What Does a Bookkeeper Do for a Small Business?

what does a bookkeeper do for a small business

Bookkeepers, contrary to popular belief, are in fact not accountants at all and instead act as the micromanagement counterpart to accountants, who utilize this information in order to provide financial statements, disclosures and financial management planning to the executives of a company or to external entities.

In terms of relatively small businesses, bookkeepers essentially act as a stopgap for the day to day information these businesses often accrue, usually concerning small transactions such as single purchase cash flows or receipts for liability payments.

In small businesses, bookkeepers usually record the smaller transactions that make up the informational background behind larger scale financial information statements, such as revenue statements and liability payment assessments. 

What Exactly Does a Bookkeeper Do?


Most often in small businesses, bookkeepers will record day to day transactions and cash flows to act as sources provided to the proprietor or internal accountant of the small business. This accountant or proprietor will then compile this information, essentially forming the many smaller informational statements into a single data sheet that may be acted upon depending on the information provided therein.

In the ordinary operation of businesses, documents or receipts are produced with every transaction or service that is provided, most often resulting in a movement of cash either into or out of the businesses financial accounts. With the advent of modern banking, this also includes the writing or cashing of bank checks or deposit slips.

Bookkeepers also keep close watch of credit utilized in these ordinary business transactions, making careful notes as to which entity owes how much to the company and vice versa, recording the liabilities and debts of the small business to outside entities.

After a certain period has passed, the bookkeeper will calculate the sum total of these transaction recordings, providing minute financial statements with a long trail of evidence backing them up.

What is the Difference Between a Bookkeeper and an Accountant?

While many members of the population are unaware of the difference between a bookkeeper and accountant owing to the similarity in their roles, there are several distinct contrasts between the two professions, an important divergence that requires bookkeepers and accountants to work together in order to provide a cohesive financial service.


Primarily, in the context of small businesses, accountants act as the macro-financial authority on the general function of said small business. Producing documents such as balance statements, gross income analysis and potential cash flow liability reduction, accountants utilize information recorded and compiled by their bookkeeper counterpart in order to provide detailed and digestible information to the proprietors of a small business.

This is most evident wherein an accountant will present a quarterly or annual financial report to the owner of a small business, detailing the particular cash flows of their business and the subsequent underperforming services or products therein.


Bookkeepers, when working beneath a small business, essentially act as a register system by recording all incoming and outgoing financial transactions related to said business. Often done with the aid of specialized computer software, bookkeepers often request an electronic or hard copy of all financial receipts, payroll stubs, tax disbursements and depreciating assets involved within a certain period of time.

With the aid of single or double entry bookkeeping, bookkeepers often check and recheck that the sum totals of cash flow in the business equate to the sum total of all transactions conducted. This is aided by electronic systems and mathematical rubrics that act as standalone error-checking methods independent of human error.

Once the information has been checked for errors and tallied appropriately, it is then inserted into a master accounting ledger, which essentially acts as financial history of the business and may be used as a reference by accountants in their disclosures and statements. 

What Skills do Bookkeepers use in Small Businesses?

Considering the fact that bookkeeping can be a rather focus intensive job depending on exactly how busy a small business is, bookkeepers often require several skills in order to excel at their job and prevent financial discrepancies from occurring, of which may be disastrous for their employment and their employer themselves.

The primary skill bookkeepers utilize is a key attention to detail, of which they must utilize so as to accurately record and calculate every individual transaction occurring within the small business on a day to day basis. This is somewhat aided by the use of computer software and cashier register machines, but it is still directly under the purview of the bookkeeper and as such often requires double checking for errors and malfunctions.

Apart from an attention to detail, bookkeepers must also possess rudimentary mathematical skills, particularly that of basic arithmetic owing to the nature of their job which often concerns decimal digits being added or subtracted from one another. 

Particularly when totaling revenue and liabilities in the master accounting ledger at the end of a financial period, bookkeepers must double check their calculations alongside the aid of a computer software.

What is a Bookkeeper Ledger?

bookkeeper ledger

A bookkeeper’s ledger, otherwise called an accounting ledger, is a record of accounts utilized in all sorts of businesses from mega-conglomerates to small businesses in order to provide a detailed historical record of the businesses’ financial transactions.

The bookkeeper’s ledger often contains information on the day to day transactions of the business either in chronological or value order, depending on the particular system utilized by the bookkeeper. The types of transactions recorded in this ledger can include revenue statements, expense reports, cash inflow or egress as well as accounts payable and receivable.

While ledgers most often came in hard-copy form for much of history, recent advancements in technology have allowed bookkeepers to instead utilize computerized software that aids and facilitates this recordkeeping procedure.

Ledgers are split into multiple differing types depending on the particular information contained inside, with such kinds of ledgers like the general ledger, of which details all the minute data collected by subledgers or other bookkeeper’s statement of accounts, essentially acting as a master accounting ledger.

Control ledgers as well are a distinct type of ledger used in managing expense accounts focused on subsidiary ledger inputs, of which is primarily used by franchise businesses and is otherwise not as commonly seen in most types of small businesses.

What is a Bookkeeper Daybook?

A daybook is distinct from a bookkeeper’s ledger by the fact that it is often a highly detailed and descriptive account of daily financial transactions, most often recorded in chronological order down to the minute. Also referred to as a record of original entry, daybooks often require a strict system of informational input so as to allow easy copying and transferring to a bookkeeper’s ledger.

Daybooks, like ledgers, are split into different types that are primarily differentiated by the sort of information that is entered into them, such as sales daybooks which are primarily used for recording the influx of cash or bank checks.

Sales credit daybooks, much like sales daybooks, record the daily influx of value, and are only distinct from said sales daybooks by the fact that sales credit daybooks concern credit taken from the purchaser, either through notes or with a financial intermediary such as a credit firm or bank.

Purchases and purchase debit daybooks are the counterpart to the two above types of daybooks wherein they record the egress of value and money from the entity, recording losses of cash when purchases are made or operating costs are fulfilled.

Certain bookkeepers even utilize a type of daybook referred to as a general journal daybook, wherein it acts as a semi-informal journal detailing the daily business transactions and events that may be of significance to the proprietor of the business or their accounting department.

How Does a Bookkeeper Help Small Businesses Profit?

Bookkeepers may help small businesses maintain a healthy profit margin through a multitude of ways concerning the cash flow involved in daily business transactions, and, in certain instances, even act as intermediaries between clients and the business itself.

Primarily, the bookkeeper can track costly financial errors that may be unreported and subsequently go unnoticed by their accountant counterparts. This is most often seen during the end of a fiscal quarter wherein the bookkeeper will perform a manual or software-assisted tally of every transaction that has occurred during said fiscal quarter. 

In the event that the calculation for the sum total of these transactions shows a financial discrepancy, it is possible for the bookkeeper to aid in tracing the source of this discrepancy, therefore eliminating it and aiding in the profitability of the company via a more efficient financial streamline.

By extension of this, a bookkeeper may reduce overhead costs or operating costs of a small business by micromanaging the budget and cashflow on a day to day basis, eliminating waste and maximizing gross revenue with each transaction.

As a tertiary function for a bookkeeper, the unique position of this particular profession places bookkeepers in the perfect role of acting as an invoice communicator, sending out invoice statements and accounts payable slips to clients that have either defaulted on their credit or otherwise have not paid upfront.

While this is technically not something bookkeepers have been trained for, it is entirely possible for bookkeepers to work with others in the financial sector or the accounting department of their own business in order to facilitate the sending and function of these invoices.

Can Bookkeepers Do a Businesses’ Taxes?

While this concept primarily applies to companies within or based in the United States where taxes must be reported and directly paid by the company itself, small businesses may find that they require a financial expert to both assist and advise on the concept of taxes.

Unfortunately, with how convoluted and entrenched tax law may be, the majority of bookkeepers may find themselves out of their own depth and as such cannot provide quality advice on such matters.

However, bookkeepers are still perfectly capable of filing certain forms that do not require particular knowledge or familiarity to fulfill. Forms W-2 or 1099 of the United States Internal Revenue Service, for example, may be filled by bookkeepers with no problems at all. 

By extension of this, bookkeepers may also do sales tax returns, though familiarity with this particular system may be required if no formal training is provided by the business.

However, in the event that the proprietor is unable or unwilling to file the entirety of their taxes and disclosures to the federal government by themselves, it is best to hire a professional CPA or subcontracting agent specializing in the intricacies and particulars of tax law so as to prevent any discrepancies and fines from being applied to the business.

As always, of course, these other financial professions would be unable to perform their specialized duties without the general background information transcribed and provided to them by a bookkeeper.

Can Bookkeepers be Subcontracted for Small Businesses?

Generally, bookkeepers are often kept continuously employed in a business due to the nature of their day to day financial operations, requiring them to always be present or at the least kept apprised of the financial transactions occurring within the business.

However, certain types of business sectors such as seasonal companies or businesses based overseas may instead choose to hire independent contractor bookkeepers who may only work for a short time with their own internal accounting department in order to accomplish a designated task that only a bookkeeper or accountant would be capable of.

These instances are quite uncommon, though, and are often the result of court litigation or the dissolution of a company, and as such the majority of bookkeepers work as salaried individuals instead of as freelancers or independent contractors.

Works Cited

1. Chisholm, Hugh, ed. (1911). “Book-Keeping” . Encyclopædia Britannica. 4 (11th ed.). Cambridge University Press.

2. Weygandt; Kieso; Kimmel (2003). Financial Accounting. Susan Elbe. .ISBN 0-471-07241-9.