What Does a Bookkeeper Do? A Complete Guide to Bookkeeping Services

“What exactly does a bookkeeper do?”

I get this question all the time. Business owners know they probably need help with their finances, but they’re not sure whether they need a bookkeeper, an accountant, or both—or if they can just figure it out themselves.

Let me clear up the confusion.

The Core Role of a Bookkeeper

A bookkeeper is responsible for recording and organizing your business’s financial transactions. Think of it this way: a bookkeeper keeps score of your business’s money.

Every time money moves in your business—whether it’s a sale, an expense, a loan payment, or anything else—that transaction needs to be recorded accurately. That’s the bookkeeper’s primary job.

But modern bookkeeping goes well beyond basic data entry.

What a Bookkeeper Actually Does (Day-to-Day)

Here’s a realistic look at bookkeeping responsibilities:

1. Recording Financial Transactions

The foundation of bookkeeping is capturing every financial event:

Sales and revenue: Recording income when you make sales, whether cash, credit, or invoiced
Expenses and purchases: Tracking everything you spend money on
Payroll: Recording wages, taxes, and benefits
Transfers: Tracking money moving between accounts
Loans: Recording payments and interest

Each transaction gets categorized into the right account, creating an organized record of your business’s financial activity.

2. Categorizing Transactions

Not all expenses are created equal. A bookkeeper ensures that:

Office supplies go to “Office Supplies,” not “Miscellaneous”
Contractor payments are tagged correctly (important for 1099s)
Meals and entertainment are separated appropriately
Large purchases are capitalized as assets when appropriate

Proper categorization makes your financial reports meaningful and ensures accurate tax reporting.

3. Bank Reconciliation

This is one of the most important bookkeeping tasks. Reconciliation means comparing your books to your bank statements and making sure they match.

Why does this matter?

Catches bank errors (yes, they happen)
Identifies fraud or unauthorized transactions
Finds duplicate entries or missed transactions
Proves your books are accurate

A good bookkeeper reconciles every bank and credit card account monthly.

4. Accounts Receivable Management

If you invoice customers, someone needs to track who owes you money:

Creating and sending invoices
Recording payments when they arrive
Following up on overdue accounts
Running aging reports to see who’s late
Tracking deposits and credits

Slow-paying customers hurt your cash flow. A bookkeeper keeps on top of receivables so you get paid faster.

5. Accounts Payable Management

On the flip side, you have bills to pay:

Recording incoming bills and invoices
Tracking due dates to avoid late fees
Scheduling payments based on cash flow
Taking advantage of early payment discounts
Making sure you don’t pay bills twice

Good payables management keeps vendors happy and your credit intact.

6. Payroll Support

While many businesses use payroll services, bookkeepers often:

Verify hours and pay rates
Enter payroll into accounting software
Reconcile payroll reports to bank withdrawals
Track payroll tax liabilities
Maintain employee records

Even with a payroll provider, there’s bookkeeping work to ensure everything is recorded correctly.

7. Financial Reporting

Your bookkeeper produces the reports that show you how your business is doing:

Profit and Loss Statement (P&L): Shows revenue, expenses, and profit over a period. This tells you if you’re making money.

Balance Sheet: Shows what you own (assets), what you owe (liabilities), and your equity. This is a snapshot of your business’s financial position.

Cash Flow Statement: Shows how cash moved in and out. This explains why your bank balance changed.

Custom Reports: Many bookkeepers create reports specific to your business needs—profitability by service line, expense trends, revenue by customer, etc.

8. Maintaining Organized Records

Beyond transactions, bookkeepers manage financial documentation:

Filing receipts (digitally or physically)
Organizing vendor contracts
Maintaining customer records
Keeping backup copies of financial data
Preparing files for tax time

When your accountant asks for documentation, a good bookkeeper has it ready.

What a Bookkeeper Does NOT Do

It’s equally important to understand the boundaries:

Tax Preparation and Filing

Bookkeepers maintain the records that go into tax returns, but they typically don’t prepare or file taxes. That’s an accountant’s job.

Tax Planning and Strategy

Advice on how to structure transactions to minimize taxes, when to buy equipment, whether to elect S-corp status—this is CPA territory.

Financial Audits

Formal audits require a CPA. Bookkeepers support audits by providing organized records, but they don’t conduct them.

Complex Financial Analysis

While bookkeepers produce reports, deep financial analysis, forecasting, and strategic planning often require a CFO or accountant.

Legal or Investment Advice

Bookkeepers aren’t financial advisors or attorneys. They can tell you what happened with your money, not what you should do with it.

Bookkeeper vs. Accountant: What’s the Difference?

This is one of the most common questions I hear. Here’s how to think about it:

Aspect	Bookkeeper	Accountant
Focus	Day-to-day transactions	Big picture finances
Frequency	Weekly/monthly	Quarterly/annually
Primary output	Accurate books	Tax returns, analysis
Education	Certification helpful, not required	CPA license for most services
Strategic advice	Limited	Extensive
Cost	$$	$$$

Think of it this way: A bookkeeper records what happened. An accountant interprets what it means and helps you plan.

Most small businesses need both:

A bookkeeper to maintain accurate records throughout the year
An accountant to prepare taxes and provide strategic guidance

Types of Bookkeeping Services

Not all bookkeeping looks the same. Here are the common service models:

Full-Service Bookkeeping

The bookkeeper handles everything:

All transaction recording
All reconciliations
Payroll support
A/R and A/P management
Monthly reports
Year-end prep

Best for: Business owners who want to be hands-off with their finances.

Partial Bookkeeping

You handle some tasks, the bookkeeper handles others. For example:

You enter expenses
Bookkeeper reconciles and produces reports

Best for: Owners who want to stay involved but need expert help.

Catch-Up Bookkeeping

One-time cleanup of messy or behind books. Get everything current, then either maintain yourself or switch to ongoing service.

Best for: Businesses with backlog issues.

Advisory Bookkeeping

Beyond recording transactions, the bookkeeper helps you understand your numbers:

Monthly review meetings
Cash flow analysis
Budget vs. actual comparison
Strategic recommendations

Best for: Owners who want to use financial data to grow.

Signs You Need a Bookkeeper

How do you know when it’s time to get help? Look for these signs:

1. You’re Spending Hours on Books

If bookkeeping takes more than 2-3 hours per week, your time is likely worth more elsewhere. Calculate your hourly rate for revenue-generating work, then compare it to bookkeeping costs.

2. Your Books Are Behind

If you’re more than a month behind on recording transactions, you’re already losing the benefit of current financial information.

3. Reconciliation Doesn’t Work

If your books don’t match your bank statements—or you don’t even know if they do—you need help.

4. Tax Season Is a Nightmare

If your accountant is frustrated with your records, or tax prep is delayed because of messy books, that’s a clear signal.

5. You Avoid Looking at Your Numbers

When checking your finances fills you with dread, it’s often because the numbers aren’t trustworthy or understandable. A bookkeeper can fix that.

6. You’re Making Decisions Without Data

If you’re guessing about pricing, profitability, or affordability of big purchases, you need better financial information.

7. Your Business Is Growing

More transactions, more customers, more complexity—growth requires better systems. Don’t let bookkeeping become the bottleneck.

What to Look for in a Bookkeeper

If you decide to hire a bookkeeper, here’s what matters:

Experience with Your Industry

A bookkeeper who understands your type of business can categorize transactions correctly and knows what reports you need.

Software Proficiency

Make sure they’re expert in the accounting software you use (QuickBooks, Xero, etc.) or that they can migrate you to a better system.

Communication Style

Your bookkeeper should be able to explain your numbers in plain English. If you don’t understand your reports, they’re not useful.

Reliability and Responsiveness

Bookkeeping requires consistency. You need someone who delivers on schedule and responds when you have questions.

Clean Background

Your bookkeeper will have access to sensitive financial information. Check references and consider bonding/insurance.

Certifications (Nice to Have)

Certifications like QuickBooks ProAdvisor or certified bookkeeper credentials indicate professional commitment, though they’re not strictly required.

The ROI of Professional Bookkeeping

Good bookkeeping isn’t just a cost—it’s an investment that pays returns:

Time Savings

The average small business owner spends 5+ hours per week on financial tasks. At a $100/hour opportunity cost, that’s $2,000/month. Professional bookkeeping typically costs $300-800/month.

Better Tax Outcomes

Organized books mean:

All legitimate deductions captured
No missed expenses
Faster, cheaper tax prep
Lower audit risk

Improved Cash Flow

When you know who owes you money and can follow up effectively, you get paid faster. When you time bill payments strategically, you optimize cash.

Smarter Decisions

Accurate financial data helps you:

Price services profitably
Know when you can afford to hire
Identify unprofitable customers or services
Plan for taxes and growth

Peace of Mind

There’s real value in knowing your numbers are accurate and your financial house is in order.

Questions to Ask a Potential Bookkeeper

Before hiring, ask:

What accounting software do you work with?
How do you handle bank reconciliation?
What reports will I receive, and how often?
How do you handle questions between meetings?
What’s your process for year-end and tax prep?
Do you have experience with businesses like mine?
What’s included in your monthly fee?
How do you protect client data?

The answers will tell you a lot about their professionalism and fit for your needs.

Getting Started with Bookkeeping Help

If you’re ready to get help with your bookkeeping, here’s a smart approach:

Assess your current state: Are your books current? What software do you use? What’s working and what isn’t?
Define your needs: Do you want full-service or partial help? What’s your budget?
Talk to a few providers: Get quotes, ask questions, and evaluate fit.
Start with a cleanup: If your books are behind, address that first before starting ongoing service.
Establish clear expectations: What will they do? What will you do? How often will you communicate?

A good bookkeeper becomes a trusted partner in your business’s financial health.

Wondering what professional bookkeeping could do for your business? At Profit Path Books, we provide comprehensive bookkeeping services tailored to Utah small businesses—plus we implement the Profit First system to help you actually keep more of what you earn. Learn about our services or book a free consultation to discuss your needs.