What is Bookkeeping?

Bookkeepers manage a company's financial accounts, ensuring they are accurate and easy to review. Their work plays an important role in the operation of a successful business.

What is Bookkeeping?

Bookkeeping is the process of tracking a company's financial transactions. These services include recording the money coming in and out of a business, such as customer payments and payments made to suppliers. Although accountants used to keep this information in physical books, much of the process is now done in computer programs.

It is a skill used in both large and small businesses, and necessary in almost all businesses and industries.

Did you know...? Bookkeeping as a profession dates back to the 15th century, when Italian mathematician Frater Luca Pacioli—the father of modern accounting—detailed many accounting systems and tools that are still used today, including double-entry accounting.

What Does a Bookkeeper Do?

A bookkeeper's job can vary depending on the needs of businesses. They can work in a large company, a small one, or as a freelancer. Here are some of the tasks you can perform as part of this job:

• Record transactions using accounting programs, spreadsheets, and databases
• Collect and organize financial records, cash flow statements, bank documents, and loss statements
• Generate invoices and receive payments from customers
• Track debits and credits from various accounts
• Reconcile financial statements
• Create balance sheets and income statements
• Review the accuracy of reports
• Complete payroll
• File the company's tax returns

Bookkeeper Salaries: How Much Can You Earn?

The average annual salary for bookkeepers in Mexico is approximately 169,223 MXN according to Salary Expert data. You can choose between full-time or part-time positions and even work in an office or from home, which offers great flexibility.

Bookkeeper vs. Accountant: What's the Difference?

Both accountants and bookkeepers work to maintain accurate financial records, and sometimes the terms are used interchangeably. However, there are important differences:

• Bookkeepers: Focus on administrative tasks, such as completing payroll and recording money in and out.
• Accountants: Help businesses understand the big picture of their financial situation. They can interpret financial records prepared by a bookkeeper to assess a company's financial health. They can also perform audits and prepare tax returns.

Becoming an accountant usually requires more training, but being a bookkeeper can be an excellent first step in your financial career.

Bookkeeping Methods

There are three main approaches that businesses commonly use:

1. Single-Entry: Each transaction is recorded only once. Ideal for very small businesses with low transaction volume.
2. Double-Entry: Each transaction is recorded twice (a debit and a credit). It is more accurate and helps detect errors easily. This method was developed by Luca Pacioli in the 15th century.
3. Accrual Accounting: Records transactions when they are incurred, not necessarily when money changes hands. It offers a more complete financial view.