As a small business owner, you might ask this common question, “Why do I need a bookkeeper?” The financial aspect of operating a business can be tricky compared to other areas. Sometimes, you have to consult a professional. Accountants will help you keep your books in order, but bookkeepers play a vital role in the operation of your business.
So, how can a bookkeeper help your business grow? In this article, we are going to see how a bookkeeper can help grow your business and why you should hire one to keep your financial data up to date.
What is a Bookkeeper?
A bookkeeper is a person who manages your accounts and documents daily business transactions. Bookkeepers have been in existence since 2600 BC – this is when a stylus was used to track records on slabs of clay, making bookkeeping one of the oldest professions.
Types of Bookkeepers
Due to the variety of tasks and skills that go into bookkeeping, it is no surprise that it has many branches.
This is a business operated by one person. They may have begun as an unofficial bookkeeper or one who perhaps left a big company. They have now set up their own business and have a few clients of their own via referrals from colleagues, friends, or other people who have seen their advertisements. They typically have some certification and training.
This might be a small business founder, a spouse, family member, or partner. It can also be somebody with a different role in the business, who ends up in bookkeeping by accident. They do the basic tasks of bank reconciliation, data entry, payments, invoicing, and filing paperwork for the accounting department. They are often self-taught.
Bookkeeping firms exist just like accountancy firms. They sell their services in packages such as basic bookkeeping or strategic advice.
Full Charge Bookkeeper
This kind of bookkeeper works in a business performing typical bookkeeping duties. He or she often reports directly to the business owner or management. They usually work in collaboration with an external accountant to deliver the business’s accounting needs.
Bookkeeping Department in an Accountancy Firm
Most accountancy firms have a bookkeeping department that keeps the accounts updated and produces monthly reports. This type of bookkeeper can also be referred to as an accounting technician.
These types of bookkeepers deliver their bookkeeping services remotely through accounting software and making video conference meetings. Doing business in such a manner enables them to keep their prices low.
The Difference Between a Bookkeeper and an Accountant
As the owner of a small business, you should be familiar with taking on multiple tasks. To keep things running, you need to make a profit, keep customers satisfied, and take care of the finances. Tracking finances can be tedious, and one of the questions you might have is: Who will help you with your accounts?
Do you need a bookkeeper, an accountant, or both? Let’s begin by making a few things clear.
Bookkeepers and accountants have different responsibilities. The main focus of the accountant is:
- Lodgment and preparation of statutory returns.
- Offering advice on legal entity structures.
- Providing general financial and business advice.
Accountants are members of a statutory association. Registered and qualified accountants might refer to themselves as Chartered Certified Accountants (CCA), Chartered Accountants (CA), and other titles.
Bookkeepers take on a lot of responsibilities within a business. The main focus of bookkeepers is recording, organizing, and reporting financial transactions within the organization. Recently, bookkeepers have extended their duties to include:
- Training clients on how to use accounting software.
- Implementation of inventory control and document management processes.
- Implementation of Point of Sale (POS) systems that record the daily business transactions.
- Implementation, development, maintenance, and review of internal business processes.
More often, you will find that a bookkeeper has a specific area of specialization, and it is important to ask them about this when looking to hire one.
How to Find a Good Bookkeeper
Making sure that you have enough time to hire the right bookkeeper is very crucial. Bookkeepers are an integral part of any business. So, when it comes to bookkeeping, how can you ensure that you hire the right person?
Here are five things to look for when hiring a bookkeeper.
Process-Driven, Organized, and Efficient
A good bookkeeper should understand your business industry, business process, and all your requirements before they can hit the ground running. They make sure that processes are streamlined and strictly followed to provide you with a prompt report and meet the deadlines that you provide for your business.
They should be dedicated to your financial and business success. The bookkeeper should have a keen eye to detail and keep your accounts updated and accurate.
Ethical and Trustworthy
Ethics and trustworthiness are paramount. The business owner and the bookkeeper should feel comfortable with each other to build a relationship that is founded on trust. Give all information to your bookkeeper so that they can keep accurate records for you.
You can put a confidentiality agreement in place to protect yourself. Also, make sure that your business is protected by not allowing your bookkeeper access to business bank accounts. They can prepare the supplier payment file, but the business owner or treasurer should process the banking payments.
Latest Technical Knowledge
The potential bookkeeper should have the latest software knowledge. If the bookkeeper is familiar with online accounting software like QuickBooks entries, they can automate many bookkeeping processes and reduce time spent on data entry. You can also figure out how to have a bookkeeper help you with Quickbook entries.
Cloud-based systems help bookkeepers keep the records updated and enable the business owner to identify mistakes quickly and make decisions to promote the growth of the business.
Excellent communication skills are necessary for a smooth flow of communication within the business. The bookkeeper should be aware of the business goals, operations, and issues to do their job perfectly. The ideal candidate should have the ability to enhance relationships with customers, staff, managers, and suppliers.
A Natural Curiosity
A good bookkeeper asks the relevant questions. They will also share ideas with the business owner on matters of financial planning, methods of increasing revenue, budgeting, cash flow, and cost-saving strategies they can adopt to improve the performance of the business.
Bookkeeper’s Job Description
A bookkeeper’s job description should stress the need for a strong sense of organization and time management. Bookkeeping can also be a stepping stone to a more specialized or senior accounting role.
A bookkeeper’s general job description includes:
- Producing financial reports.
- Processing payments.
- Recording transactions like income and posting in different accounts.
- Reconciling reports to third-party records like bank statements.
Interview Questions to Ask When Recruiting a Bookkeeper
Your business is growing and you have made a decision to hire a bookkeeper so that you can dedicate your time and energy to growing your business. So, what questions should you ask a bookkeeper before hiring them to make sure they are right for your business?
Are They Qualified and Registered?
Registration and qualifications requirements differ from state to state. Ensure that you ask the bookkeeper what their qualifications are and if they are registered to file sales tax in your state.
What Scope of Work Does Bookkeeping Cover?
This might seem to be like a simple question, but there are different services that bookkeepers offer. Some bookkeepers act as management accountants, while other bookkeepers’ skills are limited to only data entry.
What is Their Expertise Level?
A good bookkeeper makes accurate transactions, but a great bookkeeper goes back to review their work to check to see if there are any errors and make corrections. You may want a detail-oriented bookkeeper or a more strategic one. It is important to check their expertise level and work experience to figure out their strengths and weaknesses.
How Conversant are They With Your Industry?
If the bookkeeper is unfamiliar with your industry, you might want to keep looking. You can ask them whether they have had any other clients in your industry before. You can also ask them to give some common bookkeeping issues that arise related to your industry and how they would handle them.
How Do They Communicate With Their Clients?
It is likely that you will be communicating with your bookkeeper on a daily basis. If the bookkeeper has ineffective communication, they can slow down your business’s growth.
Are they clear and concise? Do they speak or write in a manner that makes sense to you? Ask them how they normally communicate with their clients either personally – through the phone, in person, or by email.
How Do They Price Their Services?
What does the bookkeeper charge? Do they charge by the hour, or is there a monthly fee? The trend in bookkeeping is usually charging a fixed rate. If they charge this way, ensure that you are very clear on what is and is not included in that rate.
What Does a Bookkeeper Do For a Small Business?
If you run a small business, you might take the role of a bookkeeper until you can afford to hire one to do the work for you. Once your business grows, it will make some sense to hire a bookkeeper. Here are several ways a bookkeeper can help your small business.
Minimize Your Accounting Costs
If you are using an accountant to do daily transactions and run a monthly payroll, you can use a bookkeeper to do this work for you instead. You could save a lot of money.
Allows You to Focus on Growing Your Business
Bookkeeping involves tracking fine detail and entering the data into accounting software. Calculating these numbers can sometimes make it difficult to see the bigger picture. Therefore, it is better to hire a bookkeeper to do this work instead.
Watch Cash Flow on Your Behalf
If you want to avoid suddenly running out of money, it is important to constantly monitor your cash flow. It saves time and money to have a bookkeeper check out the numbers to ensure a constant cash flow.
Get Access to Vital Figures Quickly
Getting an accountant to do the monthly business reporting and reconciliation is important. However, what if you require some financial information halfway through the month? A bookkeeper can give you the information you need quickly without having to wait for your accountant’s response.
Keep Control of Your Financial Information
Few businesses can afford to hire a full-time accountant, which leads to making many accountants working part-time.
Collaboration is made much easier if they use online accounting software to manage finances. Good online software enables bookkeepers to work on the same information as the accountant. They can work together to deliver the best outcome for the growth of your business.
Prepares You for an Audit
If your business is audited, having an accurate and updated record ensures that the audit process runs smoothly. The sooner you get back to running your business, the better. If you are worried about an audit, having a good bookkeeper in place is a good defense.
Without the proper records to back up your income tax return, non-cash items may be taxed as income, and illegitimate expenses may not be allowed.
Bookkeeping is an important job in any business. This is true even if you do it yourself or hire someone to do the business on your behalf. Without the proper bookkeeping, accounts won’t be accurate. This means that your accountant will not have a clear picture of the finances of the company, which will adversely affect your financial decisions.
Your business has a legal duty to accurately record its finances and file the business reports to the Internal Revenue Service (IRS). Therefore, it is very important to get your finances accurately in order.
Bookkeeping will help you achieve all this and will provide useful insights into the financial situation of your company. You can hire a professional and qualified bookkeeper like Sherry Borshoff. You can book a free appointment to inquire about her bookkeeping services and how she can help you achieve your business goals. Trust Indiana’s tax expert!