Skills You Need To Be A Successful Bookkeeper

Being a successful bookkeeper requires more than simply balancing accounts and learning how to use accounting software - it also involves becoming familiar with multiple areas of finance and having excellent organisational skills. If you're looking to take your career in this field to the next level, then read on to uncover the key skills necessary for becoming an outstanding bookkeeper. 

We'll discuss everything from staying up-to-date on changing tax laws, managing accounting records correctly, and understanding financial analytics so that you can make informed financial decisions. With these potential opportunities offered by being a successful bookkeeper, taking the time to hone your craft today will pay off in future returns!

Let's get started!

Bookkeeping Definition

Bookkeeping is the process of recording and maintaining control of a company's financial activities. Bookkeepers frequently compile and report on summaries of these activities, which illustrate how well the company is doing. Invoicing, paying bills, filing tax returns, tracking key performance metrics, and offering strategic guidance are all examples of the broader responsibilities that may fall under their purview.

History Of Bookkeeping

As early as 7000 BC, cash keeping records were practised in Mesopotamia, Babylon, Sumer, and Assyria, according to artefacts discovered in these regions. In addition, it has recently come to light that manuscripts have been found which indicate the keeping of accounts from agricultural production in both ancient Greece and the Roman Empire.

However, the beginnings of what we now know as modern bookkeeping may be traced back to the 15th century. It is only fitting that the person or people who first recorded the double-entry system have been given credit twice in the annals of history. Some people give credit to Benedetto Cotrugli and his book "Of Commerce and the Perfect Merchant," which was published in 1458. The majority of people, however, consider Luca Pacioli to be the founder of bookkeeping due to the publication of his work Review of Arithmetic, Geometry, Ratio and Proportion in 1494.

Pacioli was an Italian mathematician and a Franciscan monk. He is credited for writing the very first popular explanation of the double-entry system and the use of different bookkeeping instruments like ledgers and notebooks. Pacioli was born in 1254 and died in 1337. His book was so influential that it was used as a textbook for accounting and bookkeeping courses for the following few hundred years. In the 1800s, the United Kingdom and the United States both acknowledged bookkeeping as a legitimate job.

An Explanation Of The Fundamentals Of Bookkeeping

The following is a list of fundamental bookkeeping terms and topics that you ought to be familiar with. They play a pivotal role in the strategies and procedures that a bookkeeper implements in order to produce precise accounts:

• The location in an organisation's information system where transactions are documented and categorised is called a ledger.

• Accounts are the broad classifications into which all of a company's operations are placed.

• Assets include things that the company has purchased and fully or partially owns, as well as inventory and money that is owed to the company in the form of accounts receivable.

• Liabilities are amounts that the company is responsible for paying, such as past-due invoices, taxes, wages, or loans.

• Equity can be defined as money that is contributed or withdrawn by owners or shareholders.

• Earnings that are derived from the operation of a firm, including but not limited to sales, interest, and dividends.

• Costs are defined as the money that is paid out to maintain the firm operating.

• Two of the most important financial statements are the balance sheet and the income statement. Financial statements are documents that illustrate the financial transactions and success of an organisation.

• A balance sheet is a financial statement that lists the assets and liabilities of an organisation, as well as the value of the assets and liabilities.

• The income statement is a financial report that summarises a company's financial activity over a certain time period by adding up its income and listing all of its expenditures.

• A chart of accounts is a list of each of the accounts that are utilised in the process of recording financial transactions in your ledger. They are also known as general ledger codes in some circles.

• Any recording that is created in the books of accounts is referred to as a "journal entry."

The Key Distinctions Between Bookkeeping And Accounting

Bookkeeping is typically understood to relate to the process of maintaining the financial documents of a company on a day-to-day basis. Bookkeepers were once responsible just for compiling and checking the accuracy of the data used in the preparation of accounts. On the other hand, over the course of history, their function has grown, and the following chapter will discuss how this occurred.

Accounting is the process of analysing, reporting, and summarising the information that is compiled by bookkeepers. For example, the financial health of a company and the amount of tax liability can both be deduced from the information contained in the company's accounting reports.

A comprehensive education and training in tax and other regulations that firms have to cope with, as well as finance and business administration, are prerequisites for obtaining a certificate in accounting. Although it's possible that some bookkeepers have acquired skills similar to those listed above, having that degree of education is not necessary to be termed a bookkeeper.

Skills And Qualities Bookkeepers Need

1. Happy working with numbers

You got it right on the mark. Bookkeepers that function professionally are at ease when dealing with numerical data.

Now, we are not suggesting that you must possess an exceptional aptitude for mathematics. However, you will need to have a basic understanding of addition, multiplication, and division in order to equip yourself for a job in bookkeeping.

Do not let the fact that mathematics is not your strong suit deter you from trying. On the contrary, you will be able to finish mundane activities far more quickly than ever before with the assistance of tools such as calculators, spreadsheets, and programs.

2. Organisation and time management

When working as a bookkeeper, no two days are ever identical. Every week will be filled with a variety of jobs that require immediate attention, ranging from pre-planned assignments to applications received at the last minute.

Organisational and time management skills are absolutely necessary to maintain one's trajectory. However, when it comes to managing your work, you have access to a wide variety of strategies, tools, and methods.

For instance, we strongly suggest that you put your most significant responsibilities first in your list of duties. By using this method, you will have a crystal clear understanding of any future due dates. You could even push things another step forward by adding these chores to your schedule in order to guarantee that you will have sufficient time to concentrate on them. This will be an additional step.

3. Data entry and technology

You are relieved of the responsibility of keeping a handwritten record of all financial operations now that you have access to specialised accounting software.

Data entry is still an essential skill for bookkeepers, even if businesses are increasingly moving away from paper documents and towards digital ones. Bookkeepers now have access to widely used software such as Sage, QuickBooks, and Xero, which makes it quicker and simpler for them to keep correct records.

In addition, it is useful to have a thorough knowledge of software such as Microsoft Excel, Microsoft Word, Microsoft PowerPoint, and other basic programmes.

4. Attention to detail

Data entry and attention to detail are frequently two sides of the same coin. Therefore, it should be clear that paying attention to detail is included in our list.

Invoices, bills, and reports have to be processed by bookkeepers within the allotted amount of time. You are going to need a variety of financial documentation in order to finish these jobs. You are the individual who is accountable for making sure that these records are correct and free of any mistakes.

5. Communication

Bookkeeping is like most other jobs in that communication is an essential component of the function, and bookkeeping is no exception.

You will be required to speak on a daily basis, not only with members of your team but also with coworkers from other sectors. The scale of your company will determine the mode of communication that is most appropriate for it. You will need to deliver data in a manner that is understandable and consistent, regardless of whether you are communicating by email, text messenger, or face-to-face meetings.

6. Bookkeeping knowledge and qualifications

Obtaining a professional certification is the most effective approach to launching a successful career in bookkeeping. You will acquire both theoretical knowledge and hands-on experience, both of which will contribute to your preparation for a great career as a bookkeeper.

7. Integrity and transparency

As a bookkeeper, you possess access to private financial information; therefore, it is imperative that you conduct yourself with the utmost honesty and transparency at all times. Failing to do so could result in serious penalties.

In addition to recording incoming and outgoing payments, a bookkeeper is responsible for a wide range of other tasks as well. For example, your organisation's financial policies need to be protected at all costs, and you need to make sure that any and all business dealings correspond to the rules that have been established.

8. Problem solving and analytical

Bookkeepers that are successful are able to spot mistakes and make the necessary corrections.

It is your responsibility to locate the source of the issue as fast as possible, whether it be a difference in a financial statement or an invoice that you are unable to identify. You're going to need to put your analytical talents to use if you want to discover a solution that won't put either you or your employer in jeopardy.

9. Business skills and big-picture thinking

Your work as a bookkeeper will undoubtedly advance more quickly if you have a strong understanding of commercial issues.

It is essential that you always maintain one view of the future and have a solid understanding of how each move you make may have an effect on the company. Then, when you have the ability to think about the bigger picture, you can examine all of your potential courses of action before settling on the most effective one.

10. Customer service and relationships

Bookkeepers interact with a diverse group of stakeholders, ranging from individual clients to top management.

It is essential that you have the ability to navigate these intricate interactions. Your ability to communicate effectively, provide answers in a timely manner, and provide exceptional customer service will assist you in exceeding and surpassing objectives.

11. Flexible yet committed

A career in bookkeeping can take you in many different directions, and it will always keep you constantly on your toes. It's possible that your responsibilities will evolve over time better to meet the requirements of the company as a whole.

Bookkeepers who are prepared for change and willing to take on new duties are an incredible asset to an organisation. You will demonstrate that you are dedicated to working creatively as and when it is needed of you if you maintain this optimistic outlook.

12. Bonus skills for your CV

Following an exhaustive search of the internet for bookkeeping job descriptions, we discovered some valuable supplementary talents that should be included on your resume:

• A working knowledge of the most effective methods in accounting
• Competence in leadership and management is required.
• Capability of acting on one's own initiative
• Ability to work well both independently and collaboratively

How To Take Care Of Your Company's Bookkeeping If You Own A Small Business

In order to begin with the bookkeeping for your company, there are several things that you have to complete first. These steps are broken down into further detail below.

1. Acquire an understanding of and then set up your chart of accounts

It is impossible to keep accurate records of business transactions without having a comprehensive chart of accounts, which serves as the organisational skeleton of your company. Of course, you may absolutely purchase a ledger book at a store that specialises in office supplies; however, it is important to bear in mind that it will be much simpler for you to set up your chart of accounts if you use an accounting programme like Wave.

You won't have to start from scratch if you use the majority of the software that is geared towards single owners and smaller companies because it will already come with a preset chart of accounts.

Please take into account that in the vast majority of circumstances, you will be able to modify the chart of accounts so that it better fits your company's needs. When you first start entering monetary operations, it will be much simpler for you if you have a working knowledge of the accounts that are included in your chart of accounts. It is a smart option to familiarise yourself with these accounts.

2. Start keeping track of your financial dealings 

Every single transaction that you carry out is required to be documented, either in the ledger book that you keep or in the accounting software programme that you use.

This procedure might be as straightforward as putting together an invoice for a client or arranging for your electricity bill to be paid automatically. When you use software to create an invoice, each of the debits and credits that are required to do so are handled automatically behind the scenes. This is one of the many advantages of utilising the software.

You will be required to note the data in a journal entry, for instance, if you generate and submit an invoice to John Doe in the amount of $150 for consultation, you'll have to keep track of it.

Following John Doe's payment of the invoice and the subsequent posting of the payment, the appropriate entry will be as shown below. Because the invoice has been received, you will see that the A/R account, which was charged in the initial entry, will be credited (reduced) as a result. This is something that you should keep in mind.

3. Reconcile your bank accounts

In the past, you had to wait until you received your regular bank statement before you could reconcile the operations on the report with those that were logged in your ledger or accounting systems. The objective of carrying out a monthly reconciliation is to determine whether checks have not yet been cashed, to publish any banking operations that have taken place, and to add any additional expenses, like account maintenance costs.

Reconciling your books will provide you with a precise picture of your cash balance, which is useful for any firm but especially for smaller companies with restricted cash flow.

When you use an accounting system, one of the benefits is that a significant portion of the process of reconciling your accounts can be finished by just connecting your bank accounts to the programme that you choose to use. This enables quick reconciliation on a daily or weekly basis, which significantly simplifies the procedure at the end of each month.

If you decide not to connect your program with your bank, you will be required to personally reconcile your accounts in order to get everything in order. Therefore, it is essential to carry out the procedure on a consistent basis, regardless of the method you choose to use.

4. Initiate financial statements and close the books for the month

You will need to end the month and generate financial information once all of your bank accounts have been balanced, in addition to making any necessary revisions in the recording tool that you have selected.

If you utilise a manual ledger, you will be required to shut each individual account and merge them into the appropriate account types. This is a time-consuming operation that clearly argues in favour of using accounting software, which will automatically perform this procedure for you.

You are given the option to select a cutoff date for the purpose of entering transfers and generating financial statements that will properly reflect the balances for that particular month in numerous of the more recent products, which do not have a predetermined procedure for having to close out the previous month.

The preparation of financial statements is an essential part of the procedure of keeping correct books. These statements give you a complete picture of the state of your company's finances and may be discussed with your accountant or certified public accountant (CPA).

The following are the three fundamental financial statements:

• Balance sheet: A balance sheet is a financial statement that lists your company's assets, liabilities, and equity as of a specific date.

• Statement of income; Statements of income reflect a company's net income for a given time period, which can be especially beneficial to smaller enterprises.

• Statement of cash flow: A cash-flow statement is a financial document that displays cash receipts and payments made over a specified time period.

Get Your Career In Bookkeeping Off The Ground

Are you prepared to get your bookkeeping career off the ground now that you've gotten a sneak peek at the qualifications that employers are looking for when recruiting bookkeepers?