It's only fair that I follow-up last week's blog post discussion of the importance of good bookkeeping with helping you know what to look for so you can assess your bookkeeping.
First, I have to dive into the present state of bookkeeping a little bit. Thanks to the wonderful world of the internet and various software solutions, everyone thinks that they can (and should) be a bookkeeper/do their own bookkeeping. This leads to a lot of people that don't know anything about accounting doing bookkeeping.
Now, I'm a business owner too, so I completely appreciate being at the beginning of your business journey and bootstrapping everything you can (including your bookkeeping). If that's you, here's my unsolicited advice:
The moment you can afford to outsource your bookkeeping, DO IT.
I realize that sounds biased since I offer bookkeeping, but I've had too many conversations with business owners that don't truly understand their financial position because they don't understand bookkeeping. They don't know what their profit is because transactions are categorized incorrectly. Their balance sheet is a mess and cash is showing as negative. And their retained earnings doesn't match any of their tax returns.
So now, let's talk about finding a bookkeeper.
I'm going to be blunt. As with anything, there are good bookkeepers and there are some that have no business calling themselves bookkeepers.
Talk to any tax professional and they will tell you that they've had clients that are PAYING an outside bookkeeper and yet the tax pro still gets a mess handed to them at tax time.
Why is this? Because anyone can call themselves a bookkeeper.
Before you think I'm hating on bookkeepers, I want to talk to you about accounting for a second. After three years of teaching accounting to undergraduates, I can, without a hesitation, tell you that not all accountants understand accounting.
Accounting software and bookkeeping require an understanding of debits and credits (sorry, had to get nerdy on you). There's no way around it.
If you don't understand how a transaction impacts the various financial statements, you just can't be a good bookkeeper.
With all of that said, here are some things to look for when hiring a bookkeeper:
Okay, I can get pretty passionate about the ways you should be served as a business owner, so I'm going to leave you with those four points. Overall, make sure your bookkeeper knows what they are doing and cares about you and your business.
Get new blog posts sharing business tips and insight delivered straight to your inbox.