6 Things Your Bookkeeper Needs To Know

By: Valerie Briley, CPA, Founder & Chief Business Driver, Reveal Business Solutions

Over the years I’ve worked with hundreds of small and medium-sized businesses, which means I’ve also worked with a lot of bookkeepers. Some have been highly proficient and demonstrated a good understanding of accounting principles, while others saw their job mainly as paying the bills and making deposits. The fact is, there is no single certification that qualifies someone to be a bookkeeper, so it’s no surprise that people who hold the title have a variety of skill sets and backgrounds. It’s also been my experience that business owners have varying expectations about what a bookkeeper should know and be able to do.

While a certain amount of variation is okay, there are some basic functions that all bookkeepers should be able to perform to keep your business on track. Here’s my list of non-negotiable skills every bookkeeper should have and do to keep your business running smoothly.

#1 Maintain Accurate and Up-to-date Chart of Accounts

This is one of your bookkeeper’s most important responsibilities. Accounts should be grouped and classified so it’s easy to understand your financial results.  All transactions should be recorded in a timely manner and entries should be made in the correct account and in the right period. Having a well set up chart of accounts makes analysis easier to generates actionable data you can use to make more informed business decisions.

#2 Be Proficient with Accounting Software

The financial software currently available to small businesses is immensely powerful. It can improve the accuracy of your financial information, deliver new insights into business operations, and provide a more efficient way for your accountant to generate financial statements and complete your taxes. But to receive all those benefits, the software needs to be correctly implemented and maintained. Ideally, your bookkeeper will have received advanced training in whatever software you’re using.  For example, if you use QuickBooks Online, you should have someone who is either “Advanced Certified” or a “Pro-advisor.”

#3 Keep the Business in Compliance

Your bookkeeper should understand and be up to date on 1099 compliance rules, and also have a solid process for onboarding new vendors and tracking payments. If you charge sales tax, your bookkeeper should understand sales tax rules for your products and services and where you do business.  Sales tax is highly complex, and the rules vary by city, county and state.  Once a taxpayer is registered to collect or pay sales and use taxes in a jurisdiction, returns must be filed, and the taxes must be remitted on a timely basis.

#4 Understand Basic Tax Laws and Regulations

You should expect your bookkeeper to have a working knowledge of current tax law, including what is and isn’t deductible. For example, the deduction for unreimbursed, non-entertainment-related business meals is generally limited to 50%. However, the Consolidated Appropriations Act, which was signed into law on December 27, 2020, allows food and beverages purchased from a restaurant in 2021 & 2022 to be 100% deductible. This law, like several others, was passed in reaction to the pandemic and was intended to provide help to hard-hit industries, such as restaurants. If your bookkeeper isn’t up to speed on these changes, you’ll miss out on opportunities to lower your tax bill.

#5 Managing Accounts Receivable and Accounts Payable

Simply put, your bookkeeper should know who owes you money and what money is owed to you. They should be able to pay the bills on behalf of your business in a timely manner while having a solid grasp on your cash flow cycle.  Invoices for all services should be sent timely and they should make sure payments are received on time and timely follow up on late payments.

#6 Monthly Account Reconciliation

Account reconciliation is the process of comparing the numbers in one account with another financial record to verify the balances match. A monthly reconciliation helps to catch and identify any unusual transactions that might be caused by an accounting error or even fraud. Your bookkeeper should be able to reconcile your bank accounts, credit card accounts and every account on the balance sheet on regular basis.

Additional Training for Bookkeepers

If your bookkeeper isn’t proficient in all these areas, there are lots of good online options for them to enhance their skills.

Here are two of my favorite Facebook groups geared towards bookkeepers:

https://www.facebook.com/groups/5minutebookkeeping

https://www.facebook.com/groups/thesuccessfulbookkeeper

If your business uses QuickBooks Online, Intuit’s Bookkeeping Certificate can be accessed inside QuickBooks Online Accountant.  The curriculum focuses on small business accounting and includes the following four sections:

  • Accounting Basics
  • Accounting for Assets and Expense transactions
  • Accounting For Liabilities/Equity and Income transactions
  • Financial Statement Analysis

Having a bookkeeper with strong skills on your team is a huge benefit to your business. If you have questions about implementing actionable bookkeeping practices in your business book a discovery call with us at Reveal Business Solutions. We partner with small and medium-sized business owners around the country to support the growth and profitability of their business. We can help you put systems in place, so you have the financial information you need to build a successful business.