Bookkeeping Services: Tasks, Tools, and More

Bookkeeping services help manage day-to-day finances for small businesses to keep finances running smoothly. Purchases, sales, invoices, payroll, and more all fall under bookkeeping tasks. Bookkeepers ensure accuracy and compliance with generally accepted accounting principles (GAAP). In this article, learn about different bookkeeping services, why it’s important for companies and more.

What are bookkeeping services?

Bookkeeping services is the process of registering financial transactions and preparing financial statements, like income statements and balance sheets. Bookkeepers typically offer these services; some of their tasks may include:

• Managing daily cash flow

• Recording financial transactions into a software system

• Managing financial transactions

• Preparing financial records for tax filings 

• Processing timesheets and payroll 

• Inputting financial data 

These financial services are critical to a company’s economic health and stability. Bookkeepers function as the financial gatekeepers, managing money in and out and catching errors. Bookkeeping services do not include services provided by an accountant, such as tax filing preparation, analyzing financial documents, or generating financial records like balance sheets.

Importance of bookkeeping for businesses or organizations

The foundation for a company’s overall business operation is its financial status. Here are some reasons why bookkeeping services are important for a company to be successful. 

Make more informed financial decisions. It’s difficult for a company to make purchases, set goals, or plan for the future without an understanding of its financial status. Bookkeepers collect and translate data into financial reports so companies can make strategic financial decisions in the short and long term. 

Ensure compliance with GAAP. The Financial Accounting Standards Board’s (FASB) generally accepted accounting principles (GAAP) is a set of accounting rules that all publicly owned companies in the US are required to follow. Bookkeepers ensure financial data is gathered, stored, and managed uniformly and adheres to the GAAP methodology and rules. These rules help manage finances in a transparent, truthful, and consistent way. 

Organize documents for analysis. Though bookkeepers do not typically analyze financials or offer financial advice, they make it possible for accounting professionals to access key financial records easily. Much of the financial data a bookkeeper manages is used for setting budgets and planning for financial decisions like investments. Software systems can now do a lot of organizing for bookkeepers but it is still a key task for bookkeepers. 

What does bookkeeping involve?

Bookkeeping, at its basics, involves financial data entry and collection. Analysis, budgeting, forecasting, and financial decision-making are typically left to accounting professionals. As the name suggests, the primary duty of a bookkeeper is to “keep” the financial books of a company, which means accurately managing financial transactions and inputting financial data into bookkeeping software. 

Keep financial records manually and electronically.

A cornerstone of bookkeeping involves keeping financial records for a company, which refers to managing financial records like invoices and debts. Most companies use bookkeeping software wherein bookkeepers automatically input financial data into a database that generates financial records. 

Prepare financial documents. 

Bookkeepers prepare financial documents for critical financial planning and filing taxes. To create these documents, a bookkeeper maintains a general ledger which is part of double-entry bookkeeping. The transaction is recorded as both credit and debit and is called a journal entry. 

The purpose of recording a transaction twice is to ensure accuracy and reconciliation at the end of a designated period. A bookkeeper creates a trial balance from a general ledger, and the information from this balance can be used to create documents like balance sheets, income statements, or cash flow statements. 

Prepare payroll, utility, and other bills.

Managing accounts payable is a part of many bookkeepers’ duties, along with preparing employee payroll. Accounts payable refers to money a company owes to vendors or suppliers. Managing accounts payable typically involves ensuring bills are paid on time and are correctly posted in the expenses or debt column on the general ledger. For payroll, many companies use bookkeeping software to prepare it. Bookkeepers will ensure timecards, wages, and payouts are accurate.  

Prepare personal and business taxes.

Bookkeepers prepare financial documents an accountant or CPA needs to file, however, they do not file taxes. As part of this tax prep, bookkeepers prepare and send out 1099 and W-2 forms to company employees. These documents are generated using payroll data, usually with the help of payroll or bookkeeping software. Other financial reports a bookkeeper generates for tax purposes include:

• Income statements

• Balance sheets

• Cash flow statements

• Assets and expenses 

The taxes paid by a company depend on the type of business. 

Skills and knowledge needed to keep the books

Proficiency in mathematics and accounting principles is vital to keeping a company’s books accurate. You may also benefit from having other technical and workplace skills to be an effective bookkeeper. Good communication skills can be equally important as mathematical skills in this role. To be a successful bookkeeper, some important skills and knowledge to have include:

• Honesty and transparency 

• Good organization  

• Effective communication 

• Attention to detail 

• Skilled in data entry 

• Firm understanding of accounting fundamentals such as invoicing and general ledger 

• Proficiency with spreadsheets and Microsoft Excel 

• Knowledge of popular bookkeeping and accounting software systems 

• Critical thinking 

Common bookkeeping tools

Helpful bookkeeping tools are intuitive, feature-rich, and aimed at helping small businesses monitor their financials in real-time. Using these top software systems can amplify bookkeeping services, making it efficient and accurate. 

Intuit QuickBooks Online

Intuit QuickBooks Online helps bookkeepers track inventory, run payroll, create and track invoices, and generate financial documents. QuickBooks is an ideal choice for smaller businesses, with four plans, depending on the company’s needs. Some features include:

• Customers can submit payments in multiple ways

• Bookkeepers can send invoices and capture receipts

• Cash flow is managed in one place

Good for: Small businesses

Wave

Wave is another bookkeeping software ideal for smaller businesses. Wave provides a user-friendly dashboard that places key metrics such as cash flow, overdue invoices, and other accounts' statuses in one place. Some features include:

• Ability to generate invoices, capture receipts, and manage payroll

• Ability to create financial reports

• Ability to capture receipts

Keep in mind that Wave's more advanced features require a monthly plan. Wave also offers a pay-per-use option for users only needing certain features, making this software tool one of the most affordable. 

Good for: Smaller businesses

XERO

XERO has three plans to choose from. Xero even has plans specific to your industry and business type. Features are similar to other bookkeeping software options, but Xero provides a more tailored approach to services that can be scaled to match the size and needs of a small business. On the accounting dashboard, some features include:

• Ability to monitor a company’s financial health with real-time updates on outstanding or paid invoices, bank balances, bills due, and more.

• Xero includes collaboration with other users, a benefit to accounting firms that manage finances for multiple clients. 

Good for: freelance accountants and bookkeepers, accountant firms, small businesses

Zoho Books

Zoho Books features excellent tools to stay tax compliant with automatic tax calculations and sales tax reports but lacks features like payroll management or online payment options. Customers have six plans to consider, including a free version. Zoho Books is a good option for smaller businesses with only a few employees or freelance workers with no employees to manage. The dashboard is simple, easy to use, and provides basic bookkeeping services, including invoicing, project tracking, and receipt capture. 

Good for: small businesses

Read more: Your Guide to Small Business Accounting

How to become a bookkeeper

To become a bookkeeper, pursue an educational pathway with your future career goals in mind. A college degree is not a requirement to become a bookkeeper, however, it is recommended if plans include working in an industry that requires highly skilled bookkeepers or moving into accountant roles. Here are the steps to take to become a successful bookkeeper. 

Pursue a high school degree.

A high school degree or GED is a requirement to become a bookkeeper. Since bookkeeping doesn’t typically require a college degree, this is a foundational education requirement. A high school degree is also a requirement if you later earn a college degree in accounting or a related field.  

Consider an associate or bachelor's degree 

For potential bookkeepers who want to earn a college degree common majors include business administration, finance, or accounting. You can find accredited programs offered as both associate and bachelor’s degree options. According to Zippia, 46 percent of bookkeepers have a bachelor’s degree, and 29 percent have an associate. Associate degrees can be completed in just two years, while bachelor's degrees typically take four years.  

Read more: What Is an Accountancy Degree? A Guide

Acquire training.

Training and experience are key to becoming a bookkeeper since college degrees are optional in this profession. Find opportunities to acquire training and build critical skills in bookkeeping. Some options include enrolling in self-paced online courses, taking bookkeeping classes offered at local colleges or through bookkeeping organizations, or applying for bookkeeping internships offered at local businesses. 

Courses like Bookkeeping Basics, a fully online course offered on Coursera, focus on key skills like double entry bookkeeping, ethics in bookkeeping, and the daily responsibilities you’ll likely have as a bookkeeper. Apply for entry-level bookkeeping positions that offer on-the-job training for another pathway to gain experience and acquire training. 

Apply for positions.

When it’s time to apply for bookkeeping positions, research job postings in your area to find the best fit for your level of education, experience, and interests. Online job boards can be helpful when researching in-demand skills for bookkeepers and common qualifications. Build your resume and tailor it to the position you’re applying for. Lead with your qualifications and skills, followed by professional experience. This is especially true if you have yet to build professional experiences.

Read more: Resume Keywords: How to Find the Right Words to Beat the ATS

Consider certifications.

Certifications, while optional, is recommended to boost your competitiveness as a candidate and to enhance your resume. The most common and widely recognized certifications for bookkeeping are the Certified Professional Bookkeeper (CPB) Certification and the Certified Bookkeeper (CB)Certification. 

• The CPB Certification is offered by the National Association of Certified Public Bookkeepers (NACPB) and is intended for anyone who wants to develop bookkeeping skills. Eligibility requirements only include one year of bookkeeping experience. To become CPB certified, submit an application, complete the NACPB accounting foundational course for bookkeeping certification and pass the certification exam. Complete 24 hours of CPE each year you hold your licensure as a CPB. Submit a license renewal application online. 

• The CB certification adds credibility to your resume as a bookkeeper, whether you’re freelance or employed with a company. The American Institute of Professional Bookkeepers (AIPB) offers this certification for bookkeepers with previous professional experience who are looking to build skills rather than learn foundational bookkeeping skills. To become a certified bookkeeper, pass the national CB exam, provide proof of two years of professional experience, and sign a code of ethics. You can find exam prep courses offered by AIPB and other organizations to help you prepare for the national exam.  

Jobs similar to bookkeepers

Bookkeepers work within the field of finance and accounting, which encompasses many different job titles and career paths. From entry-level bookkeeping and clerks to analysts and beyond, the finance field provides many opportunities for qualified candidates. Consider similar job titles related to bookkeeping. 

Accountants and auditors

Median annual salary (US): $77,250 [1]

Job outlook (projected growth from 2021 to 2031): 6%

Accountants and auditors prepare financial documents for companies that may include tax preparation and documents used for budgeting and forecasting. Accountants assist key financial decision-makers in making short and long- term financial plans and goals for a company based on financial health.

Tax examiners and collectors, and revenue agents  

Median annual salary (US): $56,780 [2]

Job outlook (projected growth from 2021 to 2031): -7%: 

Tax examiners and collectors examine filed tax records, conduct tax audits, and contact filers if errors are found or taxes are overdue. The federal government is the largest employer of these tax professionals, many employed by the IRS.

Loan officers

Median annual salary (US): $63,380[3]

Job outlook (projected growth from 2021 to 2031): 4%

Loan officers process both personal and business loans. The process, called underwriting, typically involves gathering financial information and required documentation from businesses or individuals to verify eligibility for loans.

Payroll clerks

Median annual income (US): $49,560 [4]

Payroll clerks typically work in financial departments as part of the payroll department. Typical duties of a payroll clerk include calculating employee wages, deductions, and other time and payroll data to generate paychecks or input information to payroll software for processing. 

Budget analysts

Median annual income (US): $79,940 [5]

Job outlook (projected growth from 2021 to 2031): 3%

Budget analysts advise companies on financial decisions based on financial health and other stats. Accounting professionals in this role help companies create budgets, plan for future financial decisions, and monitor the financial stance of a company based on financial records and data. 

Industry outlook and career prospects for bookkeepers

The industry outlook for bookkeepers is evolving with technological innovations and software functionality. Bookkeepers are tasked with adjusting their role to meet the needs of companies with a shift from manual entry to automated entry. 

Cloud-based computing, artificial intelligence, and automation are changing the accounting landscape, but this doesn’t mean an end to the bookkeeping profession. Rather, many experts in the field see this digital transformation as an elevation of the profession, providing accounting professionals with more advanced tools to do a better job. 

The US Bureau of Labor Statistics (BLS) projects a slight decline of 5 percent in job growth for bookkeepers over the next decade as a result of the dynamic changes the industry is currently experiencing [6]. Technological changes are the apparent result of the projected drop, specifically software innovations like automated entry. Career prospects for bookkeepers are not necessarily on the decline but simply changing. BLS suggests that bookkeepers will likely move into a more analytical role rather than purely data entry as professionals reap the benefits of more efficient means to input data.

How much do bookkeeping professionals make?

The average annual salary of bookkeeping professionals in the US is $45,560 a year [7]. The lowest 10 percent of earners brought in an average of $29, 120 a year, and the 10 percent of all earners made an average of $61, 980 a year These averages also include audit clerks and accounting professionals. 

Factors impacting the annual earnings of bookkeepers and related professionals include employer, location, qualifications, experience, and services you offer as a bookkeeper. 

Get started

Earning a bookkeeping certificate can be a beneficial step in starting your career as a bookkeeper. You’ll find certificates offered by professional organizations, local colleges, and more in both online and in-person formats. Online courses are convenient options to build bookkeeping skills and credibility. The Intuit Bookkeeping Professional Certificate on Coursera can equip bookkeepers with key skills, such as double-entry bookkeeping, bank reconciliation, understanding the accounting cycle, and creating financial statements.