Choosing A New Bookkeeper: The Ultimate Guide
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Finding a Bookkeeper Near Me: How to Find A Good Local Bookkeeper
Bookkeeping goes right back to an Italian man, named ‘Lua Pcaiolli’ known as the ‘father of accounting’. Way back in 1494 he introduced the ‘double entry’ bookkeeping system that is still used widely today.
In this article we’ll cover everything you need to know to help you find a bookkeeper, including what a bookkeeper does, how their work crosses over with an accountant, the sorts of skills and qualifications you should look out for and how they can add value into your business.
So let’s get into it.
What is Bookkeeping?
If you’re looking for a bookkeeper near me online, then you probably have a business or are self employed and need help with the financial side of things.
Bookkeeping is all about recording the financial transactions of the business on an ongoing basis. Bookkeepers are responsible for keeping up to date and accurate financial information about the business they are helping. More often that not, the bookkeeper will have fairly limited scope – providing reports to business owners or making paperwork available to accountants for the next stage of things. However, as with most professions, skills and experience vary and some bookkeepers may be able to help with strategy and planning.
Good Bookkeepers
Good bookkeepers should have a methodical approach to for maintaining accurate records. There are different methods, including ‘single entry’ and ‘double entry’, and these are sometimes thought of as being best practice bookkeeping approaches, in the end as long as your bookkeeper is maintaining up to date records of transactions in and out, then it’s the same end state.
There’s no fixed line for when a bookkeepers role ends and when an accountant’s role begins, but generally speaking bookkeepers do not tend to get involved with tax returns for companies.
What qualifications do bookkeepers have?
There are certifications that a bookkeepers can obtain through associations and institutes. The Institute of Certified Bookkeepers (ICB) offer a diplomas and certificates through accredited providers, and they are the largest bookkeeping institution globally.
Other associations are out there too. The Association of Accounting Technicians (AAT) offers different bookkeeping qualifications. You can become licenced through this process and even have letters (AATQB) after your name. If you achieve this level you can become licenced through the AAT for the services you offer.
Some bookkeeping roles may not need a qualification. Even some experienced bookkeepers have ended up in the role through systematic exposure to the role. In nearly all circumstances you would expect the bookkeeper to have knowledge of bookkeeping methods (single entry / double entry) and be comfortable using modern software to get the job done.
Some younger people may start their bookkeeping carer with a qualification from school and learn more whilst they are on the job. A degree isn’t required for bookkeeping, but bookkeepers can study via colleges and universities and there are even online courses in order to master the basics.
When seeking to find a local bookkeeper, whether they have an appropriate qualification is an important question, but should be considered against other factors as well, such as their experience, client testimonials and ethics.
What does a bookkeeper do?
Bookkeepers must provide up to date and accurate financial information about a business. Fundamentally, the two tasks that define bookkeeping are data entry and bank reconciliation.
Other roles may include:
- Managing the profits and loss for the company
- Managing the balance sheet for the business
- Paying bills and suppliers
- Dealing with client invoices, approving payments (or denying) payments
- Maintaining the company ledgers
- Recording financial transactions
- Completing tax forms
- Completing VAT returns
- Producing financial reports
A good bookkeeper does a lot more than just reconcile the bank statements though. If you are brining in an outside bookkeeper for your business, they may be able to contribute other ideas, such developing systems to account for all financial transactions through establishing a chart of accounts. They may help to define bookkeeping policies and best practices.
They can also offer advice around cashflow, business strategy and planning.
What’s the difference between an accountant and a bookkeeper?
Your accountant should be the real financial expert. They are the ones who will ultimately give you the advice that has the most impact on the business. They may well major in tax planning and preparing your tax returns. Your bookkeeper on the other hand is more likely to more of an expert in maintaining accurate business records that get made available to your accountant.
Bookkeeping is an administrative role that handles the ongoing tasks of documenting financial transactions, whether it be purchases, sales, receipts and other payments. There are a set of steps and a process that a bookkeeper can follow to get your data entered correctly and the bank reconciled.
Accounting is more subjective – it is the accountant’s job to take the input from the bookkeeper and offer the best advice and insights they can to help you progress your business goals.
Bookkeeping is an early stage of the accounting process. It’s likely your accountants could do the work for you, but part of the attraction of using a good bookkeeper is to make the life of your accountant a little easier – and therefore keep the costs of your accounting service down as much as possible.
Your bookkeeper will help generate data about your business. Your accountant will take that data and turn it into usable and actionable information.
With the advent of cloud software packages, such as xero, quickbooks and freeagent, some companies choose to take on the bookkeeping function for themselves and simply have an accountant log into the software to then carry out the next stage of things.
This approach is fine if your requirements are simple, and you do not require anything other than bank reconciliation in a formulaic way. If you need more on the advice side, or if you want your bookkeeping to get involved with preparing other paperwork or dealing with suppliers, then there’s no replacement for a real person being involved.
What are the most important tasks a bookkeeper does?
There is a recognised accounting cycle that is intended to make the financial accounting of a business as easy as possible for a business owner.
The cycle typically includes:
- Identify transactions
- Recording transactions in a journal
- Posting
- The unadjusted trial balance
- The worksheet
- Adjusting journal entries
- Financial statements
- Closing the books
Your bookkeeper should have an awareness of how to get this done.
They will most likely be confident in working with at least one cloud accounting platform as this will help them move through the steps in the process above and produce meaningful reports and intelligence for the business owner.
Your bookkeeper may get involved with managing business repayments, maintaining a journal of asset depreciation, calculating interest on loans and investments and setting money aside for the payment of corporation tax.
If you’re fortunate enough to have a great bookkeeper, as well as them handling the accounting process for you, you can have confidence that you’ll be able to:
- Make better budgeting decisions
- Know with more clarity where your money is going
- Release time back to you to focus on the business
- Understand the ebb and flow of trading, whether it be seasonal or other
- Have insight into metrics that inform thinking, such as revenue, costs, profits et
- Reduce stress levels knowing that a professional is dealing with these thing
What skills should you look for in a bookkeeper?
Let’s start with the non negotiable bits. If they can’t reconcile the books, or are terrible with numbers, perhaps they aren’t the right fit to be your bookkeeper.
Here are the core areas for your bookkeeper to be comfortable with:
- Balance Sheets
- Bank Deposits
- Bank Reconciliation
- Benefits Calculation
- Billing
- Bonuses and Commissions
- Debits and Credits
- Deferral Transactions
- Depositing Payroll Taxes
- Depreciation
- Financial Statements
- General Ledger
- Inventory Transactions
- Invoicing
- Journal Entries
- Managing transactions and cash flow
- Monetary Exchange
- Nonprofit Accounting
- Overtime
- Payments
- Payroll Journal Entries
- Payroll Tax Calculations
- Reporting Payroll Taxes
- Wage and Salary Calculation
However, even if your bookkeeper has great core skills, they might still be a headache if they are lack organisation, or are not good working with clients and suppliers.
The ‘added value’ skills to look for in a bookkeeper are:
Great attention to detail
This is probably pretty self explanatory. The person who is going to cross the t’s and dot the i’s of your financial transactions needs to excellent at making sure they are doing it to the right standard. You might make key financial decisions based on the data that is being shared with you, so it’s of fundamental importance that all valuable details are included.
Communication skills
You may well have brought in a bookkeeper to do things that don’t come naturally to you. Having that specialism around is wonderful, but if they can’t explain the key concepts and detail to you in a way that makes then some of that value will be lost. Equally, if they are going to chase payments at any time or deal with suppliers, it’s nice to know they won’t create more problems for you by poor communication.
Integrity & Ethics
You really need someone you can trust in this role. Beyond marketing, operations and sales, your bookkeeper will see behind the curtain, they will have full access to the financial records of the business. This data is hugely confidential and will be of commercial significance. It can be worth ensuring you have a contract in place with a non disclosure clause in it to help ensure that the integrity is maintained.
Organisation skills
This goes hand in hand with the attention to detail. Many business owners do not major in staying on top of paperwork. Instead, they want to focus on the business and sales side of things. Finding a local bookkeeper or bookkeeper near me that can contribute to this area can be a real asset if they can help place structure around the processes and timescales associated with the financial side of the business.
Why should a small business need a bookkeeper / what are the benefits of a bookkeeper?
In a small business, time is your single greatest asset. There’s a good chance that if you really put your mind to it, you could take over some of the key responsibilities of a bookkeeper. Cloud accounting software has made this an even more realistic proposition.
But ask yourself – if you are spending time doing the bookkeeping, what aren’t you doing instead? What is the opportunity cost of doing the work yourself?
Further, if you were to take the work on yourself, could you be sure you do more than the minimum requirements? If you can’t be sure then you would be missing out on management reports and insights that come from having a specialist dealing with these things for you.
The benefit of a bookkeeper will mean:
Detailed recording for your business
This can have an impact on your tax liability and even how well placed you might be to exit the business some time in the future.
Compliance with the law
The bookkeeper will be accountable for getting things right for you and for clearing any mistakes up that are made. These are typically jobs that are dealt with faster and more error free when they are being handled by an expert.
Faster Reporting
It’s true that the final accountants will come from the accountant, but a good bookkeeper can let you have a good idea what is going on at an earlier stage. Better data equals better decisions
Better tax forecasting
It’s far more preferable to have an idea about the rough estimate of your tax liabilities sooner rather than later. A good bookkeeper can help you plan and save for these moments ahead of getting bills that cause distress.
Swifter decision making
If you have close to real time understanding of your financial posture you will be better placed to capitalise on opportunities or allocate resources to new projects when they arise. Being able to answer the question of whether you can take action is underpinned by good bookkeeping.
Avoid upset with suppliers
Your bookkeeper can help ensure you are up to date with your payments, which keeps suppliers happy and relationships healthy as well as having a bearing on your own cashflow. Speaking of which…
Better cashflow forecasting
As your bookkeeper will have the day to day view of your finances they are well placed to tell you if there are calm or troubled times ahead. Many businesses hit distress because of cashflow problems.
Improved access to finance
If you need to raise finance in the future, creditors are more likely to be supportive of your case if you able to demonstrate excellent bookkeeping and a solid handle on your companies finances.
Do I need a bookkeeper?
In short, yes. In most cases, yes you need a bookkeeper.
You could take over some of the work of a bookkeeper yourself. However, keep in mind that around ½ of new businesses will fail within the first 5 years. The number one reason? Financial mismanagement.
The more organised you can be, the less stress you will be under, the more time you will have and the more creatively you can focus on the strategy of the business.
The absence of well-defined bookkeeping processes usually means that finance related tasks can build up and create significant time drains on your resources.
A lot of business owners are less focussed on documenting every single financial transaction and more focussed on the running of the business. There’s a stereotypical image on a carrier bag full of old receipts for petty cash purchases and coffees. If you’ve been able to find a local bookkeeper, then some of these headaches can disappear.
You should also remember that your bookkeeper will help you stay organised for taxes, give you insight into profit and loss and help ensure you are paid on time.
Finally, the work has to be done at some point. So you pretty much have 3 options; do it yourself, get a bookkeeper to do it or pass a lot of it onto your accountant. The middle option is likely the most attractive option in terms of time and capital outlay.
What are the qualities to look for in a bookkeeper?
Not all bookkeepers are created equally! You need a balance between the core skills that your bookkeeper needs, and the softer virtues that could be the make or break aspects of how well you work with each other and the value they add to your business.
You certainly won’t be at a disadvantage if you’re able to find the following traits in your bookkeeper:
Having a positive attitude
It’s hard work running a company. Really hard work. You do not need someone constantly seeing the worst in everything. A caveat, you need positive realism from your bookkeeper, not naïve optimism that leads to mistakes. It may well be their job to give you bad news and you want them to be able to do that.
Conscientious
You want to feel that that your bookkeeper cares about the work they are involved in and they are invested personally and professionally with their own output. They are far more likely to do a great job for you if genuinely have a connection with how it turns out.
A great memory
You’ll have a software system that can retrieve the stats about your finances, but having a bookkeeper with good recall can aid discussion and provide context if you need to look back at historic payments or situations.
Strong communicator
Your bookkeeper may need to deliver good news, bad news, forecasts, projections and more to internal stakeholders, customers and suppliers. It’s better they get the messages across in a friendly, understandable and concise way.
Comfortable using cloud technology
You really need your bookkeeper to be happy working with whatever your preference of cloud software is. The perfect world for this is for you, the bookkeeper and the accountant to all be using the same software solution.
How else might a bookkeeper help your business?
You might simply want a bookkeeper who can do the data entry and reconcile the figures. Simple enough. However, you might want to find someone who can get involved cash flow forecasting, preparing budgets and offering expert advice on strategy.
In simple terms, most bookkeepers should be able to create the data, the more consultative ones will be able to help do something with the data.
What questions should you ask your bookkeeper?
Before hiring your bookkeeper, it’s worth having in your mind a series of questions you can ask them in order to ascertain their level of experience and competence.
You’ll be employing a bookkeeper to do some of the jobs that you don’t want to, or can’t do. However, you should be able to hold the person to account and being to ask questions that challenge them.
Find out more about your prospective bookkeeper with the following questions:
- Are you qualified? If so, who with?
- How do they identify and correct their own errors?
- How well do they understand your industry / business model?
- Where would you look in order to assess opportunities for us to reduce cost?
- What types of accounting software are you familiar with?
- What sort of financial reports can you produce?
- How can we make our bookkeeping process more efficient?
- What is their process for bookkeeping?
- How have you become a better bookkeeper over the years?
- What strategies do you recommend for increasing profit?
- How do you stay current with appropriate laws that impact you?
- What do they see as falling into their remit, the remit of the business owner and the remit of the accountant?
- What working hours do they keep?
- Do they see the role of the bookkeeper as being able to offer analysis? Or is it simply to produce figures?
You want to know that your bookkeeper is going to be an asset for you and not a liability. Asking as many questions as you can at the start of your working relationship won’t eliminate the risk of things going wrong fully, but it can certainly mitigate it to a large degree.
Bookkeeping ethics
And as important here really is ‘business owner ethics.’ Your bookkeeper is going to be exposed to the type of confidential financial information that is usually reserved for the business owners or directors.
In a lot of situations, there may be more than one permitted way to account for a transaction. This can lead to situations where bad practices can creep in. In most organisations, the ethics and culture are spread down from the top.
Don’t put your bookkeeper in a situation where they may be compromising their professional reputation by acting in a way that is not legal.
Remember, your bookkeepers first duty is to the law, and not directly to you.
Cost of a Bookkeeper
There just isn’t one clear simple answer to this. The cost of the bookkeeping service for your business will be unique to you. You might have lots of transactions that needs reconciling and suppliers to deal with, whereas someone else might have completely different requirements.
The scope of services the bookkeeper provides will also have a bearing on the cost. You’ll pay less for someone to simply reconcile your financial transactions compared to someone who offers business strategy, reporting and forecasting.
You should seek to understand if your bookkeeper will charge you an hourly rate or a fixed fee for the scope of the services you agree. If they are proposing an hourly rate, you need to be sure they are efficient workers and that you won’t end up with inflated costs due to poor productivity.
Equally, if you agree a fixed cost for a fixed scope of work, you should be mindful not to ask your bookkeeper to take on significantly more work without extra payment.
One way of working out if you are being offered a price you are happy with, is to speak to other business owners to understand the nature of the services they receive and prices they pay. You can line up separate calls with multiple bookkeepers and compare the services and prices. You can also use our service at Go Impartial and we can connect you with some of our partners that can help.
Using Go Impartial to find your next bookkeeper
Many of the accountants we work with have relationships with local bookkeepers they recommend and trust.
All of the accountants we work with have passed our guarantee. You can request a call back from one of our specialists here.
