As today’s business owners get increasingly busier, they have learned it is in their best financial interest to offload some of their day-to-day responsibilities. By freeing up their valuable time, they can devote their energy to more productive undertakings.
One big item most businesses outsource is their bookkeeping and accounting work. This happens for many reasons. The business owner may not have the best bookkeeping skills or they might not have enough knowledge of all the accounting procedures. I am not going to sugarcoat things, bookkeeping is a monotonous task and bores most business owners, myself included. Secondly, they just don’t have time to slave over learning bookkeeping software and keeping up with the changes. A business owner should spend the majority of their time working on and developing their business, not spending time on tasks that can be quickly completed by an individual who specializes in that field. Would you hire a plumber to perform open heart surgery? No, so why do business owners want to do their own books? It’s not an exorbitant expense and it takes quite a large burden off their backs.
So you have made the decision to look into hiring a bookkeeper. Now, how much bookkeeping help do you really need? Do you need someone who sits in your office once or twice a week and lets you oversee their work, or would you be happy sharing your files via email or disc and letting them reconcile your books a few times a month from their own workplace? These options are something to think about and may greatly reflect the cost of your bookkeeping.
Secondly, do you have time to do some of the work on your own? Often business owners can spend 15-30 minutes a day on an accounting program, link their accounts and then hand the rest over to the bookkeeper. The bookkeeper can then review their work to make sure the chart of accounts, reconciliation and journaling are correct. You must ask yourself if your energy is best spent working on your business 100 percent of the time or if you can do these small tasks quickly and efficiently in order to save yourself a few bucks.
Another thing to look at is the bookkeepers or accountants specific knowledge and experience handling a company in your specialized line of work. If you are a construction company and you find a bookkeeper with great pricing but no specific knowledge of how a construction business runs, the price might not be worth it in the long run. Consider the amount of information you will need to pass on to the person who will be handling your books and how much time it will take to bring them up to speed, versus finding someone who may be a little more pricey but has a good knowledge of your industry.
Here are some of the most important questions to ask.
1. Does the bookkeeper ask the right questions or any questions at all?
Similar to when you interview for a job, you want the individual managing your books to ask questions about your company. They should want to learn how your firm runs and familiarize themselves with the inner workings of your business.
2. What is better? A flat fee or hourly wages?
In my experience a flat fee is always preferable to hourly wages. You know what you are up against and can allot the funds needed every month to handle your bookkeeping. However, this is not always true for all businesses. If your months greatly differ in transactions, an hourly billed bookkeeping contract may lead to overall savings in your case. I would weigh the pros and cons for your specific business and judge each company bidding for the work accordingly.
3. Does the bookkeeper have knowledge of new programs?
Streamlining with new tools and programs can make the process, faster and sometimes less expensive as less time and effort is used to produce the same results. Newer programs can also help you to interact with your tax pro in a more efficient manner. You don’t necessarily want someone too high tech who gets every new software out there, but you do want them to have a good knowledge of up-to-date programs. You definitely don’t want a bookkeeper who has no streamlined processes and is doing your books by hand. On the opposite end of the spectrum, you may not want a bookkeeper whose use of high-end products greatly increases their bottom line and diminishes your ability to review their work in an easy to understand manner. I say find a happy medium and your cost should not be increased.
4. Is their personality a good fit?
This shouldn’t be overlooked when choosing someone to handle your books. Your ability to “click” and freely converse with them can make a huge difference in your working relationship and productivity. Also, how responsive are they to your calls and emails? You don’t want to wait a week to get an important answer you need for insurance, tax returns, or other important paperwork.
5. How is their communication?
Pay close attention to how they handle tasks such as emailing, appointment setting and letter writing. If you notice grammatical errors in their emails or that their office makes mistakes when setting appointments, please don’t shrug this off. It may be a warning sign of much bigger problems. A bookkeeper must pay great attention to detail. After all, one decimal place in the wrong spot could cost you thousands if not more. Go with your gut on this one and never overlook mistakes no matter how small they may seem at the time. Don’t choose someone just because they are less expensive. Find a competent bookkeeper and or accountant with great attention to detail, reasonable prices and a bedside manner that suits you. Do this and it will save you time and money in the long run.
If your potential bookkeeper passed that round of questioning, you can move on to the services. Aside from creating a list of financial transactions, bookkeepers usually help with: accounting journals, accounting software errors, invoices, cash receipts and supplier invoices. A bookkeeper can also reconcile accounts to make sure they are accurate and complete.
When choosing an accountant to keep track of financial transactions such as purchases, sales and payments, please understand this takes a great deal of time, energy and patience. In turn you want to spend adequate time vetting your candidates and do your due diligence. Nothing is more nerve-racking than hiring a company only to find your initial fears of their incompetence are proven correct. No one wants to switch accountants mid-year, or even worse closer to tax time.
I will leave you with one last opinion: don’t cut corners. Businesses and business owners should have a proper bookkeeping procedure in place. Whether you hire someone full time or only have some assistance, proper book work is imperative to a successful and compliant. It lets you know how your business is running and it also helps you pay the appropriate taxes. Having someone complete the work who is not well-versed in bookkeeping procedures and accounting can be detrimental to your business. Choose once, choose wisely, and don’t let cost be deciding factor.