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Hiring A Bookkeeper? Read This Before You Do

by Brett Backues on February 27, 2015
One of the first and most important service providers any small business owner will hire is a bookkeeper. When a small business owner hires his or her employees to run the business, it is usually understood that the team hired will only be as strong as its weakest member, and so much attention is given to putting together a qualified and valuable team. However, how many business owners think of their bookkeepers as employees or part of this team? Oftentimes, small business owners make the mistake of allowing their bookkeepers to try to fit the business's financial work in whenever they can find time in their own lives instead of making the business a priority, but the bookkeeper should be thought of as a member of the management team. Therefore, one needs a strong bookkeeper who puts the business first in order to complete and strengthen that team appropriately.
Certain basic skills are an absolute must and should be considered the bare minimum required of any bookkeeper you would hire. Examples include the ability to reconcile any banking accounts and credit card statements, experience in using the specific accounting software, such as QuickBooks, that is expected to be used for your business's finances - and even understanding how a few others work is a good idea in case needed for integration purposes - knowing who receives what necessary end-of-year tax forms like the 1099-MISC and what the other related forms are and how they're used, such as the W-9 and 1096, experience processing payroll if that should be one of the duties required of his/her position and all the facets of accomplishing that, such as payroll tax returns that are to be done quarterly and generating W-2's, and managing accounts payable and receivable. Gone are the days of hand-written books and hard copies done strictly manually. In today's world of technology, to be able to produce all the proper reports, your bookkeeper absolutely has to demonstrate mastery of the use of appropriate computer software and electronic banking methods and also the knowledge to safely and securely use the Internet for transactions when necessary.
While we're on the subject of technological advances, consider also that the bookkeeper you hire should be someone who has the mindset that such change is a good thing. They should embrace advances that will make the job more streamlined and enable processes to run more smoothly. Someone who is set in his/her old ways might have a difficult time growing with your business in today's ever-changing technological landscape.
Another characteristic that your bookkeeper should have is the willingness to learn your processes for how your business has been run in the past, then compare and contrast with his/her normal practices for keeping up with transactions and managing and reporting finances, and finally integrate the two while eliminating duplicated procedures that could waste time, effort, and money not to mention set your business up for more potential errors due to repeating so many unnecessary steps in recording and reporting.
Along these same lines, other capabilities a competent bookkeeper should be proficient in performing include:
* Recognizing any current problems or even potential problems that could arise in the future.
* Communicating those problems or potential problems (which is a distinct skill aside from just the recognition of them) to the owner and/or rest of the management team.
* Recommending solutions to problems and ways to avoid them in the future.
* Taking the initiative to institute new techniques to maintain proper checks and balances in the company's finances while seeking to always improve upon these strategies.
* Having a keen attention to detail to avoid the small mistakes that could lead to bigger errors overall.
A vital fact to keep in mind also is that the bookkeeper is the primary person who will consistently have direct communication with your CPA for completion of the business's annual income tax return. The billing rate charged by the CPA is considerably higher in comparison with that of the bookkeeper. Therefore, it is the bookkeeper's responsibility to keep the time spent with the CPA at a cost-effective level while still being sufficient for the task. This will be in direct association with the level of the bookkeeper's preparedness for meetings, ability to provide financial statements that are clear and concise, and responsiveness to any other needs the CPA may have to get the job done quickly. In short, the bookkeeper is the one who can manage the cost required to prepare your business's income tax return and ensure that the process is as economical as possible.
The bookkeeper's own time management is also a concern when performing his/her normal work routine. There needs to be an ability of the bookkeeper to organize as many processes as possible so that they run in an automated fashion and to efficiently produce the most up-to-date, accurate financial information when needed. The previous month’s financial statements are far more valuable on the 5th of the current month than they will be on the 20th.
These are all crucial factors to keep in mind when looking for your business's bookkeeper, and you can often benefit from gleaning information from his/her past or current clients who can impart to you their experience with the bookkeeper's quality of work and their satisfaction with the services provided. Because bookkeepers conduct their business on a contractual basis, they should certainly be able to provide such references for you, so don't be afraid to ask. After all, it's your business and your reputation at stake.