You like having a business. You don’t like doing the books. You like knowing how much money you have. You don’t like doing the books. You like being on time with your VAT and tax returns. You don’t like doing the books.
Enter a wonderful bookkeeper who is going to do your bank reconciliation, prepare your VAT, give you cash flow forecasts and generally make your financial life smoother and easier.
But how do you know if you’ve found the right bookkeeper? How do you avoid dealing with someone who is going to create more problems than they solve?
Enter the Go Impartial list of ’24 Questions to Ask Any Bookkeeper Before Using Their Services’.
We’ve broken our questions down into 5 essential categories; Experience & Qualifications, Communication & Responsiveness, Price, Knowledge and Scope of Services.
By asking your potential bookkeeper these questions you can build confidence in their abilities and find the right bookkeeper for the first time. And, yes, as you’d expect, any bookkeeper you find through Go Impartial will be able to answer all these questions and more.
Let’s dig in.
Experience & Qualifications
Experience matters. There’s a time for helping people learn on the job, but the chances are if you’re running a small business, you don’t have the time or expertise yourself to train up a bookkeeper.
Here’s our suggestions for how to quiz a bookkeeping agency about their level of experience.
1. Are They Registered/Qualified?
Ask whether your potential bookkeeper is registered with a professional body such as the Association of Accounting Technicians (AAT) or the Institute of Certified Bookkeepers (ICB). This will give you peace of mind that they have the necessary qualifications and experience to do the job properly.
Now, it’s important to say, this isn’t the be all and end all. If you deal with an accountancy firm directly, they may have an accountant doing your books. It’s not a bookkeeping qualification, but they’re going to know what they’re doing.
Equally, we’ve known many businesses who have someone ‘doing the books’ who has no formal training, but has built up years of experience and is more than competent.
Anyone we connect you with will be qualified, but if you find someone directly, this question forms part of your overall assessment.
2. What Is Their Level of Expertise?
You should also inquire about their level of expertise. The more experience and expertise they have, the better equipped they’ll be to handle your finances.
3. How Familiar Are They With Your Industry?
If you operate in a niche industry, it’s important to make sure that your bookkeeper is familiar with the specific accounting requirements and regulations that apply to your business. This way, you can be confident that they’ll be able to correctly record and report on your financial transactions.
Now, there’s certainly a school of thought that says that bookkeeping is bookkeeping regardless of business or industry. But if you’re dealing with international transactions, or have specific needs like being an author or social media influencer, it’s reassuring to know that the bookkeeper is going to understand the details of how your industry hangs together.
4. How Long Have They Been a Bookkeeper?
You want to hire a bookkeeper who has plenty of experience. After all, your finances are important, and you don’t want someone who is just learning the ropes. An experienced bookkeeper will be able to spot problems quickly and efficiently and will have seen everything before.
They will also be up-to-date with the latest financial software and legislation.
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5. What Are the Biggest Challenges They Face as a Bookkeeper?
A good bookkeeper will be able to tell you about the challenges they face in their work. This will give you an insight into their level of experience, as well as their ability to problem-solve. It’s also a good opportunity to see how they handle difficult questions.
At a certain level of skill, you move beyond needing to know the answers to each and every question and move more into the ability to problem solve through your own experience.
A competent and experienced bookkeeper will have ‘war stories’ too, of things going wrong and how they resolved them.
6. What Makes You Different or Better Than Other Bookkeepers?
There are many bookkeepers out there, so what makes this one stand out from the crowd? This is your chance to find out what makes them different, and why you should choose them over someone else.
Maybe they have specialist knowledge in areas such as tax or payroll, or maybe they offer additional services such as financial advice.
Whatever it is, make sure it’s something that will benefit your business.
Our tip – almost everyone who says they are a bookkeeper should be able to do the basic bit like bank reconciliation and preparing a VAT submission. So look for the added value. Great communication. An interest in business operations. Preparation in management reports. Help with forecasting and planning etc.
7. What Do They Think Are the Benefits of Bookkeeping?
This is a good question to ask to get an insight into the bookkeeper’s motivations. Do they see bookkeeping as a necessary evil, or do they genuinely enjoy it and see it as an important part of running a successful business?
The answer will give you some clues as to whether they’re going to be enthusiastic and proactive about keeping on top of your finances, or whether they’re just going to go through the motions.
You’re looking for passion and interest in helping your business run, and not someone who simply does it to pay the bills.
Responsiveness & Communication
You’ve got to work with this person / business in a detailed way. You’ll be trusting them with the inside view of your business.
You’ll want to know you can count on them to be interested in your success, be willing and able to contribute ideas and be prompt and reliable in how they communicate with you.
Here’s our suggested questions to gauge their responsiveness and communication levels:
8. What Can We Expect Around Delivery and Response Times?
Some things are better not left unsaid.
Over time as your relationship blossoms, you’ll likely find a grove with your bookkeeping firm. They’ll understand when your busy times are, and you’ll know how to get the best from them.
But… When you’re initially engaging a new company / person, it’s worth agreeing what good service looks like. How long will you have to wait until month end for the bank to be reconciled? If you raise queries, what’s a reasonable amount of time to wait for a response.
Trust us, do the details on this early and avoid any unpleasant discoveries later on.
9. How Can We Make Our Approach To Bookkeeping Better?
Okay, we’ll be the first to admit this question is a tiny bit unfair – as the bookkeeping company will need to look at your set up to make an intelligent judgement about how it could be better.
However, that shouldn’t stop some general observations from them about what makes things better in most circumstances.
You’re looking for comments such as automating as much as possible. Automating your bookkeeping can save you a lot of time and hassle in the long run. Everything from capturing receipts, auto tracking of mileage, setting up rules for bank reconciliation. All these steps make the process quicker and easier.
They might have plenty of other ideas based on their experience. Hear them out and judge it accordingly.
10. How Do You Think We Can Improve Sales?
A bookkeeper can help improve sales for a small business by keeping track of customer purchases and providing accurate financial reports.
Also, by keeping track of customer purchases, a bookkeeper can help a small business identify spending patterns and make necessary adjustments to pricing or inventory levels. Accurate financial reports can also help a small business obtain the financing it needs to grow and expand.
There could be other comments they make based on work they’ve done previously and we couldn’t list everything here. In the end, what you’re looking for is to check they don’t give you a ‘don’t know’ type answer.
11. How Can I Better Manage My Cash Flow?
So we’re on to the added value side of things with this question. As we’ve alluded to previously, bookkeeping 101 is the things like bank reconciliation and VAT preparation.
But businesses live or die based on financial health questions such as cash flow.
The first and most important step a bookkeeper can take to help you better manage your cash flow is to understand your business’s financial health. This includes understanding your business’s current assets and liabilities, as well as its revenue and expenses. Once your bookkeeper has a clear understanding of your business’s financial situation, they can help you develop a plan to improve your cash flow.
Once your bookkeeper has a clear understanding of your business’s financial situation, they can help you develop a plan to improve your cash flow. This plan may include measures such as reducing expenses, increasing revenue, or arranging for short-term financing. By developing a comprehensive cash flow plan, your bookkeeper can help you ensure that your business has the funds it needs to meet its obligations.
Bookkeeper Pricing & Costs
Not much in business happens without money changing hands. So how much cash needs to change hands, and what should you expect to get for your money?
Ask these questions to find out:
12. How Do You Price Your Services?
Some bookkeepers charge hourly rates for their services. Rates can vary from as little as £15 per hour up to £40 an hour.
The bookkeeper’s experience, the type of services being provided, and where the services are being provided can all impact cost.
More expensive doesn’t always equal better, but if it’s too cheap, you need to ask why.
Here at Go Impartial, we’re not a fan of hourly priced services. We prefer a fixed fee for a fixed scope.
Fixed fees are typically based on the number of transactions that need to be processed or a forecasted number of hours that will be required to complete the work.
The benefit of a fixed fee for fixed scope is that you can plan properly for the cost on an ongoing basis and relationships don’t get strained through unexpected bills.
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13. What, if Anything, Will Cost Me More?
This question matters, particularly if you’re going down the fixed fee, fixed scope route (which you should).
You’ll almost certainly have agreed a cost that includes the basic bookkeeping functions – but what about cash flow forecasting? Management reports? Analysis of the reports?
Try to do the detail on what costs could exist outside of your expected monthly bill and you’ll not be disappointed after everything is set up.
14. What Are Your Payment Terms?
Check this at the outset, so you understand if they’ll be asking for money up front, whether they’ll be asking for a direct debit mandate etc.
Bookkeepers Knowledge
The chances are pretty high that you’re getting a bookkeeper in because you either don’t have the time or the skills to do it yourself.
So, you’ll want some reassurance that your day to day business finances are in good hands.
You’re not trying to catch anyone out, but there’s no harm in asking for a little information about how they’d approach certain scenarios.
Here’s a few questions you can use to test things out:
15. How Would You Find an Error in the Ledger?
This is an important question to ask because, as the business owner, you’ll be relying on your bookkeeper to keep your financial records accurate. If they don’t know how to find errors, that could lead to some serious problems down the road.
You’re looking for comments such as by comparing the trial Balance to the general ledger.
The trial balance is a list of all the accounts in the ledger and their balances. If there are any errors in the ledger, they will be reflected in the trial balance. To find an error, a bookkeeper would compare the trial balance to the general ledger to see if there are any discrepancies.
Further, if an account is out of balance, it means that the debits do not equal the credits. This could be due to an error in posting transactions or an error in calculating the balance. To find an error, a bookkeeper would investigate out-of-balance accounts to see if there are any discrepancies.
16. What Are the Benefits of Cash Basis and Accrual Reporting?
Another crucial question for any potential bookkeeper. As the business owner, you need to know which type of reporting will best suit your needs. If your bookkeeper doesn’t know the benefits of both cash basis and accrual reporting, they might not be able to give you the advice you need to make an informed decision.
One of the primary benefits of cash basis accounting is that it allows businesses to more accurately reflect the timing of when revenue and expenses are actually incurred.
Under accrual accounting, revenue and expenses are typically recognized when a sale is made or an invoice is issued, regardless of when the actual cash is received or paid. This can often lead to mismatches between when revenue is reported and when expenses are incurred, which can make it difficult to get an accurate picture of a business’s financial health.
Another benefit of cash basis accounting is that it is generally much simpler than accrual accounting.
This is because businesses only need to track their actual cash inflows and outflows, rather than trying to estimate when revenue and expenses will be incurred. This can save a lot of time and effort, particularly for small businesses with limited resources.
17. How Do They Organise Receipts and Financial Documents?
In practice, a lot of this sort of stuff is handled by bookkeeping software (Xero, QuickBooks, Sage, Freeagent etc).
But it’s still good to know, because you might be dealing with a lot of paper receipts and hard copy paper documents.
Receipts should be organised by date. This will allow you to easily see which expenses were incurred when, and will make it simpler to track spending over time. You can organise receipts chronologically by putting them in a folder or envelope labelled with the month and year.
Financial documents should be organised by type. This will make it easier to find the documents you need when you need them. For example, you might have a folder for bank statements, another for invoices, and another for tax documents.
If you use accounting software (which you will be by 2024 because of making tax digital), you can typically organise your documents by type within the program.
18. How Would You Work Out My Break-even Point?
Every business owner should want to know what their break-even point is.
This is the level of sales at which your business covers all of its costs. Once you know your break-even point, you can start to make plans for profitability.
Any potential bookkeeper should know this like the back of their hand. The first step is to calculate your fixed costs. These are the costs that stay the same every month, regardless of how much or how little you sell. They include things like rent, insurance and salaries. To get an accurate picture, it’s best to look at your costs over a 12 month period. This will give you an average monthly figure to work with.
Next, you need to calculate your variable costs. These are the costs that change according to how much you sell. They include things like raw materials, packaging and shipping. Again, it’s best to look at your costs over a 12 month period to get an accurate monthly figure.
Once you have your fixed and variable costs, you can calculate your break even point. To do this, divide your total fixed costs by the difference between your selling price and your variable cost per unit. This will give you the number of units you need to sell to cover all of your costs.
Scope of Services
Are you looking for basic bookkeeping only? Or something a bit more involved? What about payroll? Some bookkeepers will handle this too for you, particularly because it now forms a central part of most cloud accounting packages.
Here’s the birds eye view of how to figure out the scope of service you might receive:
19. Which Cloud Accounting Software Do You Use? And Do You Specialise in a Particular Package?
You might not care which software you use for your business, or you might care a lot. But one thing is for sure, if you’re not already using cloud accounting software you will be soon, since the government is mandating its use by 2024.
And sure, they all do similar things, but in practice, if you know how to find what you need in QuickBooks, it’s a pain to have to learn Xero or vice versa.
Equally, if you’re deep down the rabbit hole of Sage, it’s worth finding a bookkeeper that majors in that package, rather than someone who is a jack of all trades.
And if they specialise in a package you’re not on and they want you to move to it, then it’s reasonable to discuss the migration between systems and training on it as part of the package and without extra cost.
This matters more than you might think as your accounting software forms the basis for a lot of conversations between you, the bookkeeper and your accountant.
20. Can You Provide Me With Some Reporting Specifically for My Business?
The answer to this question needs to be yes.
They should be able to prepare a variety of reports for your business, including financial statements, profit and loss statements, and balance sheets.
Financial statements show a business’s overall financial health and can be used to assess whether the business is making a profit or loss.
Profit and loss statements show a business’s income and expenses over a period of time, which can be used to assess the profitability of the business.
Balance sheets show a business’s assets, liabilities, and equity at a specific point in time, which can be used to assess the financial stability of the business.
21. Can You Process the Payroll for My Business?
Most bookkeepers should be able to handle your payroll.
But…. and it’s an important but. It’s more about whether you want them to do it.
If you’ve got a super small payroll run, then it’s probably fine asking them to do it. It’ll be simple, probably consistent each week / month and no big issues.
Once you’ve more than, say, 10 staff, we’d recommend finding a dedicated payroll provider to handle this side of things. Many bookkeepers can do it, but it is ultimately a separate discipline and it’s not fair to expect a bookkeeper to be fully up to date with payroll legislation or to understand what your pension obligations are, or to be to handle cock ups and queries that involve HMRC as part of their day job.
22. Will You Work With My Accountant?
Last on our list is a really key question. Ah, the link between the bookkeeping and your statutory accounting requirements.
Some people like to keep bookkeeping and accountancy delivered by separate businesses to ‘keep everyone honest’.
Others like to find an accountant that can handle the day to day bookkeeping as well as the company accounts and Director’s self-assessment.
If you do keep them separate, then checking the willingness for the bookkeeper to prepare things in a way that your accountant likes will help save you time and money.
The last thing you want is to have to mediate between two styles of work and communication.
For us, we find the best service is delivered when you have an accountant that looks after the bookkeeping too. There’s often a deal to be done and gives the accountant a reason to have a little bit more to do with your business on a day to day basis, which can help them provide better tax advice.
Questions for Bookkeepers - Final Thoughts
There you have it. You can now give any potential bookkeeper the Spanish Inquisition. Just make sure they still want to work with you after the tough questioning!
But seriously, most of these questions shouldn’t represent a pass or fail for whether you use them. They’re intended to help you form an overall impression of how well you buy into their skills, knowledge and communication.
If you want to save the hassle and only deal with bookkeepers that have already been pre-vetted and offer expert service at a fixed cost, then find one through us here.