Small Business Bookkeeping Guide

10. How to Hire Bookkeeping Services

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Business Finance

How to Hire Bookkeeping Services

Jun 24, 2019 • 8 min read
Two women doing bookkeeping together
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      Is it time to hire a bookkeeping service for your small business? Perhaps your business is growing, or you don’t have time to do it all on your own anymore. Whatever the reason, there are plenty of bookkeepers out there ready to help you keep your books in order.

      Why hire a bookkeeper?

      According to research by Clutch, almost half of small businesses (45%) don’t employ a bookkeeper, and a quarter of small businesses still record their finances on paper instead of a computer. Doing your bookkeeping by yourself isn’t easy. It can be easy to make errors or miss something important. Manual bookkeeping can also put your data at risk from damage or theft.

      With the help of a professional bookkeeper, you may be able to manage your cash more effectively, save some time, and make better business decisions.

      Curious about what a bookkeeper could do for you? Typical tasks a bookkeeper can help with include:

      • Streamlining your bookkeeping systems and processes
      • Recording and reconciling transactions and expenses
      • Handling accounts receivable and payable to avoid cash flow issues
      • Issuing invoices
      • Paying sales taxes
      • Managing payroll and certain HR functions
      • Working with your tax preparer
      • Delivering financial reports and help track your financial health

      Most small businesses don’t need to hire a full-time bookkeeper and can keep costs low by working with an external bookkeeper. Here’s what you need to know to hire right.

      Hiring a freelance bookkeeper.

      Freelance bookkeepers can benefit your business in many ways. Because they typically work from home, their overheads are low and their fees competitive. Rates can range from $15-$50 per hour depending on the nature and range of work you want them to do—and you only pay for the hours you use. Freelancers are also business owners and stake their reputation on meeting deadlines and taking their work seriously.

      Freelancers can be found by word of mouth or via freelance job sites such as Upwork, Indeed, or Freelancer. You can also connect with a network of bookkeepers via QuickBooks’s ProAdvisor certification program or Xero’s advisor directory.  

      Working with a bookkeeping firm.

      Bookkeeping firms may cost more than a freelance bookkeeper but for good reason. They bring a range of experience to the table, access to a larger team of experts, and guaranteed coverage. Unlike a freelance bookkeeper, if your dedicated bookkeeper takes a vacation or is otherwise unavailable, someone else can seamlessly step in.

      Bookkeeping firms may also offer accounting services, which brings the added benefit of sourcing your tax filing and financial advice from a single provider.

      Bookkeeping firms can be found online or through referrals.

      Another option is a technology-based bookkeeping firm, like Bench. For a flat monthly fee, Bench uses its proprietary cloud-based software to connect you to its team of bookkeepers. If your finances are straightforward, this can be a cost-effective choice, since automation cuts much of the manual work.

      Understand the difference between a bookkeeper and an accountant.

      In your search for bookkeeping help, don’t confuse bookkeepers with accountants or CPAs.

      Many accountants provide bookkeeping services, but they can also prepare detailed financial statements (profit and loss statements, balance sheets, etc.).

      Accountants, however, are not all Certified Public Accountants (CPAs). Many who perform this function don’t have accounting degrees. In order to become a CPA, accountants must pass a Uniform CPA Exam and meet rigorous experience requirements. Because of the more thorough requirements to become a CPA, individuals and businesses may look to CPAs for more assistance with their financial decisions and goals. Furthermore, you would need a CPA—not an accountant—to prepare audited financial statements and represent a taxpayer before the IRS.

      Be sure to consider which type of professional help you’ll need when choosing a bookkeeper, accountant or a CPA.

      Choose a bookkeeper who knows your industry.

      Bookkeepers often specialize in certain industries. Make sure that your bookkeeper understands your industry and specific business needs. Bookkeeping for a construction or manufacturing company is very different from handling a service-based company.

      For example, Allison Vitek, owner of A-Sharp Bookkeeper, has a unique niche. Vitek combines her passion for music and bookkeeping to help other music business owners take care of their books. “Someone who may be an expert at keeping the books for law firms may have no idea how to record applied overhead or labor costs [for musicians],” said Vitek.

      “I myself specialize in serving music businesses because I have a music degree and still work in the music industry. I understand how their businesses are run and can predict what types of obstacles to look out for during the year. I think being a musician also gives me an advantage in terms of fitting in with the company culture. Being able to make personal connections helps to instill mutual trust and respect between the bookkeeper and owner, creating a long-lasting business relationship.”

      Ask probing questions.

      Hiring someone to help with financial management for your business is a significant undertaking. A bookkeeper would typically have access to your finances, act in the role of a trusted advisor, and be willing to work closely with your accountant. Before you hire a bookkeeper, be sure you understand what you’re getting into. Shop around and find someone with whom you feel comfortable.

      During the screening process, Vitek recommends that business owners find out what they can expect from the bookkeeping process. “Interview several bookkeepers and keep a note of what they say in common and ask further questions for anything that sticks out or sounds odd,” says Vitek.

      If you don’t screen your bookkeeping candidates, you might end up overpaying later on. Vitek shared a story that many small business owners would do well to keep in mind. “I recently spoke to an owner of a music school who had been going along with whatever her bookkeeper said without doing her own research. As a result, she has been paying way more for payroll than she needs to.”

      If you choose to work with a freelancer, they may or may not have experience working with your accounting software. Ask about this during the consultation process, as well as their capacity to work with your accountant or CPA during tax time. Other considerations include their availability, especially during the busy season at the end of the financial year.

      About the author
      Irene Malatesta

      Irene is a business content strategist with Fundbox, passionate about working with entrepreneurs and mission-driven businesses to bring their stories to life. Fundbox is dedicated to helping small businesses grow by democratizing access to credit.

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