Why You Need a Bookkeeper

As a business owner, you often find yourself juggling several different aspects of your company. It can prove to be very difficult, especially when it comes to areas with which you are not completely familiar. A common sector of the business with which many owners seem to struggle is finances; even with DIY instructions, a lot of people just are not confident handling the numbers. For situations like these, the smartest move to make is bringing in an expert, and in this case, that would be a bookkeeper.

The job of a bookkeeper is to organize records of financial transactions through establishing accounts and posting those transactions (a.k.a. “keeping the books”) all while ensuring that the company complies with specific legal requirements. Bookkeepers are also responsible for reconciling your accounts in order to maintain as much accuracy as possible.

There are a number of qualifications that define a bookkeeper, such as the ability to correctly analyze data, successfully report results, and implement accounting skills (We list later on everything you should look for in a bookkeeper, so keep reading to find out!). Nowadays, most bookkeeping services are completed virtually with the availability of electronic documents, so any potential hire should be well-versed in accounting software like QuickBooks.

A bookkeeper’s job is to manage your money and, overall, make your job easier by taking over in his or her area of expertise. However, most jobs require a great deal of effort, so how do you know if your business really needs a bookkeeper?

Signs You Need a Bookkeeper

Sure, doing the bookkeeping yourself might be stressful, but you can handle it, right? Wrong. Most of the time, it is significantly more beneficial in the long run to hire a bookkeeper for your business. Bookkeepers are trained to do what they do, and, to be frank, most business owners like you are novices when it comes to accounting. Even as a novice, though, you can learn the ropes–so how do you know when your business is truly in need of a bookkeeper?

There are a number of telltale signs, but five key factors will typically point to whether or not you need to hire a bookkeeper.

  1. Your time feels wasted on DIY bookkeeping. When doing your own bookkeeping begins taking up more time than you can afford, you need to assess the reality of the situation. You should not take your time for granted; as a business owner, every minute you spend on a task is worth a certain amount, so you need to determine if you are throwing away money doing your own bookkeeping. What is the point in DIY bookkeeping if it is not saving you money? Instead of crunching numbers in the office, you could be making money and closing deals out in the field!
  2. Your books are practically never up-to-date. The moment you start to fall behind on bookkeeping is the moment your books stop representing your actual financial situation. As a blatant consequence of out-of-date bookkeeping, your cash flow and financial reports do not provide accurate insights into your company’s performance. Not only do out-of-date books cause short-term consequences, but they stir up trouble in the long-run as well. Once tax season rolls around, you need to catch up on bookkeeping, meaning you will have to drop everything you are doing in order to get your books up-to-date–and then the cycle will repeat itself.
  3. Your cash flow has become unpredictable. When you reach a point in your work where you cannot closely predict the amount of money coming your way, you have a serious problem. You might take a look at your cash flow statement and realize, “Oh, this tells me nothing I need to know.” Cash flow statements are supposed to help you figure this out–how much people owe you and how much you owe others–so when your statements do not do their job, you need to find somebody who can fix them.
  4. Your profits do not increase with your sales. Picture this: you work hard day and night, developing new methods to attract and keep more customers than ever before–and it works! Your sales begin to increase dramatically, and you feel the excitement until… your profit margin remains plateaued. It does not matter that your revenue increases if your profit margin is stagnant; after all, more money in the bank does not always equal profitability. All of your hard work does not really pay off if… well, you are not getting paid for it.
  5. Your estimated taxes are exhausting. You always want to be as accurate as possible when it comes to paying your quarterly estimated taxes; if you underpay your taxes, the IRS can hit you with a bunch of fines, and if you overpay your taxes, the IRS receives a free loan and your temporarily short on money. Correctly calculating your estimated taxes is next to impossible if you do not have your bookkeeping in order; out-of-date or inaccurate bookkeeping makes an already stressful process even more frustrating.

While there are obviously more indications that your business might be in need a bookkeeper, these five major signs are critical. If your business struggles with bookkeeping, especially around tax time, it is time to start looking to hire.

How a Bookkeeper Helps

Many people tend to ask if the expense is worth hiring a bookkeeper, and the answer is, “Of course!” When you hire a bookkeeper, that person becomes an essential member of your team.

Specifically, though, he or she helps you and your company in a number of ways:

  • Retain your focus. When you hire somebody to do the dirty work for you, you can start focusing on all aspects of your business instead of sweating about the finances.
  • Spend your time wisely. Not only can you focus on other parts of your business, but you can allocate your time and energy to more productive money-generating activities.
  • Gauge your performance. When you let an expert handle your financials, you can gain accurate insights into the health of your business and how you can improve.
  • Maintain a good cash flow. A bookkeeper will stay on top of your payments, expenses, and income, and he or she will ensure that your company maximizes its cash flow.
  • Keep everything up-to-date. You no longer have to worry about falling behind in your bookkeeping, and, better yet, there will be no tax-time catch-up rush.
  • Manage your credit score. Having a proper bookkeeping system for your business ensures that you make all of your payments on time and keep your credit score high.
  • File your taxes the right way. Since you will have appropriate records for all of your transactions, you can rest assured that your taxes will be paid accurately and punctually.
  • Reduce costs of financial obligations. While DIY bookkeeping seems less costly, the reduced risk of error and expert practices save you significantly more in the long-run.

Everybody has heard the saying that “time is money,” but most people do not grasp how true it is. You want to be spending your time as productively, efficiently, and wisely as possible, and a good way to do that is by not throwing it away on number crunching. When you let an expert bookkeeper manage your finances, you are reducing the risk of error and increasing the potential for profitability!

What to Look For in a Bookkeeper

So by now, you should have realized the importance of having a reliable, professional bookkeeper on your team, and you want to start looking for potential employees. However, like many others, you might have no idea where to start. How do you know if somebody will perform well? How do you know if he or she is dedicated to the job? Ultimately, the decision to hire is up to you, but here are some tips that can steer you in the right direction:

  • Ask for referrals from trusted sources.
  • Hire somebody with clear attention to detail.
  • Consider the accounting software he or she uses.
  • Evaluate how well he or she understands your business.
  • Take into account his or her degree of professionalism.
  • Determine if he or she has enough industry experience for you.
  • Find somebody who is level-headed and a good problem-solver.
  • Make sure he or she has good communication and time management skills.
  • Hire a bookkeeper who has a passion for the job and shows a strong commitment.

There are a ton more traits you can look for, especially ones tailored specifically to the needs of you and your company, but these nine tips will surely get you going. Since a bookkeeper is somebody on whom you as an owner have to depend, you want somebody who is loyal, committed, and (obviously) good at what he or she does. Before you begin interviewing, make sure you know what you want out of a bookkeeper, and your search will become much easier!

 

What to Ask a Prospective Bookkeeper

Not knowing the right questions to ask when you begin interviewing potential bookkeepers can pose a threat to your business; if you hire somebody who does not perform the way you want, you are losing money, especially if you end up having to let him or her go! You should really think about the questions you are going to ask, and even more so about the answers your interviewee gives. We compiled a list of questions that will help you determine as much about your bookkeeper as you want to know:

  • What is the scope of work? While the question might seem very general, it is critical for you to know the exact services that your bookkeeper will provide, as the scope of work differs from worker to worker.
  • Are you registered and qualified? The level of education and certification can vary; some bookkeepers might have a high school diploma while others might be a CPA. If you want somebody who is very formally educated, this is an important question to ask.
  • How familiar are you with the industry? If a bookkeeper is not familiar with your industry, there may be a learning curve for them to grasp once they start working. You can ask about past clients and common issues in your industry to gauge how well-acquainted he or she is with the industry.
  • What can I expect around delivery and response times? A commonly heard complaint about bookkeepers is that they take too long to respond and have no set schedule. Knowing a bookkeeper’s general delivery and response time helps you know if you want to and can work with his or her schedule.
  • How do you handle quality control and backup plans? Nobody likes surprises when it comes to finances, so knowing that a potential bookkeeper can maintain the quality and implement a backup plan is very reassuring and alluring.
  • How do you protect your clients? Having a bookkeeper that will protect you and your information is very crucial; you are sharing your financial data with him or her. Establishing trust and security right off the past is essential to fostering a good working relationship.
  • What is the first thing you would do on your first day? Presenting an interviewee with this scenario gives you insight into how well they understand the accounting process and how it works for your business.
  • What would you do if the bank reconciliation is off by a small amount? You want a bookkeeper who has no tolerance for any discrepancies in your data, and, if there happens to be a discrepancy, they will find it and fix it. Period.
  • Why did you want to become a bookkeeper? A person’s response to this question will tell you a lot about their work ethic and passion for the job. The right bookkeeper will give you an answer that falls in line with what your business needs.
  • What interests you about my industry? While it might seem like bookkeeping is just bookkeeping, it can differ greatly between industries. Like the previous question, this lets you know the thing your bookkeeper is passionate about and if that thing could be your business.
    • (Note: Even if they do not have a lot of experience in the industry or are not the most knowledgeable, do not let that scare you off. If a potential bookkeeper is otherwise a great fit for your company, it is probably worth it to hire him or her!)
  • What are some of your personal interests and passions? While this does not apply directly to the work, it is very important to ask. Not only can you determine if the bookkeeper will mesh with your existing company culture, but employees with a proper work-life balance are statistically happier and healthier!

Now you have to determine what is important to you. Is it the cost of a bookkeeper, the delivery time, or something else? What are you looking for in an employee, and what do you want to get out of it? Would you rather have someone who comes in every once in awhile, enters your data, and just walks away, or would you have somebody who keeps up with your accounting so you always know where you stand? It is crucial for you to remember that money saved in the short-run (a.k.a. DIY bookkeeping) is not always going to be money saved in the long-run. It is up to you to decide who you hire as a bookkeeper, and we know that is a tough decision, so it is important that you take the time to consider all of your options.

If you are still a bit unsure of where to start, start with us here at Fast Trac Consulting. With us, you can confidently go through the next step of transforming you from a DIY bookkeeper into a true CEO. We are here to answer any questions you might have and to provide all the help you need!

By |2019-11-14T12:07:17-05:00November 5th, 2019|0 Comments

About the Author:

With more than thirty years of experience in the real estate and property management industry, Gita Faust is more than just a real estate investor; she is also popular for her work as an accountant, consultant, mentor, speaker, QuickBooks Top ProAdvisor, QuickBooks Solution Provider, member of Intuit’s Trainer/Writer Network, and, of course, author. As the CEO and owner of Fast Trac Consulting, Gita is well-known for her exemplary leadership and advisory skills. In fact, she even helped pioneer the adaptation of QuickBooks to suit the needs of professionals in real estate and property management. To share her knowledge and experience with others, she has written a series of courses titled Simplified Accounting Solution, which provides step-by-step guidance for those working with QuickBooks.

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