A State By State Accounting Guide

Bookkeeping Jobs

Bookkeeping is the profession from which the term “keeping the books” derived. Bookkeepers manage the finances of small businesses and are often responsible for billing and invoicing, as well as tracking deposits and expenditures. They must be sophisticated users of bookkeeping and accounting software such as QuickBooks, and must also understand the dynamics of cash flow within the businesses they serve.

Bookkeepers have a unique understanding of how the day-to-day operations of a business effect its finances, so a bookkeeper who is attentive and can anticipate the impact of daily operations on cash flow and the management of expenses, helps build a healthy business.

Bookkeeping also involves organizing and reporting a company’s financial information in such a way that the business can make informed decisions about how to use its capital. A skilled bookkeeper can present data clearly and can also assist with analysis.

The finances of most small businesses can be looked at as being comprised of three main components: accounts payable, accounts receivable and payroll. Depending on the size of the business they work for, bookkeepers may be responsible for some or all of these components by performing the following tasks:

  • Paying expenditures
  • Billing services
  • Recording income and deposits
  • Balancing accounts
  • Reconciling statements
  • Managing past-due accounts
  • Preparing financial statements
  • Managing payroll
  • Withholding and filing taxes

Scope of Practice

A bookkeeper’s job description often depends on the size of the business they work for. Very small businesses may need a bookkeeper only a few hours a month to manage bank statements, pay expenditures and reconcile income and deposits, and may not staff a bookkeeper full time. Larger businesses may need debit and credit balancing completed on a daily or weekly basis and therefore need the support of a full time bookkeeper.

When an organization reaches greater levels of financial complexity, accounting is often broken into subtasks and assigned to accounting clerks. Accounting clerks are financial professionals who manage specialized accounting tasks within an organization, while bookkeepers are responsible for general oversight of financial data from multiple sources. Accounting clerks are generally assigned accounts payable, accounts receivable or payroll functions, and in larger companies are often overseen by an accountant who is more responsible for strategic planning.

A bookkeeper not only records the numbers but can also interpret them. Managers who are responsible for business strategy or development do not always have the kind of understanding of ledgers and bank statements that bookkeepers do. Bookkeeping is neither simple bill paying nor strategic financial planning. Effective bookkeeping includes being able to analyze the movement of funds to optimize benefits to the company, but does not reach so far as to include investment or debt management. Although they function as statisticians and data analysts in a sense, bookkeepers are not by training the professionals who make financial projections or assess financial risk for a company.

How to Become a Bookkeeper: Education and Degree

Education requirements for bookkeepers vary widely by employer. Small companies with simple needs may look for high-school education and offer on the job training. Organizations with any level of complexity in their accounting – or businesses that are hiring freelance bookkeepers for intermittent support – seek individuals with more formal education.

An associate’s degree in accounting is the most common requirement. The course load in these programs will include classes in budget analysis, payroll taxation and general finance. While a bachelor’s degree is seldom required for most positions in the field of bookkeeping, graduates with bachelor’s degrees in accounting may start in bookkeeping positions while working towards becoming CPAs.

Bookkeeper Certification

There are several organizations that certify bookkeepers. While bookkeeping is not a licensed profession, employers or businesses that need to hire consultant bookkeepers may look to certification as a demonstration of competency.

The American Institute of Professional Bookkeepers (AIPB) offers the credential “Certified Bookkeeper.” Becoming a Certified Bookkeeper through AIPA requires two years of full-time experience in the field as well as passing an examination and agreeing to abide by the AIPB code of ethics. Certification by the AIPB demonstrates proficiency in the areas of adjustments, error control, payroll, inventory management, internal controls and fraud prevention through its testing program.

The National Association of Certified Public Bookkeepers (NCAPB) offers several levels of certification and licensing. In addition to bookkeeper certification, the NCAPB also offers certification in the areas of payroll. Certification is granted for Certified Public Bookkeepers, Certified Payroll Specialists and Certified QuickBooks Advisors. All certifications are issued through a testing process. The certifications are issued by the NCAPB and are not regulated by any state of federal office, so while they convey to a potential client or employer that you have demonstrated competency in a number of accounting areas, they are seldom compulsory.

Companies that develop software for bookkeeping and accounting such as Intuit, who created Quicken and QuickBooks, or Microsoft, who created Excel, offer certifications in theses programs. Companies with more complex record keeping and financial reporting requirements may look to professionals with the most sophisticated understanding of these accounting-support programs, and certifications in these systems can demonstrate that ability. Bookkeepers who become QuickBooks Certified Users or obtain a Microsoft Office Excel Certification demonstrate exceptional abilities with these essential software products.

Career Growth

Many bookkeepers decide to further their educations and become Certified Public Accountants. Becoming a CPA requires a bachelor’s degree in accounting, work experience, and passing the Uniform CPA Examination, which is sponsored by the American Institute of Certified Public Accountants. Passing the examination and fulfilling the work experience requirements qualifies applicants to apply for a state license. Experienced CPA’s may then choose to move into management positions such as financial controllers or strategic positions such as chief financial officers.

Other bookkeepers grow freelance businesses and service clients through consulting activities, intermittent financial support, or training a company’s in-house accounting staff. A growing business that decides to hire its own bookkeepers or accounting clerks may seek out the services of experienced bookkeepers to help them educate and train their staff.

Many bookkeepers also offer tax preparation services, which create an annual surge in business for bookkeepers. Finances and taxes go hand in hand, so a bookkeeper that pursues education in the area of tax preparation offers a full-service business. Bookkeepers who want to become tax preparers need to register with the IRS, pass an examination and complete annual continuing education requirements to stay current on tax laws.

Salary Potential

According to the US Bureau of Labor Statistics, bookkeepers can expect 7-13% job growth, which is average for the US economy. The median salary for a bookkeeper in 2009 was $33,450.

Income is highly influenced by experience and work environment with the highest paying industries offering an average salary of $59,000. Geography also impacts earning with more populated states like California and New York reporting average salaries of $39,000.