Bookkeeping

 

A bookkeeper is a person that handles Accounts Receivable, Accounts Payable, or Payroll. In smaller companies, the same person may perform all three tasks. In larger companies, each task is performed by a different person. In very large companies, there are often multiple people performing each task. The bookkeeper's job is usually to "keep the books" on a daily basis, and then hand that information off to the accountant on a monthly or quarterly basis.

 

Smaller companies often hire a contract bookkeeper to come in for a few hours each week, or at the end of the month, to do what's called "writeup services" -- basically entering all of that week's (or month's) transactions and reconciling the books in one fell swoop, rather than updating the books every single day.

 

In smaller companies, bookkeeping and accounting may be handled by the same person. In larger businesses, one or more accountants typically supervise multiple bookkeepers. In very large companies there may be hundreds, possibly even thousands of accountants. One will be designated as the "Controller" who oversees the entire accounting and bookkeeping system.

 

Accounts Receivable (A/R) refers to customer accounts and the funds that are due to be paid to the company. The company provides products or services to its customers and the company receives payment in exchange. A bookkeeper who does this task is often called an Accounts Receivable Clerk. The process usually consists of entering customer orders into the computer system, preparing invoices, sending them to customers, receiving payments, logging the payments into the computer system, and following up with customers who have overdue payments.

 

Accounts Receivable (A/R) refers to customer accounts and the funds that are due to be paid to the company. The company provides products or services to its customers and the company receives payment in exchange. A bookkeeper who does this task is often called an Accounts Receivable Clerk. The process usually consists of entering customer orders into the computer system, preparing invoices, sending them to customers, receiving payments, logging the payments into the computer system, and following up with customers who have overdue payments.

 

Hiring a CPA full-time may be cost-prohibitive for the average small business owner. CPAs are usually more expensive than regular accountants, and hiring a CPA for a bookkeeping position is definitely overkill. Many companies work with bookkeepers and accountants throughout the year and hand off their year-end records to their CPA for a final audit before the year's taxes are prepared.

 

Accounts Payable (A/P) refers to vendor accounts and the funds that are due to be paid by the company. The company orders goods or services from other businesses (vendors) and the company then pays for those goods or services. A bookkeeper who does this task is often called an Accounts Payable Clerk. The process usually consists of entering purchase orders into the computer system, receiving bills and invoices and logging those into the system, paying those bills and logging the payment into the computer system, and following up with vendors regarding account adjustments, refunds, returns, etc.

 

Payroll refers to the company's employee salaries, wages, bonuses, net pay, and deductions; the maintenance of all records pertaining to payroll and payroll taxes (Federal income tax withholding, Social Security, Federal unemployment tax, State and Local taxes); and the issuance of the actual payroll checks or electronic payments to the employees. A bookkeeper who does this task is often called a Payroll Clerk. The process usually consists of entering or verifying employee hours in the computer system, computing and recording the earnings owed to each employee, calculating payroll taxes and other deductions, generating the payroll checks or initiating the electronic payments, and keeping records of benefit deductions, sick leave and vacation pay, 401(k) and pension contributions, and other nontaxable wages.