Before the invention of computer software, businesses used to record financial transactions in handwritten daybooks, hence the title Bookkeepers! The daybooks were called ledgers and in them was recorded all the relevant details for business transactions relating to sales and purchases. These names are still used today although software now does the majority of the leg (or hand) work.
So what does a modern Bookkeeper do?
A Bookkeeper is still responsible for recording all the financial transactions of a business and with modern software it has become a more specialist role dealing with automation of data entry and reconciling entries.
Frequent financial transactions involved in bookkeeping are:
Recording sales and purchases
Recording receipts and payments
Reconciling the bank account
Reconciling Debtors and Creditor ledgers
Managing VAT accounts
Managing PAYE/NI owed account
Entering and managing petty cash
Recording payments made outside of the purchase ledger.
Each of these tasks is vital to make sure your accounts are accurate as well as ensuring all legal requirements are met.
It is possible for small business owners to make use of software such as Sage, Quickbooks and Xero as part of a bookkeeping process but if you are unsure what you are doing things can get messy quickly and falling foul of HMRC can be time consuming. Having a bookkeeper either in person or remote saves time and effort and allows you to focus on your core expertise of running your business.