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, 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

Bookkeeper

Accountant

Accounting software set up icon-cross icon-tick icon-tick
Data file and account list icon-cross icon-tick icon-cross
Correct links, preferences and tax codes icon-cross icon-tick icon-cross
Cards and inventory items for efficient use icon-cross icon-tick icon-cross
Opening balances for accounts, debtors etc icon-cross icon-tick icon-cross

Enter Transactions

Data Entry

Bookkeeper

Accountant

Bills and invoices icon-tick icon-tick icon-cross
Recurring transactions etc icon-cross icon-tick icon-cross
Receipts and payments icon-tick icon-tick icon-cross
Make electronic payments icon-cross icon-tick icon-cross
Reconcile creditors icon-cross icon-tick icon-cross
Follow procedural checks icon-tick icon-tick icon-cross

Checks, reconciliations and end of year processes

Data Entry

Bookkeeper

Accountant

Reconcile reports with BAS returns icon-cross icon-tick icon-tick
Check accuracy of all reports icon-cross icon-tick icon-cross
Follow up unreconciled transactions icon-cross icon-tick icon-cross
Organise and perform system backups icon-cross icon-tick icon-cross
Reconcile bank and credit card accounts icon-cross icon-tick icon-cross
Run company data audit and fix problems icon-cross icon-tick icon-cross
Setup users with passwords and audit trails icon-cross icon-tick icon-cross
Roll over data file for financial and payroll years icon-cross icon-tick icon-cross

Payroll

Data Entry

Bookkeeper

Accountant

Set up payroll categories and accounts icon-cross icon-tick icon-cross
Set up employee cards icon-cross icon-tick icon-cross
Enter/import time sheets icon-cross icon-tick icon-cross
Apply payroll legislative requirements icon-cross icon-tick icon-cross
Process pay, adjustments, leave etc icon-cross icon-tick icon-cross
Keep track of outstanding entitlements/leave icon-cross icon-tick icon-cross
Reconcile payment summaries icon-cross icon-tick icon-cross
End of year payroll rollover and tax table updates icon-cross icon-tick icon-cross

Other

Data Entry

Bookkeeper

Accountant

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

Legal, tax and management

Data Entry

Bookkeeper

Accountant

Set up legal structures icon-cross icon-cross icon-tick
Legally prepare BAS returns icon-cross icon-tick icon-tick
Calculate depreciation and interest expenses icon-cross icon-cross icon-tick
Annual tax returns and tax planning icon-cross icon-cross icon-tick
Fringe benefits tax returns icon-cross icon-cross icon-tick
ASIC returns icon-cross icon-cross icon-tick
Management advice icon-cross icon-cross icon-tick

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.