What a Bookkeeper Actually Does (And What They Don't)

The spreadsheet stares back at you. Transactions from three months ago need categorizing. The bank account balance doesn’t match what QuickBooks shows. Somewhere, something went wrong.

You’ve heard you need a bookkeeper. But what would they actually do? What problems would they solve? And what would still be your responsibility?

These are fair questions. The line between bookkeeper, accountant, and CPA gets blurry. Here’s what a bookkeeper actually handles—and what falls outside that scope.

The Core Work: Recording Reality

At its heart, bookkeeping is systematic documentation. Every dollar that enters or leaves your business gets recorded, categorized, and reconciled.

Transaction Recording

The fundamental task: capturing every financial movement.

Money coming in:

• Customer payments received
• Sales revenue from all channels
• Interest earned
• Refunds issued
• Other income sources

Money going out:

• Vendor payments
• Operating expenses
• Payroll costs
• Tax payments
• Loan payments

Each transaction gets recorded with date, amount, payee or payer, category, description, and documentation reference.

A Houston restaurant might have 200+ transactions weekly. A consultant might have 30. Either way, every single one needs accurate recording.

Bank Reconciliation

Think of reconciliation as your financial security system. It matches what your accounting software shows against what actually happened in your bank account.

The process:

1. Compare recorded transactions to bank statement
2. Identify discrepancies
3. Add any missed transactions
4. Investigate and correct errors
5. Verify ending balance matches

Why this matters:

We’ve caught $14,000 in fraudulent charges for a Houston business owner during routine reconciliation. An employee was making small unauthorized purchases—$200 here, $350 there—assuming nobody would notice among thousands of legitimate transactions.

Monthly reconciliation catches these patterns before they become catastrophic.

Expense Categorization

Where you put expenses affects everything from financial reports to tax deductions.

Common categories:

• Advertising and marketing
• Bank fees
• Contractor payments
• Insurance
• Office supplies
• Professional services
• Rent and utilities
• Travel and meals
• Vehicle expenses

Why accuracy matters:

Put a contractor payment in “Supplies” and you’ll understate labor costs. Categorize a business meal as “Entertainment” and you might miss the 50% deduction. Small errors compound into major misstatements.

A skilled bookkeeper knows which categories maximize legitimate deductions while maintaining compliance.

Accounts Receivable: Money Owed to You

Managing what customers owe keeps cash flowing.

Invoice Creation and Tracking

• Creating professional invoices
• Setting appropriate payment terms
• Sending invoices promptly
• Recording payments received
• Matching payments to invoices
• Identifying partial payments

Collections Support

• Identifying overdue accounts
• Sending payment reminders
• Generating aging reports
• Flagging persistent non-payers

A Houston consulting firm discovered 23% of their invoices were paid late because they weren’t sending reminders. Systematic follow-up reduced that to 8%—and improved cash flow by $15,000 monthly.

Accounts Payable: Money You Owe

Managing what you owe protects vendor relationships and cash flow.

Bill Processing

• Recording incoming bills
• Verifying amounts and terms
• Matching to purchase orders
• Routing for approval

Payment Scheduling

• Planning payment timing
• Managing due dates
• Optimizing cash flow
• Avoiding late fees

Payment Execution

• Processing check runs
• Managing electronic payments
• Recording payment confirmations
• Maintaining payment records

Payroll Processing

Many bookkeepers handle payroll responsibilities:

Employee Payments

• Calculating gross pay
• Applying deductions
• Processing direct deposits or checks
• Generating pay stubs

Tax Withholdings

• Federal income tax
• State income tax (where applicable—not Texas)
• Social Security and Medicare
• Local taxes

Employer Obligations

• Matching FICA contributions
• Unemployment taxes
• Workers’ compensation tracking
• Benefits administration

Compliance

• Quarterly payroll tax deposits
• Annual W-2 preparation
• 1099 contractor reporting
• Payroll tax filing

Financial Reporting

Bookkeepers produce the reports that inform your decisions.

Profit and Loss Statement

Shows revenue minus expenses over a period:

• How much you earned
• What you spent
• Net profit or loss
• Comparison to prior periods

Balance Sheet

Shows financial position at a point in time:

• What you own (assets)
• What you owe (liabilities)
• Owner’s equity
• Overall financial health

Cash Flow Statement

Shows how cash moved:

• Cash from operations
• Cash from investing
• Cash from financing
• Net change in cash

Custom Reports

Depending on your needs:

• Accounts receivable aging
• Accounts payable aging
• Revenue by customer or product
• Expenses by category or department
• Budget versus actual comparison

What Bookkeepers Don’t Do

Understanding boundaries prevents confusion and disappointment.

Tax Preparation and Filing

Bookkeepers organize records but typically don’t prepare tax returns. That’s CPA territory. Your bookkeeper creates the clean financial data your CPA uses to file your return.

Tax Strategy

Recommending entity structure changes, retirement plan optimization, or tax timing strategies requires accounting and tax expertise beyond bookkeeping scope.

Audit Representation

If the IRS comes calling, you need a CPA or enrolled agent representing you.

Financial Projections

Complex financial modeling and forecasting often require accounting expertise.

Business Valuation

Determining business worth for sale or investment requires specialized credentials.

The line between bookkeeper and accountant isn’t always clear. Some bookkeepers have deep expertise; some CPAs handle bookkeeping. Ask about specific capabilities before assuming.

Daily vs. Monthly vs. Annual Work

Daily or Weekly Activities

• Recording transactions as they occur
• Depositing checks
• Processing payments
• Answering financial questions
• Handling urgent issues

Monthly Activities

• Reconciling all accounts
• Generating financial reports
• Reviewing for errors
• Processing payroll
• Following up on collections
• Processing regular bills

Quarterly Activities

• Payroll tax filings
• Estimated tax payment preparation
• Quarterly financial review
• Budget comparison

Annual Activities

• Year-end closing
• 1099 preparation
• W-2 preparation
• Tax document organization
• Support for tax preparation

What to Expect When You Hire

Onboarding Process

A professional bookkeeper will:

• Review your current financial setup
• Assess your software
• Set up account access
• Review historical data for issues
• Optimize your chart of accounts

This typically takes 2-4 weeks depending on complexity and historical cleanup needed.

Ongoing Communication

Expect clear communication about:

• Update frequency (weekly, monthly)
• Response time expectations
• Preferred communication channels
• Scheduled review meetings

Your Ongoing Responsibilities

Even with professional help, you’ll need to:

• Provide receipts and documentation
• Answer questions about unclear transactions
• Approve certain payments
• Review and understand reports
• Communicate business changes

Bookkeeping is collaborative. The bookkeeper handles the mechanics; you provide the context.

Getting Maximum Value

Provide Complete Documentation

Receipts, contracts, and invoices submitted promptly and completely make everything easier. Chasing documentation wastes time you’re paying for.

Communicate Changes

New revenue streams, major expenses, or business changes should be shared immediately. Surprises discovered during reconciliation cost time and accuracy.

Actually Review the Reports

Don’t just receive reports—read them. Ask questions about anything unclear. The reports exist to inform your decisions. If you’re not using them, something’s broken.

Stay Engaged

Monthly check-ins ensure you understand your financial position. A good bookkeeper becomes a partner in your success, but only if you’re paying attention.

Finding the Right Fit

A good bookkeeper becomes a trusted partner. Look for:

• Industry experience relevant to your business
• Software proficiency matching your systems
• Communication style that works for you
• Responsiveness that meets your needs
• References from similar businesses

At EZQ Group, our bookkeeping services give Houston business owners clear financial visibility without the administrative burden. We handle the mechanics so you can focus on the business.

Ready to stop staring at that spreadsheet? Contact us to discuss how we can help.