Bookkeeper Qualities You Should Look For
The bookkeeping profession has a variety of expertise levels ranging from students/interns, to a spouse or all the way up to Certified Bookkeepers. There are plenty of horror stories out there from small business owners that have had a accounting nightmare. Nothing is worse than spending your hard earned money on someone to get your bookkeeping completed only to find out it is useless, wrong and needs to be redone. Coming from a public accounting background we know all do well how important having accurate financials at any point in time is to a small business owner. Accurate financials provide the small business owner with cash flow opportunities, tax planning, loan refinancing or credit line renewals, etc. There are certain bookkeeper qualities you should look for when hiring someone.
What kind of Experience Level do they have? Everyone needs to start somewhere and we are all for interns/students or free labor as they want to learn the profession. Yes, a majority of bookkeeping could be considered "Data Entry" but there is a whole other side to the profession that a bookkeeper should be able to provide. Knowing right from wrong, personal spending vs business expenses, how an entity actually works whether is a S Corporation, partnership or a sole proprietor. Each type of entity operates in a different way for tax purposes. A good bookkeeper knows this and can provide direction to the owner. The less work your CPA/tax preparer has to do in corrections, the quicker it could possibly get done and perhaps cheaper as well.
What kind of Questions do they ask? A good bookkeeper isn't afraid to ask questions. Whether they are asking about various expenses that are on the bank account or there is an issue that arose which may need an expert to answer. Nothing is worse than having sending your financials to someone only to have them ask you questions what they line items are because the bookkeeper wasn't sure where to put it. All questions should be cleared up on a monthly basis. At the very least they should ask these questions on a monthly basis.
They should question any charges that are out of the ordinary course of business. There is always a proper place to put a transaction; however putting it into the wrong account could start an issue that progress as time goes on.
They should ask if any new assets have been purchased. The IRS has a safe harbor rule when it comes to De Minis assets. A de minis asset is any asset whose cost is under the $500 threshold established by the IRS. This is good for several reasons. Small assets such a chair or desk does not have to be depreciated and if you are in a state such as North Carolina, you do not have to report them on the business personal property tax returns for the county in which you operate. It is almost guaranteed that a majority of the bookkeepers are not aware of this IRS rule and therefore if you preparer isn't paying attention you could loose out on some benefits.
They should also ask if any assets have been disposed/sold. If you no longer have the asset, why have it on the books still? When we sit down with new clients and review their asset list it never ceases to amaze us how many assets should have been removed. The clients response is always, "Well they never asked so I didn't know".
Do they ask if there are any new bank accounts, loans, lines of credits, etc? As a business owner there are always various ways a business holds onto money, funds expenses, etc. A bookkeeper might go months without knowing there is some new account that needs to be tracked; thus your financials are not accurate, income/expenses not reported and usually there are transactions that are reported improperly.
A good questions that should be asked often is if there are any new 1099 vendors. Every year a business has to file 1099s for expenses paid to individuals, sole proprietors and other types of entities. This requires a full name or business name, EIN or social security number, address and amount paid for the year. If they wait until year end to gather this information, vendors might not be around or contact is impossible.
Are they aware of the various Obligations a business has? A business has a tremendous amount of filing requirements depending on what type of industry they are in. The obvious yearly tax filings is a given but there are monthly other monthly, quarterly and annual filings that take place. They should ask if you are current in all of your tax filings for the business, current in payroll, current in filing the annual report, current in filing business personal property tax returns. These are just to name a few. If
Can the bookkeeper Adapt to your business? Most bookkeepers have several clients they work with, each one could be different from the other. Each business is unique in their needs, structure, systems, etc. The bookkeeper should be able to tailor his/her services/experience to fit the mold the business needs to flourish. There are many different types of software for accounting, each with its own pros/cons. The bookkeeper should be able to know the software limitation and be able to adjust his/her systems to account for any needs of the business. They should be inventive in need be.
Finally, do they have Network of Contacts? A business has various needs that need to be met in which the bookkeeper only fills one part. He/she should have a network of contacts that they can trust that range from CPA/tax preparers, insurance agents, merchant card providers, lawyers, bankers, and even other clients.
Bookkeeping is the life blood of the business. You can sell all you want but if you don't have accurate, up to date financials, a business owner is not able to make appropriate financials decisions, plan for taxes, renew loans or licenses.
When you are ready to hire someone be sure to ask about these bookkeeper qualities.