Is Bookkeeping Hard? Everything You Need to Know
Is bookkeeping hard?
The short answer is no. It’s a common misconception that you need a formal education to be a bookkeeper, but anyone with solid math skills and the right resources can do it. Bookkeeping usually involves categorizing and entering financial data into an accounting system. So, if you’re planning to become a bookkeeper, here’s everything you need to know about it.
What is Bookkeeping?
Bookkeeping is the process of regularly recording a business’ financial data. A bookkeeper’s job is to enter every financial transaction a company or client makes in a database, from business loans taken out to day-to-day expenses.
Additionally, bookkeepers must be able to handle tasks like producing invoices, completing payrolls, posting debits and credits, and more. Since they have access to sensitive financial data, bookkeepers are bound to confidentiality.
Depending on the company or client they’re working with, other bookkeeping responsibilities may also involve:
- Developing or improving accounting systems
- Introducing or replacing accounting software
- Creating, implementing, or amending bookkeeping procedures and policies
- Developing debit and credit accounts and creating expense categories
- Entering financial transactions (income and expenses) into the software, including non-digital methods of payment like cash and checks
- Handling banking activities like making deposits or withdrawals
- Maintaining financial records and regularly making backups and archives for the data.
- Assisting with audits
- Training staff on how to use bookkeeping software
- Making sure the recorded expenses follow the company’s policies
- Ensuring the company’s bookkeeping procedures adhere to best accounting practices and government regulations
- Verifying the accuracy of the financial information and flagging any discrepancies
Bookkeeping Vs. Accounting
There are many similarities between bookkeeping and accounting, leading many to believe that both are the same. While accountants and bookkeepers often work side by side, there are differences between the two careers. In a nutshell, bookkeepers record day-to-day business transactions, while accountants focus on the bigger picture.
Bookkeepers record transactions and keep them organized. Meanwhile, accountants analyze the data from these records to provide sound tax advice. So while accountants occasionally tackle bookkeeping tasks, remember that this is not their primary role.
Bookkeepers generally use journals, ledgers, and cash books. On the other hand, accountants study balance sheets, profit-and-loss accounts, cash flow statements, and position declarations, to name a few.
Moreover, several financial software available today can make the jobs of bookkeepers and accountants easier. It’s up to you to pick among these for your bookkeeping endeavors.
Accountants usually have a degree or certification. In contrast, bookkeepers generally don’t require formal education.
However, you need to have specific skills to be an effective bookkeeper. These include:
These include basic to advanced bookkeeping principles and basic accounting practices (i.e., you need to know how accounting works).
These include good typing skills, the ability to add in data accurately and promptly, and the ability to keep up with the latest bookkeeping software and technology.
These include organizing, maintaining, and storing financial records.
These include entering data as accurately as possible and ensuring no errors are left unaddressed in the ledgers.
Aside from these technical skills, you need to showcase discipline, good communication, interpersonal skills, and a desire for growth.
Since bookkeepers don’t require special skills to do their job, their responsibilities are relatively more straightforward. In contrast, accountants need specialized skills due to the complexity involved in their line of work. Aside from needing a professional degree in accounting, they also need relevant work experience.
Generally, top management doesn’t closely monitor bookkeepers. However, you may have to work closely with the company’s accountants. This helps ensure that the records are accurate and up-to-date and address concerns.
Business owners or upper management regularly consult with their accountants to check the company’s financial status and growth.
Financial Decision-Making Powers
Lastly, bookkeepers and accountants are different in terms of decision empowerment. Bookkeepers can’t make financial decisions on behalf of the company. Meanwhile, top management doesn’t usually need bookkeeping records during essential deliberations.
In contrast, accountants can make proposals and suggestions to help improve or maintain a company’s financial health. Entrepreneurs also need to consult them regarding tax laws, financial analysis, and more.
10 Skilla That Can Make Bookkeeping Easier
There are specific skills aspiring bookkeepers need to develop to achieve success in bookkeeping. Learning about these traits prepares you for a successful career ahead. Here are 10 skills to make bookkeeping easier.
Math is like a double-edged sword in bookkeeping and accounting. So practice your basic arithmetic skills and learn how decimals, fractions, and percentages work. And while you’re at it, practice your skills with the calculator and spreadsheets.
Strong critical thinking and math skills will allow you to easily solve any number-related problems and resolve any bookkeeping challenges that come your way. Furthermore, critical thinking helps you make sense of the data in the financial records you’re handling, from interpreting the records to identifying trends. This will help you make better financial reports, making accountants and your clients happier.
Attention To Detail
Great attention to detail will help you keep your clients’ financial records accurate and enable you to immediately spot any errors. This can help your clients, especially when they need to make critical decisions (since they need correct data to do so).
Having an excellent mental memory can greatly help you as well. It enables you to effortlessly recall any information you previously encountered, making it easier for you to keep track of your client’s financial records and answer any questions they have about this and that number. Additionally, a great memory will help you learn new bookkeeping techniques and principles, which you can use to further your career.
Bookkeepers need strong organizational skills to help them prioritize their tasks for short-term and long-term projects. Additionally, bookkeepers handle all financial records of business owners, and a single mistake can cost them hundreds or thousands of dollars. It’s crucial to effectively organize your clients’ books to prevent data errors that lead to costly mistakes.
One of your responsibilities as a bookkeeper is presenting the financial records you’re handling to accountants and your clients. By knowing how to communicate properly (whether online or in-person), you’ll be able to present this vital information. Excellent communication skills will also make your job easier along the way, as it will be much less painful for you to interact with others. This will come in handy when working with a team or talking to different people.
Managing your time can be difficult, especially if you’re a bookkeeper. But if you want your life to become easier (not to mention succeed in your career), you need to acquire good time management skills. Start by creating to-do lists; this will help you focus on specific important tasks for the day. You could also consider trying tricks like the Pomodoro technique to keep your mind focused and fresh.
Transparency is crucial for bookkeepers because it allows them to provide honest financial reports to their clients and boost their reputation in the long run. As an added bonus, it will also lead to better job performance and satisfaction. So do your best to be as transparent to your clients and teammates as possible. That means always presenting accurate and updated financial reports, being honest about deadlines, and what-not.
Bookkeeping can be a repetitive and mind-numbing task. With discipline, you’ll be able to soldier on as a bookkeeper even during challenging moments, meeting deadlines, providing accurate reports, and more. Moreover, it will help you build new habits that will prove valuable in your bookkeeping career, particularly the skills on this list.
Like discipline, commitment will help you soldier on during those moments when bookkeeping is harder than usual. And it will set you apart from other aspiring bookkeepers. That being said, two factors play a huge role in your commitment: importance and ability. That is, how important your goal is and how capable you are at achieving it. To fully commit to bookkeeping, you need to see it as important while acquiring the necessary skills.
Is Bookkeeping Hard?
Bookkeeping is not hard as long as you have the skills and resources needed to maintain accurate and up-to-date books. Take online courses and training programs and read books about bookkeeping to continually hone your skills and increase your chances of success.
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