Two Ways to Improve Your Financial Health
If you read our last blog, Small Business Bookkeeping – Are You Wearing Too Many Hats?, you might remember that there are 2 most common types of bookkeepers you can hire:
We also mentioned that the type of bookkeeper you hire, their costs, experience, availability and process are all extremely important. Since they’re going to be responsible for keeping you informed of your company’s financial health, you need to be confident in your decision.
Hiring a Full-Time Bookkeeper
Cost is absolutely something to keep in mind if you are considering hiring a full-time bookkeeper. In addition to the investment of their annual salary or hourly wages, there are a couple of additional investments you’ll need to make too. We’d call them “hidden costs.” You’ll need to provide them with an office workspace, phone, computer, possibly annual raises, perhaps invest in additional training and possibly benefits. In the end, you probably already know that hiring someone isn’t just the rate you pay them. On the other hand, hiring someone that doesn’t cost you very much can be hazardous to your business’s financial health.
Experience comes into play when you think about the costs! If you do end up posting a job opening, you’ll want to keep in mind your applicant’s experience. Though, number of years isn’t the only metric you should be measuring. Other key areas your new staff member should have experience in/with are: technology and advanced tools, coming from your industry, direct work experience with CPAs and continuing education to stay current with proper procedures.
Availability is another key metric to be mindful of. If you hire internally, you’ll need to create a plan in the event that your employee gets sick, takes leave or takes a vacation. Having just one person responsible for all your financials may end up leaving you stranded if you’re not prepared.
Processes are unique to each company and the right bookkeeper for your business should also be able to adapt. From day one, they should consult with you about what your expenses are so that they can have a better idea of how to categorize them. However, because the legal qualifications are not equivalent to what they are for a CPA, a bookkeeper you hire may make mistakes with the bookkeeping process - especially if they don’t know the full requirements of your industry. This can lead to problems with financial transactions and the time you’ll have to spend helping them out. Remember that if they make a mistake or report inaccurate information, it’s still you and your business that face the consequences.
Hiring a Bookkeeping Firm
Cost is typically less when you hire a firm than it is to hire a full-time employee since there’s no additional overhead of office space, benefits, annual raises, investments into training, etc. Don’t just take our word for it though! When you’re investigating a firm we’d recommend you ask them about whether or not they have set monthly fees. By offering you set monthly fees, you’ll truly be able to budget what your bookkeeping costs are as well as perform a true comparison of hiring internally versus hiring that firm.
Experience is still key for the choice you make in employing a firm. Firms that specialize in bookkeeping can employ staff with experience that’s all over the map, ranging from beginners to experts. It’s important to ask if a firm guarantees a certain level of quality so that accuracy isn’t impacted from person to person. We’d also recommend that while you’re interviewing the firm to ask if they have experience in working with technology, if they take part in additional training and if they have worked directly with CPAs. Each of those areas can speed up the process (and keep your costs low) throughout the year and during Tax Time.
Availability comes into play when considering hiring a firm too, but in a different way. Since you’d instead be electing to have an entire firm responsible for your books, when one person is ill, on leave or takes a vacation - another bookkeeper will be able to pick up their slack. A couple of key things you should investigate are about where they’re physically located and how you can reach them. From time to time, you will need to meet with them.
First, firms may offer you the ability to meet via virtual video conferencing. If that’s the case, then their physical location becomes less troublesome. If you’re uncomfortable with conducting business in this manner, consider hiring a firm that’s local to you or perhaps one with several locations.
Second, find out how available they truly are. Most companies are going to be quick to respond when they’re trying to gain your business, that’s a no-brainer. This is where we’d suggest you ask them for references! This way, you can speak to other owners and directly ask if they return emails, calls and always show up for scheduled meetings.
Processes that a firm uses are worth asking questions about as well. Many firms may be able to offer the ability to work remotely with them. If that’s the case, they may need you to get comfortable using their bookkeeping services (or software programs) so that you can really work together. This may present a bit of a learning curve for you and we’d suggest you consider asking if they provide any training, resources or guidance on their programs. One bonus to using tech is that it’s a step towards having a paperless office – and ditching the old shoeboxes stuffed full of receipts could be a blessing.
If the firm does not have options to work remotely with you, again take a look at where they’re physically located as this could be important. Even if they’re not physically close to you, traditional mailing is an option. However, sending large amounts of papers does come at a cost and we’d suggest that you tack that onto whatever quote they provide, to give you the true costs associated with that firm.
Consider Outside Help
Now that you’ve read through the true breakdown of costs, experience, availability and processes - it’s time to make some decisions and begin investigating your options. The right bookkeepers, accountants, CPAs and processes should be helping you get back to running your business.
Bookkeeping and accurate records enable you to make sound business decisions throughout the year. If you think your company would benefit from an inspection of your internal processes, bookkeeper training or that you may be interested in accounting services, please give us a call at 812-222-1527 or send us a message anytime.
Now is the time to make some easy changes to your bookkeeping system and turn that tiresome task of bookkeeping into your secret weapon to success!