Bookkeeping explained

What is bookkeeping?

Bookkeeping is about understanding how a business works and then providing accurate figures that enable the business to know exactly how well it is doing.

Every business, no matter how large or small, is required by law to ‘keep books’. A business must have up-to-date financial records in order to ensure it pays the required taxes and levies.

“Bookkeeping” is a vital, large part of the overall accounting process which involves recording, analysing and interpreting the financial transactions of a business or individual. A bookkeeper’s duty is to set up financial statements so that an accountant can easily perform legal and tax management in a timely manner.

A skilled and compliant bookkeeper should be able to produce financial records that give business accurate information about its financial activities. These records are critical to the future success of any business.

A good contract bookkeeper is able to:

• Accurately setup accounting systems and software
• Enter transactions
• Perform checks, reconciliations and end of year processes
• Ensure they are up to speed with legislative requirements and management reports
• Undertake payroll duties and compliance
• Legally prepare BAS returns
• Provide general business administrative support

What we do

Difference between Data Entry, BAS Agent/Bookkeeper and Accountant

People often misunderstand, or are confused about the different roles and tasks that can be performed by data entry, bookkeeping and accounting roles. The below tables details some common tasks and the role each discipline plays.

Setup

	Data Entry	BAS Agent/Bookkeeper	Accountant
Accounting software set up
Data file and account list
Correct links, preferences and tax codes
Cards and inventory items for efficient use
Opening balances for accounts, debtors etc

Enter Transactions

	Data Entry	BAS Agent/Bookkeeper	Accountant
Bills and invoices
Recurring transactions etc
Receipts and payments
Make electronic payments
Reconcile creditors
Follow procedural checks

Checks, reconciliations and end of year processes

	Data Entry	BAS Agent/Bookkeeper	Accountant
Reconcile reports with BAS returns
Check accuracy of all reports
Follow up unreconciled transactions
Organise and perform system backups
Reconcile bank and credit card accounts
Run company data audit and fix problems
Setup users with passwords and audit trails
Roll over data file for financial and payroll years

Payroll

	Data Entry	BAS Agent/Bookkeeper	Accountant
Set up payroll categories and accounts
Set up employee cards
Enter/import time sheets
Apply payroll legislative requirements
Process pay, adjustments, leave etc
Keep track of outstanding entitlements/leave
Reconcile payment summaries
End of year payroll rollover and tax table updates

Other

	Data Entry	BAS Agent/Bookkeeper	Accountant
Source support from professional advisors
Assist with profit and loss cash flow budgets
Suggest cost control measures
Assist with stock-takes
Customise invoices, statements and cheques
Keep legislative and industry knowledge up-to-date
Troubleshoot problems and suggest record keeping solutions
Set up procedural checklists and train staff
Visit premises regularly

Legal, tax and management

	Data Entry	BAS Agent/Bookkeeper	Accountant
Set up legal structures
Legally prepare BAS returns
Calculate depreciation and interest expenses
Annual tax returns and tax planning
Fringe benefits tax returns
ASIC returns
Management advice

The above chart is a generalisation of duties and may not represent every scenario – for example: some accountants also offer bookkeeping services; some data-entry personnel may be qualified to do perform a greater range of tasks.