What Is Bookkeeping And How To Become A Professional Bookkeeper

What Is Bookkeeping And How To Become A Professional Bookkeeper

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Bookkeeping is the role of ensuring that company’s financial accounts are accurate and can be reviewed at any time. Mundane as the front-office staff’s job may seem, they are the engines that make the business run smoothly. The business may have a huge number of transactions in a day, not even to mention in a week, month, fiscal quarter, or a year.

If you are someone who is detail-oriented in work, you like to work with numbers, then you can think of a career as a bookkeeper.

In this article, you’ll gain more insight into the role of a bookkeeper, why this role is so crucial to a business, and how much salary one can expect, on average. Besides that, you’ll discover how to become one and will be provided with referrals to low-cost courses in which you can pick up skills that are required for your workplace.

What is bookkeeping?

Bookkeeping is the activity of maintaining a business’s financial records. Businesses often hire financial services to handle the convenient recording processes when income comes into and goes out of the business, for instance, when customers make payments or vendors are paid. Critical information management was previously the responsibility for bookkeeping, yet most of it is now done electronically on the software.

It is a broad and useful skill that both large organizations and small businesses use, and bookkeepers are needed in almost everything as it is common in every field of business.

Types of bookkeeping

The actual bookkeeping procedures include more than just the one that the bookkeeper performs, thus, there seem to be many more types of bookkeeping. Single-entry bookkeeping and double-entry bookkeeping are the two most common.

Single-entry bookkeeping:

In single-entry bookkeeping each financial transaction is entered only once. The typical place to record such transactions would be a simple ledger or spreadsheet. The major aim of this accounting system is to monitor the cash flow, making it perfectly fit for small business owners or individuals who have simple financial transactions.

Here’s how it works:

Every deal, regardless of whether it was a revenue (income) or an expense.

Cheques, cash outflow, and bank deposits are illustrations of the transactions which are written down in single-entry bookkeeping.

The booklet usually has the columns for date, description of the transaction and amount.

Single-entry bookkeeping is the easiest to get along with and understand, that is why it is good for small businesses that do not require many accounting operations. But this is because it does not comprehensively explain the financial situation of a business, especially large or complex businesses.

Double-entry bookkeeping:

In contrast, the double-entry bookkeeping registers each financial transaction twice, where the first operation is a debit and the second is a credit. This system follows the fundamental accounting equation: Assets = Liabilities + Shareholder’s Equity.

Here’s how it works:

Every operations will be recorded as at least two accounts will be affected by one account is debited whilst the other is credited.

Debits and credits always be reciprocal, this way keeping the accounting equation in a balance.

Double-entry bookkeeping is beneficial in the sense that it ensures a more precise and detailed statement of the company’s financial position, as it not only records cash transactions but also accounts payable, accounts receivable, and inventory.

Double-entry bookkeeping is the fundamental notion of accrual accounting that records revenue and expenditure at the point of incurrence, disregarding when cash is actually moved. This type of accounting system is more reliable because it gives the most exacting performance of a firm’s financials for a specific period.

Difference between a Bookkeeper And an Accountant

As a matter of fact, either the accountants or the bookkeepers are responsible for keeping the records of the financial information, and sometimes these two roles are mistakenly used each other’s name. Literally, the bookkeepers would be in charge of the administrative function of the company like payroll and recording financial transactions. However, accountants give a broader picture of how healthy the finances of a business actually are.

An accountant may perhaps be involved in bookkeeping related tasks, it is usually the case that their role would encompass more responsibilities. For example, accountants may undertake the analysis that is based on the data put together by bookkeepers in order to find out about the company’s financial conditions. They may also project, conduct audits, prepare tax returns, and offer insights related to financial strategic planning as well. It is possible to develop into an accountant by with a deeper training and education which is a great career development in bookkeeping.

What is the main job of a bookkeeper?

A bookkeeper’s responsibilities can include anything from supporting the owners at the beginning to regular accounting duties, as some businesses’ requirements might be different. You might be employed by a huge corporation, or a small-sized business or earn as a freelancer. The bookkeeping tasks may vary depending on the type of business as the performance can be different. Whether employed by a large corporation, a small business, or working independently as a freelancer, the role of the bookkeeper is as follows: 

  • Recording transactions using accounting software, spreadsheets, and databases.
  • Collecting and organizing financial records, including cash flow statements, bank documents, and profit and loss statements.
  • Generating invoices and managing payments from customers.
  • Tracking debits and credits across various accounts.
  • Reconciling financial statements to ensure accuracy.
  • Creating balance sheets and income statements to provide an overview of the company’s financial health.
  • Reviewing reports for precision and consistency.
  • Managing payroll processes, including calculating wages and processing payments.
  • Assisting in filing business tax returns to ensure compliance with regulatory requirements.

Bookkeeper salary

Bookkeepers usually on average get a salary of. As reported by the US Bureau of Labor Statistics (BLS), the median wage for bookkeepers in the country averaged $45,860 per annum in 2021. Whether you need to work full time or part time, whether you want to work in an office or remotely from home, and depending on your circumstances, you will be able to choose the work arrangements you prefer.

The salary of bookkeepers in Hong Kong is dependent on several factors like experience, course record, and the nature of the firm or the industry where they are employed. But nevertheless, the fact that the median salary for bookkeepers in Hong Kong varies between HK$120,000 and HK$300,000 per annum is known from the available data. This range may be different because of how the market works and economic conditions. In the same way, the “bookkeeper” profession in Hong Kong has the freedom to opt for full-time or part-time positions, and also has the choice to work at an office or to work from home depending on the guidelines of the employer and the nature of the job.

How to become a bookkeeper

If you value organization and you are good with numbers, then a career as a bookkeeper would be an ideal choice for you. Below, we will cover the skills you will need to be ready and competitive.

1. Take a bookkeeping course

An understanding of bookkeeping basics that you can find through a course can help you with the preparation of financial reports, organization of data by using convenient tools like MS Excel, or knowing how to balance the books.

2. Get a professional certification in bookkeeping 

Certifications are not a prerequisite to the endeavor for bookkeepers nevertheless they might serve as a sign to employers that you have the training and the related knowledge to be able to meet the standard in the field. By the time you have accumulated a few years of experience, you can be CBP (Certified Bookkeeper) by taking a series of courses once you pass them successfully from the American Institute of Professional Bookkeepers.

3. Develop a good bookkeeping skill.

As you take courses and pursue a certification in bookkeeping, be sure to acquire skills that are essential for your bookkeeping career. Be sure to acquire skills that are essential for your bookkeeping career, as explored below:

  • Debits and credits
  • Issuing invoices
  • Managing billing processes
  • Maintaining vendor relationships
  • Handling accounts payable
  • Managing accounts receivable
  • Performing data entry tasks
  • Utilizing spreadsheets
  • Processing payroll
  • Preparing financial statements
  • Conducting bank reconciliation
  • Using accounting software

4. It’s worth considering pursuing a degree.

Although there are a lot of bookkeeping positions that don’t demand a two-year or four-year degree, some businesses may not employ those who do not have those qualifications.

Getting an associate or bachelor degree in bookkeeping or other disciplines such as finance, accounting, and business may apprise you of the bigger picture which in turn may lead to higher earnings and a better chance of finding a job. Besides that, a degree can also give you an edge if you wish to do a transformation from a bookkeeper to an accountant or any other business-related job.

Get started in bookkeeping

A bookkeeper is a person who plays an important role in small and large businesses that want to organize their finance accounts. In case you thinking of bookkeeping as a career, you should probably try to spend money effective course that covers bookkeeping and accounting fundamentals, which include different types of assets, liability, equity, and financial statement analysis and has practical case study exercises to help you prepare for real-world situations. A professional certificate will be given at the end of the course as proof of your ability and to strengthen your resume for possible workplaces.

How FastLane Group Can Help

FastLane offers professional accounting and bookkeeping services. By outsourcing your accounting needs to us, you can redirect your focus towards business growth. Our experienced team ensures accuracy and efficiency in financial management, allowing you to make informed decisions and drive your business forward. Contact Fastlane Group for reliable and expert accounting support.