What Is Bookkeeping? Tasks, Skills, and How to Become a Bookkeeper

Bookkeeping is the practice of recording and organizing a business's daily financial transactions and maintaining accurate financial records. It is an essential business function and can be a worthwhile career to explore if you're detail-oriented, organized, and trustworthy.

Learn more about bookkeeping, including what bookkeepers do, key skills they need to be successful, and how to become one. Afterward, build job-ready skills in bookkeeping with the Intuit Academy Bookkeeping Professional Certificate.

What is bookkeeping?

Bookkeeping is the systematic process of recording, organizing, and tracking all financial transactions of a business, including sales, purchases, payments, and receipts, to maintain accurate and up-to-date financial records that support business operations, tax reporting, and decision-making. While bookkeepers used to keep track of this information in physical books, much of the process is now done using software. 

3 types of bookkeeping

There are several types of bookkeeping and which one you use will depend on the size of the business.

• Single-entry bookkeeping records all transactions in just one row. Typically, single-entry bookkeeping is suitable for keeping track of cash, taxable income, and tax-deductible expenses, and is therefore more useful for small businesses.

• Double-entry bookkeeping records all transactions twice, usually a debit and a credit entry. As such, it provides better accuracy and error detection, and can be particularly useful for medium to large businesses.

• Accrual bookkeeping records transactions when they're incurred. This type is more complex but tends to be more accurate because it shows a complete financial picture. It's particularly useful for larger businesses.

What does a bookkeeper do?

Bookkeepers maintain a company's financial records using software. While some bookkeepers work full-time for a company, others offer their bookkeeping services as freelancers, taking on several clients, or treat this work as a side hustle. As a bookkeeper, you can expect to perform many of the following tasks:

• Maintaining the general ledger: Using written or computerized bookkeeping methodology, you'll enter transactions in and out, tallying the sum to ensure accuracy. You can also catch errors and fraudulent transactions using the data recorded on their ledger.

• Designing spreadsheets: Spreadsheets are the core framework bookkeepers use to input and calculate data and analyze transactions. You should know how to design, manipulate, and use spreadsheets and rely on tools to enhance accuracy and efficiency. Spreadsheet software proficiency can also be beneficial.

• Completing financial reporting: You'll likely prepare financial statements and create financial reports to assist a business in daily operations and financial performance, which can help with important decision-making. The balance sheet, income statement, and statement of cash flow are three of the most common financial reports a bookkeeper maintains.

• Handling accounts receivable, accounts payable, and payroll: Most bookkeepers handle these three main aspects of a small business's finances. While performing these duties, you might find yourself paying bills, creating invoices, managing past-due accounts, and withholding taxes.

Watch this video for insights into how credits and debits work.

Bookkeeper salary and job outlook

According to the US Bureau of Labor Statistics (BLS), the estimated median annual salary for bookkeepers in the US is $49,210 [1]. It's possible to earn more money depending on the industry in which you work. For instance, bookkeeping professionals in construction made a median annual salary of $51,670.

Despite a slight downturn in projected demand for bookkeepers, the need for bookkeeping services remains, as the BLS predicts 174,900 openings for bookkeeping, accounting, and auditing clerks between 2023 and 2033 [2]. Technological advances may impact the number of workers needed in this field, but these advances provide ample opportunity for bookkeepers to expand their skill sets as financial professionals. Many people who work in this field will go on to work in advisory and analytical roles rather than clerical ones.

How to become a bookkeeper

If you're organized, have a strong attention to detail, and enjoy working with numbers, being a bookkeeper could be a good career—or side hustle. Here’s what you can do to get started.

1. Earn your high school diploma or GED. 

While you don't need to hold a college degree to get started as a bookkeeper, this role generally requires a high school diploma or a General Educational Development (GED) certification.

2. Develop your bookkeeping knowledge. 

A bookkeeping course can be a useful way to learn the fundamentals needed to prepare financial reports, organize data using tools like Microsoft Excel, or understand how to balance books.  

Among other things, you'll want to gain a firm understanding of accounting principles, get comfortable using popular bookkeeping software, and learn how to work with spreadsheets.

3. Build essential bookkeeping skills.

As you learn more about bookkeeping, use the opportunity to build or strengthen key technical and workplace skills needed to be successful in this role.

Important bookkeeping technical skills:

• Accounting and bookkeeping software

• Spreadsheet tools

• Basic formulas and functions

• Data entry skills

• General computer skills

• Basic troubleshooting

Here's an example of how you'd enter a transaction in the Intuit software.

Important bookkeeping workplace skills:

• Organization

• Communication

• Time management 

• Attention to detail 

• Critical thinking 

• Interpersonal skills 

4. Consider certification. 

Bookkeeping is a crucial function of accounting, and earning a bookkeeping certification is a great way to show employers your expertise. While a certificate is not a requirement to become a bookkeeper, some professionals pursue certification to show their skills to employers and stand out in their job search.

You can earn a Certified Public Bookkeeper (CPB) license through the National Association of Certified Public Bookkeepers (NACPB). The American Institute of Professional Bookkeepers (AIPB) can also help prepare you for the National Certified Bookkeeper (CB) exam by training you in payroll, inventory, error correction, and more. Both the CPB and CB certifications have similar eligibility requirements. You can earn either certification by passing exams, agreeing to abide by a professional code of conduct, and verifying your bookkeeping and accounting education and experience.

5. Consider earning a degree. 

Though having an associate or bachelor's degree isn’t always required to be hired as a bookkeeper, some companies may prefer candidates who do. Earning your degree in bookkeeping or related fields like finance, accounting, or business can teach you about the broader industry, enhance your potential earnings, and boost your competitiveness for jobs. A degree can also help you make the leap from being a bookkeeper to being an accountant or other business-oriented role.

Bookkeeper vs. accountant: What’s the difference?

Both accountants and bookkeepers maintain accurate financial records, and sometimes, the terms are used interchangeably. Bookkeepers generally focus on administrative tasks, such as completing payroll and recording incoming and outgoing finances, while accountants help businesses understand the bigger picture of their financial situation. An accountant may interpret the financial records that a bookkeeper compiles in order to assess a company’s financial health. They may also perform audits and prepare tax returns.

Becoming an accountant usually requires more training and education than bookkeeping and can be a good next step in your financial career.

Transitioning from bookkeeping to accounting roles

Advancing your bookkeeping career to a role in accounting can be advantageous. For instance, the job outlook for accountants and auditors has a 6 percent growth rate from 2023 to 2033 [2]. The annual median salary for these roles is also higher than for bookkeepers at $79,880. 

Several career paths can lead to management and analyst positions in the field of accounting. Consider these tips to help you advance from bookkeeping to accounting roles:

• Accountants commonly need a bachelor’s degree. If you do not have your degree, consider returning to college either online or in person.

• Choose a specialty. Accounting is a large field with numerous areas of specialization, such as internal auditing, environmental accounting, or managerial and tax accounting. Decide which specialty fits your career goals.

• Decide whether you want to become a certified public accountant (CPA).

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