What does a bookkeeper do?

A bookkeeper keeps a business's financial records complete and current. business.gov.au says a bookkeeper keeps track of your day-to-day financial transactions, either in account books or in accounting software. Its glossary defines bookkeeping itself as the process of recording a business's financial transactions.

Every sale, purchase, payment and receipt is a transaction. The bookkeeper's job is to make sure each one is recorded once, in the right account, with the document that supports it, so the books show what has actually happened in the business.

Most of a bookkeeper's time goes into the routine work that keeps the books current. Depending on the business, that usually includes:

• Entering sales and the money received from customers.
• Entering bills and purchases, including small cash purchases.
• Keeping the cash book, which business.gov.au describes as a daily record of the cash, credit and cheque transactions a business receives and pays out.
• Sorting each transaction into the right account, so the reports show income and costs under the right headings.
• Filing the invoice, receipt or statement behind each entry, so every figure can be traced back to where it came from.

business.gov.au lists the records a business needs to keep, among them records of all income and sales, all business expenses including cash purchases, and bank records. Getting those into the books as they happen is the core of the job.

business.gov.au lists several tasks a bookkeeper may also take on. Each one grows out of the daily records.

• Looking after your banking. This often includes a bank reconciliation, which business.gov.au describes as a cross-check that the amounts in your cash book match your bank statements.
• Preparing invoices, the documents you give customers to ask for payment for goods or services.
• Chasing overdue payments from debtors, the people and businesses that owe you money.
• Monitoring your cash flow, the money flowing in and out of the business.
• Preparing some financial statements. business.gov.au's glossary says financial statements can include a profit and loss statement, a balance sheet and a cash flow statement.

Not every bookkeeper does all of these, and not every business needs them all. A business with only a few transactions a month may need just the recording and the bank reconciliation, while one that sells on credit may also want help with invoices and unpaid accounts.

business.gov.au describes your accountant's role as analysing your business finances, preparing financial statements and helping you make financial decisions. That includes advice on starting or expanding a business, buying or leasing vehicles, equipment and premises, and managing your financial records.

The two roles overlap, since both may prepare financial statements, but the emphasis differs. A bookkeeper keeps the records accurate and up to date. Your accountant uses those records to analyse how the business is going and to advise on decisions. Well-kept books give your accountant complete, reconciled figures to start from.

Because the role varies from business to business, it helps to agree the details at the start:

• Which tasks are included, such as recording, bank reconciliations, invoicing or following up unpaid accounts.
• How often the books will be brought up to date, such as weekly or monthly.
• Which reports you will receive, and when.
• How you will pass on documents and answer questions about transactions.

Handing the books to someone else does not hand over responsibility for them. The ATO says that, as the business owner, you are accountable for understanding your record-keeping obligations, and you keep primary accountability even if you give the task to another person, including an employee.

In practice, that means staying involved in a few things:

• Passing on the documents the bookkeeper needs, such as receipts, supplier bills and sales records, as they come in.
• Explaining transactions only you can explain, such as what a particular payment was for.
• Reading the reports you receive and asking about anything that looks wrong.
• Keeping access to your own records. business.gov.au says digital records must be on a computer or device that you have access to, including all passwords, that is backed up, and where you control the information.

business.gov.au also says records must be in English or easy to translate into English, and stored in a way that prevents them being changed or damaged. Those rules apply whoever keeps the books.

business.gov.au says good records help you keep track of your business's health so you can make good decisions, show your financial position to banks or other lenders, and manage your cash flow.

Each of those depends on the books being current. Figures that are months behind can't show a cash shortfall in time to act on it, or give a lender a recent picture of the business. Whether you keep the books yourself or work with a bookkeeper, the aim is the same: records that are complete, accurate and up to date.