If you’re good with numbers and like the idea of working with businesses, a career as a bookkeeper may be appealing to you. What is a bookkeeper?
What a Bookkeeper Does
The Bureau of Labor Statistics (BLS) shares that bookkeepers are responsible for recording all of a business’s transactions, which involves keeping track of its debits (monies going out) and credits (monies coming in). Furthermore, these transactions are recorded in what is known as a general ledger.
Investopedia adds that the purpose of this ledger is to hold all of the information required for the preparation of a company’s financial statements, some of which include its income statement, balance sheet, and a statement of cash flows. As such, the general ledger contains separate sections for listing of the business’s assets and liabilities, as well as different areas to record its revenues, expenses, and owners’ equity.
Why Bookkeepers Are Important
There are many reasons a small or mid-size business might decide to hire a bookkeeper to record and maintain its financial records. Among them are:
- It helps the company develop a more realistic budget, both short and long-term
- Tax preparation becomes easier because all of the information is accessible and organized
- It provides real-time information about the company’s performance and financial health
- Better decision making and future planning is possible because it is based on realistic financial data
- It makes investor reporting
- IRS audits become
Bookkeepers provide companies with a number of benefits that, when combined, make it worth employing them as staff, hiring a bookkeeping company, or contracting this service out. But what does a bookkeeper actually do?
Typical Duties and Responsibilities
Though actual bookkeeping functions can vary based on the needs of the individual business, Career Builder explains that some of the typical duties and responsibilities associated with this role—in addition to maintaining the general ledger—include:
- Preparing and sending invoices
- Receiving and recording payments
- Paying expenses
- Verifying that invoices match purchase orders
- Processing payroll and employee reimbursements
- Preparing and filing payroll taxes, as well as federal, state, and local taxes
- Creating financial reports on a monthly, quarterly, and annual basis
- Verifying that all of the financial information is input accurately and that the correct spreadsheets and computer software are being used
- Resolving any discrepancies found within the company’s financial data
Career Builder goes on to say that, the smaller the business, the more functions a bookkeeper is likely to be asked to do. Additionally, while some bookkeepers are hired to work directly within the company’s four walls, others work out of their own businesses or homes, providing services as an independent contractor versus being on staff.
The Current & Future Bookkeeping Job Market
The BLS reports that there are approximately 105,480 individuals employed in either accounting, tax preparation, bookkeeping, or payroll services. This accounts for approximately 10.99 percent of all employed persons nationwide in this employment industry.
While the BLS also predicts that the jobs available in this field are anticipated to decline by four percent by the year 2028, other industry reports present more optimistic numbers.
For example, the industry and market research firm IBIS World states that payroll and bookkeeping services within the U.S. have grown by 3.9 percent annually from 2015-2020. This firm further notes that more and more businesses are outsourcing their bookkeeping needs, increasing employment in this industry nationwide.
Statista has shown a steady upward growth as well from 2011 through 2018, with accounting, tax preparation, bookkeeping, and payroll services bringing in revenues around $120.4 million in 2011 and $155.9 million seven years later. But what does the bookkeeper of the future look like?
According to Ledgers Online, it likely involves the use of more advanced software, offering clients’ advice in addition to just “crunching their numbers,” communicating via instant methods as opposed to email, and more bookkeepers offering their services as a freelancer as opposed to working for the company itself.
In the future, there may also be a need for bookkeeping of non-traditional forms of currency, such as Bitcoin and other cryptocurrencies. Thus, bookkeepers of tomorrow could benefit from learning about all different forms of financial payment, even those that extend beyond bills and coins.
Bookkeeper Salary Potential
Data collected by the BLS tells us that the median salary for a bookkeeper in the U.S. is $40,240 per year, or approximately $19.35 per hour. For comparison purposes, the median pay for all occupations combined is $38,640 annually. Therefore, generally speaking, bookkeepers often earn slightly more than the median national average.
Additionally, certain industries tend to pay bookkeepers more than others. For instance, a bookkeeper working in retail trade makes an average annual salary of $35,170 per year. Yet, someone providing bookkeeping services within professional, scientific, and technical services typically earns closer to $42,560 annually.
When considering your salary potential as a bookkeeper, it’s important to remember that many factors can affect how much you can realistically earn. For instance, if you have previous recordkeeping experience, this may enable you to command a higher rate.
Pay is also determined based on level of education, the size of the company that is hiring you, your geographic location, and whether you hold any specialized certifications.
Skills Required to Become a Successful Bookkeeper
While anyone can learn what it takes to become a bookkeeper, finding success in this field often requires the development and honing of certain skills. One of the most notable is computer skills. Bookkeepers use spreadsheets and bookkeeping software to help their company or clients maintain their records, thus knowledge of these types of programs is critical.
Good bookkeepers also do well in math. Because this entire role revolves around adding, subtracting, and averaging numbers, being proficient in this area is a must.
Another skill that is highly beneficial to bookkeepers is being detail-oriented. Financial records must be accurate, so it is up to you to ensure that all of the numbers are correct and that everything adds up. If it doesn’t, customers could be sent erroneous invoices, employees could be paid the wrong amounts, suppliers could be shorted for goods purchased, and the government could think they’re being cheated out of taxes. None of these are good scenarios and can ultimately hurt a company’s good name.
Last, and certainly not least, successful bookkeepers have integrity. Being privy to a company’s financial status requires a certain level of discretion. This information is highly confidential, so the company you provide bookkeeping services to needs assurance that you’re not going to divulge their private information to others.
Educational Requirements & Training
What type of education and training is required to become a bookkeeper? Though you may be able to find a job in this field with only a high school diploma, the BLS indicates that most employers prefer their bookkeepers have some level of college. Specifically, these college classes should also be within the accounting realm.
Once hired, you can also expect a fair amount of on the job training according to the BLS, a phase which usually lasts around six months. This will help you learn the bookkeeping systems utilized by that particular company or employer, as well as giving you the opportunity to hone your knowledge of any computer software they may use.
Bookkeeping Advancement Opportunities
Some people enter their bookkeeping careers with the intention of always remaining a bookkeeper. Others use it as a stepping stone to more advanced accounting opportunities.
The BLS reports that, though more education and experience would be required, individuals working as bookkeepers can also progress to become an accountant or an auditor.
Accountants perform a wide range of tasks surrounding financial recording, which includes not only keeping of the records but also advising the company based on those what those records say. Auditors, on the other hand, are tasked with double checking a company’s records to ensure that they’re accurate.
Both professions are important to businesses and both can be great careers should you decide to go further with your education and expand your service offerings.
Start Earning Your 2-Year Degree Today
If you like working with numbers and helping businesses, Ultimate Medical Academy offers a Healthcare Accounting Associate Degree for individuals interested in working within this field.
This 2-year program is designed to provide students the knowledge and skillset necessary for successful bookkeeping practices in a healthcare setting.
Contact us today to learn more!
Disclaimer: While UMA's Healthcare Accounting program does not prepare students to earn the certified bookkeeper designtation, we do prepare our students to work in the field as a healthcare accounting clerk or bookkeeper. We are committed to providing our readers all of the information necessary to make an informed decision regarding their future in healthcare accounting. To learn more about how we can help you or the programs we have to offer, contact us today!