<aside> What’s this about? Bookkeeping is the recording of financial transactions and activities.
What do I need to do? Decide whether you’ll handle bookkeeping in-house, or outsource it to a third party. If you decide to outsource, make sure your vendor has a suitable understand of your organization and its activities, so that they can code transactions appropriately.
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Further reading
Databases
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Most of your payments will probably relate to invoices your organization receives.
The majority of these invoices will likely come from independent contractors or vendors (e.g. software providers).
You can pay an independent contractor via bank transfer, using the details they supply on their invoice.
However, an alternative approach is to onboard or manage independent contractors through your HR system. The HR system can then make payments on your behalf, and may even collect W-9 and 1099 forms from independent contractors automatically. For more information on HR systems, see Set up an HR system.
Vendors will often accept both card payments and bank transfers.
If you’re being charged a recurring fee, you can likely automate the payment with a recurring transaction or direct debit.
As with independent contractors, payroll can also typically be disbursed through your HR system, although it may still require payment preparation.
See Set up an HR system for more information.
If you’re running payroll on a more manual basis, keep an eye on the separation of duties. Have one person prepare the payroll, another authorize it, and another create payments, thereby reducing the risk of fraud unless multiple people collude in doing so. In smaller companies where there are not enough personnel for a proper separation of duties, at least insist on having someone review and authorize the payroll before payments are sent.
See Set up an expense management system.
Bookkeeping is the process of recording transactions.
There's plenty of overlap between the bookkeeping and accounting, but there are important differences. Bookkeeping typically covers data entry, whereas accounting covers reporting and taxes (and sometimes strategy). For more information on accounting, see Set up an accounting system.
In theory, a generalist on your team could handle bookkeeping, provided they were detail-oriented and able to teach themselves the GAAP principles. It still might not be their competitive advantage, though, and we generally advise outsourcing your bookkeeping. (Similarly, we’d strongly recommend outsourcing accounting — or hiring a qualified CPA accountant.)