What a Bookkeeper Does? | Complete Guide 2025

Whether you’re a small business owner or managing a fast-growing startup, staying on top of your finances is crucial. This is where a bookkeeper comes in. But what does a bookkeeper do exactly? What makes their role so important for your business?

In this comprehensive blog, we’ll walk you through the bookkeeping duties, explore the role of a bookkeeper, and answer all your questions about what bookkeepers do on a daily basis.

Talk to one of our intelligent and clever professional bookkeepers to get your further queries about bookkeeping services in London. We will be sure to come up with the best possible solution for you.

Table of Contents

What Is a Bookkeeper?

A bookkeeper is a financial professional responsible for recording and organising a company’s day-to-day financial transactions. While many people confuse bookkeepers with accountants, their roles are distinct. A bookkeeper focuses on the daily financial record-keeping, while an accountant provides broader financial analysis and strategy.

In simple terms, if your business were a car, a bookkeeper would be the one ensuring the engine runs smoothly by handling the small but essential tasks that keep everything on track.

What Does a Bookkeeper Do?

The short answer: A lot more than you think!

A bookkeeper’s role involves managing and documenting every financial transaction made by a business. From handling invoices and receipts to reconciling bank statements, bookkeepers ensure that a business’s financial data is accurate, up-to-date, and compliant with regulations.

Here are the key responsibilities and tasks that bookkeepers perform:

1. Recording Financial Transactions

At the core of what a bookkeeper does is the accurate recording of financial transactions. Every sale, purchase, payment, or receipt must be documented correctly. This includes:

Inputting data into accounting software
Categorising expenses and income
Recording supplier and customer invoices
Tracking all incoming and outgoing payments

Accurate data entry ensures financial statements reflect the true financial health of a business.

2. Bank Reconciliation

Bookkeepers reconcile bank statements to make sure that the recorded transactions match what actually happened in the bank account. This helps:

Identify and correct discrepancies
Catch fraudulent or unauthorised transactions
Keep the accounts up-to-date for month-end or year-end reports

Regular bank reconciliation also ensures that tax reporting will be accurate and less stressful.

3. Managing Accounts Payable and Receivable

Bookkeepers keep track of money the business owes and is owed. This includes:

Creating and sending invoices
Monitoring overdue accounts
Processing supplier payments
Managing customer receipts

This function ensures healthy cash flow and helps the business avoid late payment penalties or missed income.

4. Payroll Processing

Another important bookkeeping duty is managing payroll. This includes:

Calculating employee wages
Deducting taxes and National Insurance
Issuing payslips
Submitting payroll data to HMRC

Accurate payroll management not only ensures legal compliance but also boosts employee satisfaction.

5. Preparing Financial Reports

Although preparing full financial statements is often the job of an accountant, bookkeepers generate essential reports like:

Profit & Loss Statements
Balance Sheets
Cash Flow Reports
Expense Summaries

These reports give business owners an ongoing snapshot of financial performance and help with informed decision-making.

6. VAT Returns and Compliance

In the UK, bookkeepers often assist in VAT preparation and filing. They:

Track VAT on income and expenses
Maintain digital records in compliance with Making Tax Digital (MTD)
Submit VAT returns on time

Proper VAT handling ensures the business stays compliant and avoids costly HMRC penalties.

7. Supporting Year-End Processes

When year-end approaches, a bookkeeper’s role becomes even more critical. They:

Organise and finalise all transactions
Reconcile all accounts
Provide clean, accurate records to accountants or auditors

This support ensures a smooth year-end closing and accurate financial statements for tax filing.

What’s a Bookkeeper vs Accountant?

While both deal with financial data, bookkeepers and accountants serve different functions.

Bookkeeper	Accountant
Records daily transactions	Prepares and analyses financial reports
Handles payroll and invoicing	Files tax returns
Tracks VAT and reconciles accounts	Provides financial strategy and forecasting
Maintains accurate ledgers	Offers insights for business growth

Think of the bookkeeper as the foundation and the accountant as the architect of your business’s financial structure.

Why Is the Role of a Bookkeeper Important?

Still wondering what a bookkeeper does and why their role matters?

Here’s why bookkeeping is essential:

Accuracy: Financial accuracy is key for decision-making, funding, and compliance.
Cash Flow Management: Bookkeepers help maintain steady cash flow by tracking receivables and payables.
Tax Efficiency: With accurate records, tax preparation becomes easier and more cost-effective.
Regulatory Compliance: They ensure your business meets its HMRC and VAT obligations.
Stress Reduction: With a bookkeeper managing your financials, you focus on growing your business.

What Makes a Good Bookkeeper?

A great bookkeeper possesses a mix of technical and soft skills. These include:

Attention to Detail: Even small errors can cause major issues.
Organisational Skills: Staying on top of thousands of transactions is no small feat.
Knowledge of Accounting Software: Proficiency in tools like Xero, QuickBooks, and Sage.
Communication Skills: Translating complex numbers into understandable reports for business owners.
Trustworthiness: They handle confidential and sensitive financial data daily.

Do I Need a Bookkeeper for My Small Business?

If you’re a small business owner juggling sales, marketing, customer service, and operations, adding bookkeeping to your list can be overwhelming. A professional bookkeeper:

Saves you time and stress
Reduces risk of HMRC penalties
Helps you make smarter business decisions

Whether you’re just starting out or scaling your business, hiring a bookkeeper is a smart investment.

Final Thoughts

So, what does a bookkeeper do? They are the backbone of any financially healthy business. From managing invoices and payroll to preparing reports and reconciling accounts, the role of a bookkeeper is both vital and valuable.

If you want your business to thrive, not just survive, consider partnering with a qualified bookkeeper who can keep your financial engine running smoothly.

Disclaimer: All the information provided in this article on what a bookkeeper does, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.