Bookkeeper secrets are important facts that every small business owner needs to be aware of. There are some bookkeeper secrets that can be helpful to know to when you decide to work with one.
Your bookkeeper may only tell you a little about how much their service will cost. In the end, you may pay a lot of additional fees. That often happens when the bookkeeper needs better understanding scope of the work, and there needs to be a pricing structure. For example, if you agree on an hourly rate and the bookkeeping could be done more efficiently, the total hours spent may also be a lot.
Make sure you have transparent pricing for the bookkeeping service you are getting. There should be a detailed breakdown of costs, including any additional fees or charges, and a clear explanation of how the pricing is determined.
At NumberSquad have established pricing packages to avoid this problem. Although some bookkeeping companies use monthly expenses, we take annual sales of the businesses to give us an idea of how much time and resources we will use for the work. The monthly costs of clients can fluctuate a lot, and it needs to make sense when the business does not generate sales. That is why our pricing packages are based on yearly revenue ranges.
Engagement Letter or Contract
Ask if the bookkeeper or the accounting firm can provide an engagement agreement. An engagement agreement is a legal contract between a client and a service provider outlining the terms and conditions of the services to be provided. It typically includes details such as the project’s scope, each party’s responsibilities, the timeline for completion, and the payment terms. It also may include details such as the level of communication, the ownership of the final work product, and handling any disputes. An explicit engagement agreement can help ensure that both parties understand their obligations and can help prevent misunderstandings or disputes from arising.
New Client Deals
Many professionals offer some deals to attract new clients, and bookkeeping services are not exception to that. Before you sign up for monthly or weekly bookkeeping services, check with them if they have any discounts.
Details of Bookkeeping; Cash or Accrual, Bill Pay, Invoicing?
Not all bookkeeping services are the same, and both parties must discuss critical details of the service before the work starts. For example, if your bookkeeper records transactions only from your bank and credit card statements, it is most likely cash-based bookkeeping. If you need to see invoices and bills, cash-based bookkeeping may not include that, and you cannot generate detailed reports.
How Long Will It Take?
Deadline is also an important factor when you receive any service. Your accounting firm may need more dedicated bookkeepers, which may take longer than expected. For example, if you must file taxes or apply for a bank loan, you may need the financial reports ready before a specific day.
You May Need an Ongoing Bookkeeping Service
- Tax season is a better time for bookkeeping clean-up, and this is one of my favorite bookkeeper secrets. Bookkeeping is not only for tax filing. If you update your books once a year, your typical local bookkeeper may have yet to tell you that bookkeeping should be done ongoing and monthly for a few good reasons. Small business owners need to make decisions all the time. They have to control spending and compare periodic sales and expense figures. All these are done better and more efficiently if your numbers are accurate and up-to-date.
- You might have missed some deductions if you start working on your bookkeeping during tax season; usually, there is a lack of time and energy, and some expenses may not be accounted for. For example, if you spend some of your business expenses from personal accounts, and the deadline is so close, chances are your bookkeeper won’t ask you about them.
- Not all local accounting firms have dedicated bookkeeping teams. Most staff members are focused on tax preparation during tax season. That will affect the quality and accuracy of your bookkeeping. To avoid this issue, NumberSquad has a dedicated bookkeeping team separate from the tax team.
Nobody Knows Everything
One of the bookkeeper secrets is that your bookkeeper is just another human being and it takes a lot of time, knowledge, and effort to be one of the best. Consider following before hiring one.
1. Accounting Related Education
Education is not required to become a bookkeeper. However, some accounting and finance concepts in bookkeeping are challenging to understand if the bookkeeper does not have a relevant educational background.
An experienced bookkeeper is very efficient and knows where the pitfalls are. They will prepare your financial reports faster and more accurately.
3. Industry Knowledge
Education and experience are not everything. It is crucial if your bookkeeper has industry experience. Accounting and taxation can be applied differently from one industry to another. For example, revenue recognition or cost of goods can vary dramatically.
4. Ability to Research
Successful and efficient bookkeepers are those who can research and learn. No matter how well a bookkeeper is knowledgeable knows, there will be plenty of space to explore. Ask if your potential bookkeeper has a such example.
Which Software Your Bookkeeper Uses Matters
Software that your bookkeeper will use matters for a few reasons. That may not sound critical but it definitely one of the bookkeeper secrets that make difference to save time and cost.
Using standard and comprehensive accounting software such as Quickbooks Online or Xero is essential. They are very commonly used and cloud-based. If you change your bookkeeper, you don’t have to rebuild your historical data.
Choose the Right Accounting Software
Accounting software should suit your industry and the size of your business. You should be able to change or upgrade editions when you need.
Ask if your bookkeeper has a special deal on accounting software. The cost of software can be high. For example, as QuickBooks Proadvisor, NumberSquad get discounted price on Quickbooks for our clients.
No matter how great your bookkeeper is, every small business owner or self-employed professional should educate themself in accounting and tax concepts. This will help you to make better decisions using the financial statements and spot mistakes in the reports. For example, many people mistake profit for the bank balance. They are rarely the same thing.
Your outsourced bookkeeper’s job is merely about preserving your financial and tax documents. The bookkeeper may never remind your numbers on the financial statements, and bank statements may not be sufficient in the case of an audit. Keep your business documents and receipts. Softcopy saved somewhere in the cloud is usually acceptable. Check the article at this link if you want to learn more about what does a bookkeeper do.