What Is Bookkeeping?

Bookkeeping entails recording, managing, and monitoring financial transactions for businesses, individuals, and nonprofit organizations. Bookkeepers record sales receipts, vendor invoices, and other financial transactions.

Businesses rely on bookkeepers' records to make informed financial decisions and set priorities. For example, bookkeepers may create profit and loss reports based on a company's financial transactions. Managers and budget analysts review these reports to increase profits while decreasing expenses.

This page covers bookkeeping responsibilities as well as the qualifications and skills needed to succeed as a bookkeeper.

What Is a Bookkeeper?

Bookkeepers record financial transactions for businesses, including expenses and sales revenues. They bring strong mathematical and organizational skills to their profession while relying on a detail-oriented mindset to identify and correct errors in financial records. Most bookkeepers complete coursework in bookkeeping and accounting to build their professional skills.

Bookkeepers also manage payroll, create invoices, and oversee the general ledger. The next sections explore the primary tasks involved in bookkeeping and the skills and qualifications required to succeed as a bookkeeper.

What Does a Bookkeeper Do?

At the most basic level, bookkeepers enter financial transactions so that businesses can monitor their spending and revenue. This information helps businesses make decisions about their financial priorities and assess their financial health. Bookkeepers often use accounting or bookkeeping software to manage financial transactions.

Bookkeepers oversee the general ledgers of businesses, which are accounting records showing all transactions. A general ledger lets a business closely monitor its revenue on a daily, monthly, quarterly, and annual basis. It also shows all costs, including expenditures, wages, and other expenses.

At the most basic level, bookkeepers enter financial transactions so that businesses can monitor their spending and revenue.

Many bookkeepers also provide payroll management services. In this capacity, bookkeepers calculate the wages owed to employees, taking into account deductions such as income tax and payroll tax. They maintain the confidentiality of employees' salaries while following applicable laws and regulations. Bookkeepers typically rely on payroll software to complete these tasks.

Bookkeepers prepare several types of financial documents and reports for their clients. They may prepare bank deposits, tracking the payments sent to a bank on a daily or weekly basis. They also prepare invoices, accounts payable reports, accounts receivable reports, and profit and loss reports. These financial reports let businesses monitor their financial health and make informed business decisions.

Because businesses rely heavily on these financial reports, bookkeepers must strive to create accurate and complete financial records. They review the general ledger to identify and correct any errors while monitoring financial reports to uncover problems.

In addition to calculating taxes owed and deductions for federal income taxes, bookkeepers may prepare quarterly estimated tax payments based on income and business tax returns.

While individuals or businesses with complex tax needs may prefer the services of an accountant or CPA, bookkeepers can also prepare taxes for clients. In addition to calculating taxes owed and deductions for federal income taxes, bookkeepers may prepare quarterly estimated tax payments based on income and business tax returns.

Some bookkeepers work for smaller clients, including small businesses or self-employed professionals. In these cases, bookkeeping tasks may include managing a simplified general ledger, preparing quarterly or annual financial reports, and estimating quarterly taxes owed. Bookkeepers can also work for enterprise-level organizations, overseeing complex general ledgers or performing payroll services for businesses with hundreds or thousands of employees.

According to O*NET OnLine, over 40% of bookkeepers hold a high school diploma as their highest degree. However, according to the Bureau of Labor Statistics (BLS), many employers prefer candidates with some postsecondary education.

According to the BLS, the median salary for a bookkeeper is over $40,000 a year, making it one of the best-paid positions that does not require a college degree.

Prospective bookkeepers can take classes in bookkeeping and accounting to strengthen their professional skills. They can also pursue a postsecondary certificate or diploma. For example, many community colleges offer undergraduate certificates in accounting or bookkeeping. While earning an undergraduate certificate, which typically takes about one year to complete, students strengthen their accounting and financial management abilities.

According to the BLS, the median salary for a bookkeeper is over $40,000 a year, making it one of the best-paid positions that does not require a college degree. However, bookkeepers who do earn a degree -- such as an associate or bachelor's degree in accounting -- can pursue roles as accountants, financial managers, and budget analysts.

What Are the Responsibilities of a Bookkeeper?

Enter Financial Transactions

In many industries, including retail, hospitality, healthcare, and higher education, bookkeepers enter financial transactions to track expenses and revenues. Bookkeepers also track debits and credits for clients. Bookkeepers typically rely on accounting software to track financial transactions.

Manage the General Ledger

In a business, the general ledger lists all of a company's financial transactions. Bookkeepers manage the general ledger by recording financial transactions and tracking the organization's expenses and income. While small businesses may maintain a simple general ledger, the ledger for larger organizations can be extremely complex.

Prepare Bank Deposits

Particularly in retail, bookkeepers prepare bank deposits for clients. To prepare a deposit, bookkeepers compile data maintained by cashiers, check receipts for accuracy, and send money to the bank. The deposit can include cash, checks, and other types of payment, which bookkeepers record in the general ledger.

Create Financial Reports

Bookkeepers may produce multiple types of financial reports that track an organization's profits and losses. These reports include income statements, balance sheets that compare cost and income, and accounts payable and receivable documents. These reports show the financial health of an organization.

Check for Errors in Reports

When creating reports or managing the general ledger, bookkeepers must check for errors. They look for problems in bank deposits that might indicate fraud, correct balance sheet mistakes, and maintain accurate payroll records. Identifying and correcting errors ensures that bookkeepers provide accurate financial information to their clients.

Manage Payroll

Many bookkeepers offer payroll management services for clients, including tracking the hours and wages of employees. Bookkeepers calculate withholdings from paychecks, such as payroll taxes and benefits, to determine employee wages for a pay period. They often use payroll software to complete the task.

What Qualifications Do You Need to Become a Bookkeeper?

Education

Some postsecondary education Most employers prefer to hire bookkeepers with some postsecondary education, such as a certificate or associate degree, though some hire candidates with just a high school diploma.
Bachelor's degree A bachelor's degree provides training in accounting principles, preparing bookkeepers for career advancement.

Skills

Math Bookkeepers rely on math skills; the job requires managing and manipulating numerical data.
Organization To produce accurate financial documents, oversee payroll, and manage several clients at a time, bookkeepers need strong organizational skills.
Detail-oriented Bookkeepers must closely monitor details to avoid making errors and identify mistakes in financial documents.

Abilities

Managing information Bookkeepers must manage financial information for clients, including expenditures, receipts, and profit and loss reports.
Problem-solving When reconciling income and expenses or calculating payroll, bookkeepers draw on their problem-solving skills. These abilities help bookkeepers address inaccuracies in their reports.
Integrity Integrity is critical to this profession as bookkeepers must maintain transparent records and confidentiality. Bookkeepers also prevent the misuse of funds by identifying potential fraud.

Knowledge

Bookkeeping software Most bookkeepers rely on software programs to complete tasks. Specialized programs that manage business finances, perform payroll services, and generate invoices help bookkeepers work efficiently.
Creating financial statements In many fields, bookkeepers produce financial statements, including balance sheets, invoices, and accounts receivable reports.
Record financial transactions/th> Bookkeepers record financial transactions, including expenses, revenues, and bills.
Learn More About How to Become a Bookkeeper

How Are Bookkeepers Employed?

Bookkeeping salaries vary depending on a worker's industry and experience. The following list outlines several common industries for bookkeepers.

  • Bookkeeping Services

    Many bookkeepers work for organizations that specialize in bookkeeping services. These workers manage expenses and revenue, oversee the general ledger, and prepare invoices.

  • Bookkeeping Services

    Many bookkeepers work for organizations that specialize in bookkeeping services. These workers manage expenses and revenue, oversee the general ledger, and prepare invoices.

  • Retail

    In retail, bookkeepers oversee revenue from financial transactions, including expenses and purchases. They may also manage payroll.

  • Finance

    Bookkeepers in finance provide accounting support services for accountants and finance professionals, including preparing financial documents. They may also work in payroll or account services.

  • Payroll Services

    In many industries, bookkeepers offer payroll services, such as calculating wages, overtime pay, and benefits. Bookkeepers must also take deductions out of wages, including payroll taxes.

  • Tax Preparation

    Some bookkeepers offer tax preparation services for individuals or businesses. They calculate taxes owed, deductions, and refunds for clients.

Learn More About Bookkeepers and Take the First Step Today!

Professional Organizations for Bookkeepers

  • American Institute of Professional Bookkeepers AIPB represents bookkeepers, providing professional resources such as calculators and conversion tables. The institute keeps bookkeepers up to date on industry news, answers questions through its telephone answer line, and certifies professional bookkeepers.
  • National Bookkeepers Association NBA offers training resources, certifications, and licenses for bookkeepers. The association provides continuing education resources, certification exam practice tests, and video tips for bookkeepers.
  • National Association of Certified Public Bookkeepers NACPB trains and certifies bookkeepers who specialize in public bookkeeping. The association offers licenses, continuing education resources, and training videos.
  • Institute of Certified Bookkeepers The U.S. branch of ICB offers webinars, podcasts, and other professional development resources for bookkeepers. The institute also offers certifications to bookkeepers who pass an examination.
  • American Institute of CPAs AICPA provides resources and information for accounting professionals considering the CPA exam, including career planning resources. The institute also offers multiple scholarships for prospective CPAs.