care of other finance-related singing.
Importance of Bookkeeping
Accurate bookkeeping gives companies a reliable measure of their performance. It also provides information when making general strategic decisions and benchmarks its revenue and income goals. Once a business is up and running and is spending extra time and money on it, it becomes crucial to maintain proper records. Several companies don't hire full-time accountants to work for them because of the cost.
Instead, they hire a bookkeeper or outsource the job to a professional firm. Many people who intend to start a new business sometimes overlook the importance of matters like maintaining a record of every penny spent.
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The Accrual vs. Cash Basis of Accounting
To maintain proper bookkeeping, the companies first choose which basis of accounting they will follow. There are two accounting methods, the cash basis of accounting and the accrual basis of accounting. The major difference between these types of accounting is based on the timing for when the company records a sale that is money inflow or purchase that is money outflow.
The recorded transaction only when cash is received or paid is defined as the Cash Basis of Accounting. When it occurs even if cash is not received or paid, the recorded transaction is called Accrual Basis of accounting. For Example, A person purchased 100 units of a product and will pay for it next month. Then, no cash basis transaction will be recorded. But, an accrual basis of the transaction will be recorded through accounts payable or liability accounts.
Do Bookkeepers Need A Degree?
Being a Bookkeeper is not an easy job. It mainly includes the ability to categorize things properly and enter financial information into accounting systems. No formal education degree or course is required to be a bookkeeper. Only basic maths skills are required for this job. The great part of this job is that you can learn how to do the work on the job. There are several schools that offer two-year degree programs in accounting or bookkeeping, but there is no formal requirement that you have a degree to work in this field. This does not mean that a degree won't help you stand out amongst other applications to get the job.
If you are planning on starting your own virtual bookkeeping business, a degree won't be necessary. However, if you do have a degree, it will just add up to be a major selling point.
It is possible to become a certified bookkeeper, although it is not necessary to have this professional designation work as a bookkeeper. As mentioned before, having a college degree and adding a certified bookkeeper to your resume immensely helps you in standing out. Just because there is no requirement of formal education or other credentials to work as a bookkeeper, several people consider this as a factor that makes the profession relatively easy. There are generally two methods of bookkeeping that are followed single-entry bookkeeping and double-entry bookkeeping.
How Do Bookkeepers Work Remotely?
Thanks to modern technology, several bookkeepers can work from home. The requirements the bookkeeper will need are a laptop or a computer, a cell phone with good reception, and a good internet connection. With these things, the bookkeeper can work from any desired place.
One of the main reasons why it is possible to work remotely as a bookkeeper is that many accounting systems are now cloud-based. This means you can log on to a company's accounting system remotely and update the required information from anywhere, anytime.
A few years ago, it was not possible to do so. The reason behind this was that many companies with computerized accounting systems used to have accounting systems loaded on each computer they used, and this was all tied together through a local network. So, to access the company's accounting system, they had to do so from a company computer within the computer on the company premises.
But this is no longer the case. If you are planning on owning a virtual bookkeeping business and taking on a new client, the client will create a new user profile and give you a password to access their accounting system remotely. You can then communicate with your clients either via email or telephone. Sometimes few bookkeepers meet with their clients, and then they discuss the details of the contract, but it is absolutely not necessary to do so.
Difference between Bookkeeping and Accounting
Bookkeeping is the foundation of accounting. Whereas, accounting uses the information provided by bookkeeping to prepare financial statements and reports. The purpose of bookkeeping is to maintain a proper record of financial activity and transactions in order.
On the other hand, the purpose of accounting is o report the financial strength and obtain the results of the operating activity of a business. The financial statements are not a part of the bookkeeping process.
The objective of bookkeeping is to summarize the effect of all financial transactions that occurred in a company for a given period of time. Accounting requires the skills of an accountant and knowledge of various accounting practices and policies. The person responsible for bookkeeping is called a bookkeeper. The person responsible for accounting is called an accountant.
Is it hard to be a bookkeeper?
Bookkeeping is not that of a challenging profession. It's something you can learn while working on the job through self-study or a formal two-year college degree program. The math included in bookkeeping is not complicated at all. In fact, if you can add, subtract, multiply and divide, you can easily be a bookkeeper. It is not hard to be a bookkeeper if you follow a system designed to take you from zero knowledge of bookkeeping to launching and growing your own virtual bookkeeping business, for example, Bookkeeper launch.
Several companies need bookkeepers' services to maintain proper financial records of their companies to free up their time for other things. Bookkeepers are majorly in demand. If you do an excellent job of marketing your pros and services, do good work, there's no reason why you cannot grow your own business of virtual bookkeeping and be proud of it.
FAQs
- What is bookkeeping?
Bookkeeping is the process of recording the financial transactions of a company.
- Name the software do bookkeepers use?
There are several various bookkeeping software applications that bookkeepers use are listed below:
- QuickBooks.
- Xero.
- Freshbooks.
- Microsoft office
- Is it hard to study to be a bookkeeper?
Many do not like the answer to the above question, but the answer is both yes and no. This might sound confusing at first but, it will make sense when you further learn about it.
- Is any particular degree required to get a job as a bookkeeper?
No, there is not any kind of formal degree required to get a job as a bookkeeper. However, having a degree does help you stand out amongst the other applicants.
- Is bookkeeping in demand?
Yes, bookkeeping is extremely in demand.