And how do you know if you have a good one?
Finding and Keeping the Right Bookkeeper – what you need and how to find it
Why is it important?
For business owners it is important to know that your financial records are being accurately maintained. Not all bookkeepers have equal skills. Some are much better than others and it may be difficult for you to know the difference.
I’ve witnessed many situations in which a business owner has had to spend thousands of dollars to clean up after a sloppy bookkeeper, has had trouble getting a loan, or has been in trouble with vendors. I won’t go into detail here, but it is heartbreaking to witness the stress and anxiety of the business owner who trusted the bookkeeper.
The old adage of “you get what you pay for” holds true with services like this too. Take the long view on saving money – invest in current expenses to save money in the long term. Hourly rates will vary depending on where you are seeking a bookkeeper. The rates I am using are for a small town and are likely lower than any major metropolitan area.
What makes a bookkeeper qualified?
Bookkeepers gain qualifications the same way everyone does – through education and experience. Some people have a knack for figuring things out and make good bookkeepers because of a natural tendency to pay attention to details and to solve problems. This alone will not result in a bookkeeper who understands why they are doing what they are doing. It only means that they don’t make errors in the stuff they are able to do. But throw them something new and they may not know what to do with it. Or ask them a business analysis question and they may not know where to start looking.
Education can happen on the job, working with a more experienced accountant, or in a more formal environment like a trade school or community college, or a four-year college. Ask your potential bookkeeper how they learned their trade and how long they have been doing it.
What levels of qualification are there?
And what each one will get you and how much you should expect to pay $$
QuickBooks Certification:
- QuickBooks offers several different certifications. Some certifications are specific to versions of their software (desktop, online, or enterprise) and some are related to providing higher-level software use advice to others (ProAdvisor)
- The certifications are generally focused on the individual’s knowledge of using QuickBooks software more than accounting knowledge.
- Useful if you use the same version of the software the bookkeeper is certified for
- Not necessarily an indicator of ability to problem solve or understand the principals behind “why it is done a certain way”
May be a good fit if partnered with a more experienced resource to oversee day to day. If they are working closely with a career accountant with a degree or a CPA, they can be a good, inexpensive resource. Going rates will vary by geography – locally under $50 per hour.
No certification:
- Can record regular, routine transactions correctly if they are trained by someone who knows the correct method
- Not necessarily able to problem solve and record a transaction that is not routine
- Can produce standard reports out of your accounting system but is not generally able to tell you what they mean.
If your resource is in this category, be sure that they have experience and you have a way to assess their skills. If they are working closely with a career accountant with a degree or a CPA, they can be a good, inexpensive resource. Going rates will vary by geography – locally under $40 per hour.
Trade school/Associate’s degree:
- Some basic understanding of accounting concepts and how to manage a set of books.
- With some guidance they can handle your basic transactions but may not be able to correctly manage more complex transactions or provide any analysis.
- Can identify problems but may not know what to do to correct them – from a correct accounting perspective.
- Can produce financial statements and generally understand what they are seeing
An excellent resource if you have a strong relationship with a higher level professional (CPA) who can provide some guidance when needed. Going rates will vary by geography – locally $40-$60 per hour.
Bachelor’s degree:
- A degree in accounting or other business subject that includes some level of accounting. A degree gives the holder a theoretical understanding of the accounting profession
- Able to correctly handle any accounting transaction
- Can provide financial analysis when needed
- Can produce and interpret financial statements
An excellent resource who can handle your day to day accounting needs and may or may not be able to assist with budgeting and building financial projections. Going rates will vary by geography – locally up to $75 per hour.
Certified Public Accountant (CPA):
There are a number of bookkeepers who are Certified Public Accountants. A CPA is fully qualified to handle any accounting challenge you may have. To gain this certification an individual must have 4-year degree and a certain number of hours of experience as well as passing a very rigorous exam. You are in good hands with a professional at this level. Going rates will vary by geography – locally up to $120 per hour.
What level of qualification is right for you?
There is no “one size fits all” answer. Variables that you need to consider are:
- What is your knowledge/comfort level with the world of accounting?
- Will your bookkeeper be working independently or with guidance from a higher-level accounting professional?
- How big and complex is your business?
As a business owner, how can you assess the skills of a potential (or current) bookkeeper?
Unless you have knowledge and experience in the accounting profession it may be difficult for you. Once you understand what the right fit is for you from the examples above, here are some guidelines to determining what each individual is capable of.
- References – always ask for and check references. Look for current and former bookkeeping clients. Ask about accuracy, time spent per month, and ability to answer questions from the business owner.
- Find out what CPAs the bookkeeper has worked with (usually providing client year-end financials) and ask the CPA for impressions of the skills of the bookkeeper.
- What education does the bookkeeper have? What degree and what field of study?
- Find out how and when they became a bookkeeper. What did they do prior to that?
- Ask what personal habits they have developed to double-check their own work
- Ask specific accounting questions
- Accrual vs cash – do they know and understand the difference? Can they explain it to you?
- Do they regularly use any reports (AR, AP, Inventory) when they are working? What do they use them for?
- Give them a sample Profit & Loss Statement and ask them to tell you if the business is doing well or not.
- Give them a sample Balance Sheet and ask them to explain to you what it means.
- What reports do they recommend a business owner look at each month?
If you need help in selecting a bookkeeper, ask your CPA or banker to connect you with someone skilled enough to support you in assessing your candidates. If your bookkeeper will be working independently (most are) it is critical that they have excellent problem-solving skills and are not afraid to ask questions. This is an important professional relationship – setting it up for success for you and your business requires you to assess your needs carefully and select the best fit. Spending money on the front end to get the best resource will pay off quickly in reduced tax preparation costs and your peace of mind for always knowing the financial status of your business.
