Who is a Bookkeeper?

 For maintaining the transactional records and filing of taxes, a professional is appointed in small and medium businesses. But, before hiring one, the recruiter should be clear about whether he needs a Bookkeeper or an accountant. A bookkeeper is different from an accountant as the bookkeeper is relied upon for maintaining books of finances like payroll, sales, purchases only and balancing the transactions. Over the years of experience, the bookkeeper might turn into an accountant as he is then also responsible for Business analysis, reporting and financial advice. Initially, a bookkeeper is sufficient for tax purposes.

What are the source documents?

The original record that contains details to give volume and credibility to the transactions occurring in a business are source documents. It has all the necessary details required to prove what has been done and exactly why, financially in an organization.

Keeping a record of all the transactions is important for bookkeeping purposes. For the same, original financial records act as the source documents working as the paper trails. The paper trail documents include packing slips, company purchase orders, supplier invoices, checks, cash receipts and time card of employees. The documents help in allowing the bookkeepers to prove that all the books are genuine and completely true to everybody’s knowledge which includes journal and ledger. The form of documents doesn’t matter. It can be presented either electronically or in manual form. The one maintaining all the records needs to make sure that the filing system used gives a clear, complete and legitimate trail of source documents. Those documents should include all of the following –

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Every precise amount of transaction which has taken place (decimals needs to stay as it is)

• Date of the transactions should not be compromised
• Participants of each and every transaction
• The reason for transactions taking place

The reasons why bookkeepers need the source documents

For tax purposes – There is a need to keep all the financial documents safe until 2 years as per the IRS guidelines. This is due to the fact that a business can be asked for presenting the documents for audit purposes in any year for any fiscal year.

Business strategy – Keeping all the documents play a crucial role when the review of a company is going on. This is mostly observed in the case of merger, acquisition or sell-off of business. If the company is in talking terms with another business about collaboration or overtaking, these records play a major role in presenting a view of the company.

Financial foundation – The records help build a solid foundation for the financial activities of the company as it is a key element in the working of any business organization.

 Future Endeavors – For any decisions to be taken up by the company, it is important that all the receipts, bills and rest of the source documents are available and not scattered or lost somewhere.

Better internal control – If the financial documents are intact, nobody will have the authority to question the working mechanism of the organisation. This gives a power within an organisation to direct the company in the direction required.

It allows a smooth flow of operations in an organisation making the operational life of a business healthy and free of worries.

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Keeping a proper paper trail ensures that accurate steps are taken by the organisation for setting up an efficiently organised and secure system for filing and retaining the documents. It also helps in proving that all the documents have been generated and filed on time without any delay and in accordance with the essential guidelines.

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