What is a Bookkeeper?

Simple question, I know. Seriously though, what is a bookkeeper and what do they do?

By definition, a bookkeeper is a professional that records transactions for a business. This still doesn’t answer the question given how vague the definition is. Let’s go a bit further. What can a bookkeeper do, what can they only assist with and what is a big no-no?

Bookkeepers work hand in hand with tax professionals to deliver financial services to businesses year round.

Bookkeepers can,

• Record financial information

• Carry out data entry for necessary accounts and ledgers

• Produce financial reports

• Can operate without a license or certification, but CB and CPB titles are available

• And more!

Now, there are some tasks that bookkeepers can only assist in completing.

Bookkeepers can assist with,

• Tax preparation

• Audits

• Financial insight

• And any other clerical task that supports processes from a licensed professional

Finally, what is completely off limits…

• Representing a business before the IRS

• Providing financial assurance

• Performing an independent audit

Above are just a few of the tasks that are within scope of a bookkeeper and what is off the table. The IRS clearly outlines who is eligible to practice on behalf of a business that is not in direct relation to you as a professional. In short terms, there are special cases where an employee, friend or family member can practice before the IRS however, this does not mean that there is no liability if a task is not completed correctly.

As a bookkeeper that practices independently, I firmly believe in E&O insurance, errors and omission insurance. I firmly believe any service provider that practices actively outside of a firm or company needs to have a policy. This protects you and your client in the event your actions resulted in a significant financial loss.

This blog is for educational purposes only. Mikaesbooks is not a tax advisor or legal professional. Seek an Enrolled Agent, EA or a Certified Public Accountant, CPA, or other tax professional for more information.