What Does a Bookkeeper Do? A Guide for Small Businesses

Running a small business involves much more than selling products or providing services. You also need to record every payment, purchase, invoice and expense correctly.

That is where a bookkeeper can help.

A bookkeeper organises your day-to-day financial records. As a result, you can see what money comes into the business, what goes out and whether your records are up to date.

In this guide, we explain what a bookkeeper does, the tasks they can handle and how professional bookkeeping support can help a growing small business.

What is bookkeeping?

Bookkeeping is the process of recording and organising a business’s financial transactions. These records form the foundation for accounts, tax returns, VAT returns and useful financial reports.

Good bookkeeping involves more than entering numbers into accounting software. You need to categorise transactions correctly, keep supporting documents and check account balances against your bank statements.

When your records are accurate and up to date, you can make business decisions based on reliable information rather than guesswork.

What does a bookkeeper do?

The exact tasks a bookkeeper handles depend on your business and the service package you choose.

For example, a bookkeeper may deal with income, expenses, bank transactions, invoices and financial reports.

Recording income and sales

A bookkeeper records the money your business earns. This can include customer payments, sales invoices and income received through card processors or online platforms.

As a result, you have a clear record of your turnover and can identify unpaid customer invoices more easily.

Recording purchases and expenses

A bookkeeper records business purchases and expenses in the correct categories.

For example, these may include:

• Materials
• Software
• Travel costs
• Insurance
• Telephone costs
• Professional fees
• Business subscriptions

In addition, your bookkeeper can review receipts and invoices to identify missing information or transactions that need further explanation.

Keeping these records organised can also make it easier to understand which costs relate to your business.

Reconciling bank accounts

Bank reconciliation means comparing the transactions in your bookkeeping records with the transactions on your bank statement.

During this process, a bookkeeper can identify:

• Duplicate entries
• Missing payments
• Incorrect amounts
• Unrecorded transactions
• Transactions in the wrong category

Regular bank reconciliation is one of the most important bookkeeping checks.

As a result, you can identify problems early instead of discovering them months later.

Managing customer and supplier balances

A bookkeeper can monitor money that customers owe your business and amounts that you need to pay suppliers.

This information can help you follow up unpaid invoices and prepare for upcoming bills.

Therefore, clear customer and supplier balances can be especially useful when cash flow is tight.

They can also give you a clearer picture of how much money your business actually has available.

Organising receipts and invoices

You should store receipts, bills and sales invoices in an organised way and link them to the relevant transactions.

Cloud accounting software can make this easier because you can upload documents throughout the month instead of keeping piles of paperwork.

As a result, a structured system reduces the risk of receipts or invoices going missing before an important deadline.

Preparing bookkeeping reports

Depending on your package, a bookkeeper may provide reports such as:

• Profit and Loss report
• Balance sheet
• Aged debtors report
• Year-to-date summary
• Income and expense summary
• Bank reconciliation report

These reports can help you understand how your business is performing.

However, the reports are only useful when the records behind them are accurate and up to date.

Can a bookkeeper help with VAT and payroll?

Some bookkeeping packages include support with VAT records, payroll information or CIS records. However, other providers offer these as separate services.

VAT and payroll have their own rules, checks and deadlines. Therefore, you should always confirm what your bookkeeping package includes before signing up.

For example, a bookkeeper may prepare the records needed for a VAT return and then pass the information to the person responsible for submitting it.

Businesses that need additional support can also look at the accounting and VAT services available from Real Key Accountancy.

If you employ staff, you should also check whether payroll processing forms part of your monthly package or costs extra.

What is the difference between a bookkeeper and an accountant?

Bookkeepers generally focus on keeping your regular financial records organised and up to date.

For example, they may record transactions, reconcile bank accounts, organise receipts and monitor customer invoices.

Accountants often use those records to prepare year-end accounts, tax returns and provide wider financial advice.

However, the two roles can overlap.

Some accountancy practices provide both bookkeeping and accounting services. For a small business, using one provider for both can create a simpler and more consistent process.

It can also reduce the need to transfer financial information between different firms.

Most importantly, check the provider’s qualifications, responsibilities and agreed services rather than relying only on their job title.

How often should you do your bookkeeping?

How often you need bookkeeping depends on the number of transactions your business processes and how complex your finances are.

For example:

• Weekly bookkeeping may suit businesses with a high number of sales, purchases or customer invoices.
• Monthly bookkeeping often works well for small businesses that need regular bank reconciliations and financial summaries.
• Quarterly bookkeeping may work for a very small business with limited activity.

However, leaving bookkeeping for too long can create a backlog.

Regular updates also make it easier to find missing documents and answer questions while transactions are still recent.

What are the benefits of hiring a bookkeeper?

More time to run your business

Processing transactions, organising receipts and checking bank records can take valuable time away from your customers and business.

Outsourcing your bookkeeping gives you more time to focus on running and growing the business.

More reliable financial records

A consistent bookkeeping process reduces the chance of missing transactions, creating duplicate entries or putting expenses into the wrong category.

As a result, your accounts can provide a more accurate picture of your business.

Better visibility of cash flow

Up-to-date bookkeeping makes it easier to see:

• Money coming into the business
• Customer invoices that remain unpaid
• Upcoming supplier payments
• Regular business expenses
• Current spending patterns

Therefore, you can make better decisions about your cash flow.

Less pressure before deadlines

Keeping your records updated throughout the year makes preparing information for accounts, tax returns and VAT deadlines much easier.

Instead of trying to organise months of transactions at once, you already have much of the information ready.

Support as your business grows

More customers normally mean more invoices, expenses and bank transactions.

As your business grows, a bookkeeper can help your financial records keep pace.

This allows you to focus on growth without letting the bookkeeping fall behind.

When should a small business hire a bookkeeper?

You may benefit from professional bookkeeping support if:

• Your bookkeeping regularly falls behind
• You spend evenings organising receipts
• You mix personal and business transactions
• You are unsure whether your bank records match
• You are not monitoring customer invoices
• You do not have reliable financial reports
• The number of transactions is increasing
• You need help with digital bookkeeping rules
• You want a consistent monthly bookkeeping routine
• You struggle to understand where your money is going

You do not need to wait until your records become difficult to manage.

Instead, setting up a clear bookkeeping routine early can prevent a larger and more expensive catch-up job later.

Small businesses and sole traders can find more information about Real Key Accountancy and the support available.

What information does a bookkeeper need?

Your bookkeeper may ask you to provide:

• Access to your accounting software
• Business bank statements
• Sales invoices
• Purchase invoices
• Receipts
• Credit card statements
• Payment-platform statements
• Loan or finance agreements
• Details of business expenses
• Previous bookkeeping records

You should always use secure methods when sharing financial information.

In addition, agree how and when you will provide documents to your bookkeeper.

Keeping a separate business bank account can also make the bookkeeping process much easier.

What should you ask before hiring a bookkeeper?

Before choosing a bookkeeper, ask:

• Which services does the quoted price include?
• How often will you update my bookkeeping?
• Does the service include bank reconciliations?
• Is there a monthly transaction limit?
• Which reports will I receive?
• Do you charge separately for VAT?
• Do you charge separately for payroll?
• Are year-end accounts included?
• Who will answer my questions?
• How will we share documents securely?
• What happens if I go over my transaction limit?

Getting clear answers before you start can prevent misunderstandings later.

A written agreement should explain what the bookkeeper will handle and which responsibilities remain with you.

Bookkeeping support from Real Key Accountancy

Real Key Accountancy provides straightforward bookkeeping support for sole traders and small businesses.

We can review your existing records, discuss the number of transactions you process and identify the level of support your business needs.

Our bookkeeping support can help you keep your financial records organised, current and easier to understand.

Whether you need regular monthly bookkeeping or help getting your records back under control, we can discuss the options available.

Contact Real Key Accountancy to arrange a free 15-minute accounts review.

Frequently asked questions

Does a bookkeeper submit tax returns?

Not always.

Routine bookkeeping and tax return preparation are different services. However, some accountancy practices provide both.

Others prepare the bookkeeping records and pass them to an accountant or tax adviser who completes the tax return.

Therefore, you should check exactly what your package includes.

Can a bookkeeper fix records that are behind?

Yes.

A bookkeeper can use catch-up bookkeeping to organise overdue transactions, reconcile accounts and bring your financial records up to date.

The amount of work required will depend on how far behind the records are and how many transactions need reviewing.

Do I still need to keep receipts?

Yes. Businesses need supporting records for relevant transactions.

However, you do not necessarily need to keep everything as physical paperwork.

Digital storage can make receipts and invoices easier to organise, find and share securely.

Can I do my own bookkeeping?

Yes. Many business owners manage their own bookkeeping when the business is small.

However, professional support may become worthwhile when bookkeeping takes too much time, regularly falls behind or becomes more complicated.

A bookkeeper can also provide a consistent process as the business grows.

How much does a bookkeeper cost?

The price depends on several factors, including:

• The number of transactions
• Number of bank accounts
• Quality of your existing records
• How often you need bookkeeping
• Level of reporting required
• Additional services such as VAT or payroll

Therefore, ask for a written quote that clearly explains what the price includes.

This article provides general information only and is not personalised accounting, tax or financial advice.