Outsourcing bookkeeping can be a great option for small businesses.
First and foremost It can save you money as you won’t have to pay for the overhead costs of hiring and training an in-house bookkeeper. This can be especially helpful for small businesses that may not have the budget for a full-time bookkeeper.
Another benefit of outsourcing bookkeeping is that you’ll have access to expertise. Professional bookkeepers have the skills and experience to handle your bookkeeping accurately and efficiently. This can help you avoid common mistakes and ensure that your books are in good order.
Outsourcing bookkeeping can free up your time and energy. Instead of spending hours on bookkeeping tasks, you can focus on running and growing your business. This can help you be more productive and successful.
In this guide, we’re going to take you through what you need to think about before entrusting your business finances to a bookkeeper, and for each topic, we’ll give you a set of questions you can ask to help you find the right professional.
Bookkeeper Skills
When looking for a bookkeeper, you should look for someone who has the right skills and experience to handle your bookkeeping needs.
Some key skills to look for in a bookkeeper include:
- Knowledge of bookkeeping principles and best practices. A good bookkeeper should have a solid understanding of bookkeeping principles and how to apply them to your business. This can help ensure that your books are accurate and compliant.
- Proficiency with bookkeeping software. Most bookkeepers use bookkeeping software to manage their client’s books. Look for a bookkeeper who is proficient with the software you use, or who is willing to learn.
- Attention to detail. Bookkeeping requires a high level of accuracy and attention to detail. Look for a bookkeeper who is detail-oriented and able to catch errors and inconsistencies.
- Good communication skills. As a small business owner, you’ll need to work closely with your bookkeeper. Look for a bookkeeper who is able to communicate clearly and effectively. This can help ensure that you’re on the same page and that your bookkeeping needs are being met.
Here are some questions you could ask a bookkeeper to test and check their skills:
- What are the different types of bookkeeping systems, and which one do you think would be most suitable for my business?
- Can you explain how to record transactions in a double-entry bookkeeping system, and how to prepare a trial balance?
- How do you handle bank reconciliation, and what steps do you take to ensure the accuracy of your client’s bank accounts?
- Can you explain how to use bookkeeping software to create financial reports, such as a profit and loss statement or balance sheet?
- What are some common bookkeeping errors, and how do you prevent and detect them in your work?
Experience and Qualifications
Experience and qualifications can also be important factors to consider when hiring a bookkeeper. A qualified bookkeeper may have more knowledge and expertise in bookkeeping principles and best practices. In the UK, bookkeepers can be qualified through professional bodies such as the Institute of Certified Bookkeepers or the Association of Accounting Technicians.
While it’s not necessarily a requirement that a bookkeeper be qualified, it can be a good indication of their knowledge and skills. You can ask a bookkeeper about their qualifications and professional affiliations to get a sense of their experience and expertise.
As for measuring a bookkeeper’s experience, you can ask about their previous clients and the types of bookkeeping tasks they’ve handled. You can also ask for references and check online reviews to get a sense of their reputation and track record.
Here are some questions you could ask a bookkeeper to check more on this front:
- How long have you been working as a bookkeeper? This question can help you understand the bookkeeper’s level of experience.
- Can you tell me about some of your previous clients and the types of bookkeeping tasks you’ve handled for them? This question can help you understand the bookkeeper’s range of experience and the types of tasks they’re capable of handling.
- Are you qualified as a bookkeeper? If so, through which professional body? This question can help you understand the bookkeeper’s qualifications and professional affiliations.
- Can you provide references from previous clients? This question can help you get a sense of the bookkeeper’s reputation and track record.
- Have you received any awards or recognition for your bookkeeping work? This question can help you understand the bookkeeper’s level of expertise and success in the field.
Range of Services
Bookkeepers provide a range of services, spanning from the essential to the optional, added value services.
Basic services include:
- Recording and reconciling transactions, such as sales, expenses, and payments.
- Preparing and maintaining financial records, such as invoices, receipts, and bank statements.
- Managing accounts payable and accounts receivable.
- Providing financial reports, such as profit and loss statements and balance sheets.
In addition to these basic services, some bookkeepers may offer additional or “added value” services. These could include:
- Providing training and support for your in-house bookkeeping team.
- Offering bookkeeping software setup and customization.
- Payroll, other accounting services.
- Providing consulting and advice on bookkeeping best practices and processes.
- Offering additional financial services, such as budgeting and forecasting.
In addition to providing basic bookkeeping services, some bookkeepers may also be able to help with management accounts and other business requirements. Management accounts are financial reports that provide detailed information on the financial performance of a business. These reports can be useful for tracking business performance, making decisions, and identifying areas for improvement.
A bookkeeper with the right skills and experience may be able to help you with management accounts. They can use bookkeeping software to create and maintain management accounts, and provide regular updates and reports. This can be a valuable service for small businesses that want to track and improve their financial performance.
Here are some questions you could ask a bookkeeper to assess their ability to provide the basic services that a bookkeeper should provide:
- Can you explain your approach to recording and reconciling transactions? This question can help you understand the bookkeeper’s process for managing your business’s financial transactions and ensuring their accuracy.
- Can you describe how you maintain financial records, such as invoices, receipts, and bank statements? This question can help you understand the bookkeeper’s process for organising and maintaining your business’s financial records.
- Can you explain how you manage accounts payable and accounts receivable for your clients? This question can help you understand the bookkeeper’s process for tracking and managing your business’s outstanding payments and incoming revenue.
- Can you provide examples of the financial reports you’ve prepared for previous clients? This question can help you understand the bookkeeper’s ability to create financial reports, such as profit and loss statements and balance sheets.
- Can you explain how you handle tax compliance for your clients, and what steps you take to ensure that their tax returns are filed accurately and on time? This question can help you understand the bookkeeper’s approach to tax compliance and how they can support your business’s tax obligations.
You can also ask several questions to test their knowledge and ability to provide added value services, such as management accounts and forecasting:
- Can you explain what management accounts are and how they can benefit a business? This question can help you understand the bookkeeper’s knowledge of management accounts and their value to a business.
- Have you prepared management accounts for previous clients? Can you provide examples of the reports you’ve created and how you’ve used them to support business decisions? This question can help you get a sense of the bookkeeper’s experience with management accounts and how they’ve used them in the past.
- Can you explain how you would set up and maintain management accounts for my business? This question can help you understand the bookkeeper’s approach to management accounts and how they would handle the task for your business.
- Have you provided budgeting and forecasting services to previous clients? Can you explain your approach and how you’ve used these services to support business planning and decision-making? This question can help you understand the bookkeeper’s experience with budgeting and forecasting and how they’ve applied these skills in the past.
Communication & Availability
As a small business owner, you’ll need to work closely with your bookkeeper and communicate regularly to ensure that your bookkeeping needs are being met. It’s important to establish clear communication and availability expectations at the outset to avoid misunderstandings and ensure that your bookkeeping is being handled efficiently and effectively.
To agree on communication and availability at the outset, you can discuss and agree on the following:
- How often you’ll communicate and what methods you’ll use, such as email, phone, or in-person meetings.
- How quickly the bookkeeper will respond to your communications and what their availability is like, such as whether they have regular office hours or if they offer emergency support.
- What your expectations are for the bookkeeper’s level of involvement and support, such as whether you expect them to provide training and advice or just handle the basic bookkeeping tasks.
- How you’ll handle any issues or challenges that may arise in your working relationship, such as communication breakdowns or unexpected changes in your bookkeeping needs.
If you get these expectations wrong, it can lead to frustration and inefficiency in your working relationship. It’s important to address any communication or availability issues promptly to avoid them becoming bigger problems.
You might also want to agree on the frequency and timing of key bookkeeping tasks, such as reconciling the bank, managing expenses, and providing financial reports.
These things might be important on that front:
- How often the bookkeeper will reconcile your bank accounts and what information they’ll need from you to do so.
- How the bookkeeper will handle expenses, such as whether they’ll track and manage receipts or just provide guidance on expense policies and procedures.
- The frequency and timing of financial reports, such as monthly profit and loss statements and quarterly balance sheets.
- Any deadlines or milestones that are important for your business, such as tax filing deadlines or important business decisions that will require financial information.
You can check where the bookkeeper stands on these issues with these sorts of questions:
- Can you describe your typical communication and availability schedule? This question can help you understand the bookkeeper’s availability and how often you can expect to hear from them.
- How quickly do you typically respond to client inquiries, and what methods do you use to communicate? This question can help you understand the bookkeeper’s responsiveness and how quickly you can expect to get a response to your questions or concerns.
- Can you describe your approach to managing expenses, and how often do you typically reconcile and review expense records? This question can help you understand the bookkeeper’s process for managing expenses and how frequently they will review and reconcile them.
- Can you provide examples of the financial reports you’ve prepared for previous clients, and how often do you typically provide these reports? This question can help you understand the bookkeeper’s approach to providing financial reports and how often you can expect to receive them.
- Can you describe your process for handling urgent or unexpected requests, and what steps you take to ensure that deadlines and milestones are met? This question can help you understand the bookkeeper’s approach to handling urgent requests and how they ensure that important deadlines are met.
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Software Proficiency
Your bookkeeper may use a variety of cloud-based software to manage your business’s bookkeeping. Some common bookkeeping software options include QuickBooks, Xero, Sage and Freeagent.
These software programs are designed to make bookkeeping tasks easier and more efficient by providing features such as transaction recording, financial reporting, and bank reconciliation.
To be sure that the bookkeeper knows what they’re doing when it comes to bookkeeping software, you can ask them about their experience with different software programs. You can also ask them to provide examples of the reports and other outputs they’ve generated using bookkeeping software. Additionally, you can ask for references from previous clients to get a sense of the bookkeeper’s reputation and track record.
This is a topic that matters. Bookkeeping has changed a lot in the last decade. There is not universal competence on this subject across all bookkeepers, and if they get it wrong you will build up problems.
If your bookkeeper isn’t very good with your cloud accounting software, it can lead to a range of problems and inefficiencies.
Such as:
- Inaccurate or incomplete financial records. If a bookkeeper isn’t proficient with your cloud accounting software, they may make mistakes when recording and reconciling transactions, which can result in inaccurate financial records.
- Delays and disruptions in your bookkeeping processes. If a bookkeeper is struggling to use your cloud accounting software, it can cause delays and disruptions in your bookkeeping processes. This can lead to missed deadlines and missed opportunities to make timely business decisions.
- Poor financial reporting and analysis. If a bookkeeper isn’t familiar with the features and capabilities of your cloud accounting software, they may not be able to generate accurate and useful financial reports. This can make it difficult for you to track and understand your business’s financial performance.
- Inefficient and ineffective use of your cloud accounting software. If a bookkeeper isn’t proficient with your cloud accounting software, they may not be able to take advantage of its full range of features and capabilities. This can lead to inefficiency and ineffectiveness in your bookkeeping processes.
You could ask the bookkeeper about their cloud accounting software proficiency with these sorts of questions (We’ve imagined your on Xero, but the same questions apply to all major bookkeeping tools):
- Can you show me how to set up and customise Xero for my business’s bookkeeping needs? This question can help you understand the bookkeeper’s ability to set up and customise Xero for your specific bookkeeping requirements.
- Can you demonstrate how to record transactions in Xero and how to reconcile them with bank statements? This question can help you understand the bookkeeper’s ability to use Xero to record and reconcile transactions.
- Can you show me how to create financial reports in Xero, such as a profit and loss statement or balance sheet? This question can help you understand the bookkeeper’s ability to use Xero to generate financial reports.
- Can you explain how to use Xero’s features for managing accounts payable and accounts receivable? This question can help you understand the bookkeeper’s knowledge of Xero’s features for managing accounts payable and accounts receivable.
- Can you demonstrate how to use Xero’s tax compliance features, such as VAT returns and self-assessment tax returns? This question can help you understand the bookkeeper’s knowledge of Xero’s tax compliance features and how they can be used to support your business’s tax obligations.
Cost of Services
When hiring a bookkeeper, it’s important to discuss and agree on the cost of their services. Many bookkeepers offer a variety of pricing models, including hourly rates, fixed prices for a fixed scope of work, and pricing based on the volume of transactions.
To avoid misunderstandings and ensure that you get value for money, it’s generally best to avoid hourly rates and instead agree on a fixed price for a fixed scope of work. This can provide clarity and certainty about the cost of the bookkeeper’s services and help you budget and plan effectively.
Some bookkeepers may also charge based on the volume of transactions, with separate fees for added-value services such as management accounts. This pricing model can be useful for businesses with a high volume of transactions, as it allows the bookkeeper to charge for their time and expertise in a way that reflects the complexity and volume of their work.
To better understand their pricing and cost structure:
- Can you provide a detailed breakdown of your pricing, including any fixed fees and variable fees based on the volume of transactions? This question can help you understand the bookkeeper’s pricing model and the specific costs involved in their services.
- Are there any additional fees or charges that may apply, such as fees for added-value services or fees for urgent or unexpected requests? This question can help you understand whether there are any additional costs that may be incurred beyond the bookkeeper’s basic fees.
- Can you provide examples of the types of services that are included in your basic fees, and what services may incur additional charges? This question can help you understand what is covered by the bookkeeper’s basic fees and what may require additional charges.
- Can you provide references from previous clients who can speak to the value and cost-effectiveness of your services? This question can help you understand the bookkeeper’s reputation and track record, and whether they provide value for money.
Checking the Reputation of the Bookkeeper
The reputation and credibility of the bookkeeper matter – you’ll be entrusting your company’s finances to the bookkeeper, so it’s essential to choose a bookkeeper who is trustworthy and reliable.
There are several ways you can assess the reputation and credibility of a bookkeeper:
- Ask for references from previous clients. A bookkeeper with a strong reputation and track record will be able to provide references from satisfied clients who can speak to their credibility and trustworthiness.
- Check for professional certifications and qualifications. Many bookkeepers are certified by professional organisations, such as the Association of Chartered Certified Accountants (ACCA) or the Institute of Certified Bookkeepers (ICB). A bookkeeper with professional certifications and qualifications can provide reassurance that they have the knowledge and expertise to handle your company’s finances.
- Research the bookkeeper’s online presence and reputation. Many bookkeepers have websites and social media profiles where you can learn more about their services and reputation. You can also check online review sites and forums to see what other people are saying about the bookkeeper.
- Ask the bookkeeper about their approach to ethical conduct and data security. A bookkeeper with a strong commitment to ethical conduct and data security will be able to provide reassurance that they will handle your company’s finances with the utmost care and professionalism.
Bookkeeper Questions - Final Thoughts
And there you go, you now know how to quiz any potential bookkeeper to make sure they can offer the services you need, at the price you’re willing to pay. You can check how they communicate and do a little due diligence about their skills and reputation.
If you want to take advantage of a free consultation with a pre-vetted bookkeeper that can answer all these questions with flying colours, then drop us a note and we’ll be happy to help.