The Ultimate Guide to Hiring a Bookkeeper for Your Business
Hiring the right bookkeeper is one of the smartest moves you can make to level up your business. But how do you know where to start?
In this article, we’re diving into exactly what to look for in a bookkeeper, the benefits they bring, and how to find one that’s perfect for your business.
What Does a Bookkeeper Actually Do?
Let’s start with the basics and look at exactly what a bookkeeper actually does.
A bookkeeper keeps your financial house in order. They record transactions, organize receipts, reconcile accounts, and prepare reports that give you a clear picture of your business finances.
But it’s more than just data entry. A good bookkeeper ensures your financial records are accurate, which is crucial for making informed decisions. They also help you stay compliant with tax laws and avoid costly errors, like missed payments or incorrect reporting.
This isn’t just number crunching, it’s the foundation for making smart decisions and staying on top of taxes.
The Difference Between a Bookkeeper and an Accountant
You’ll find that a lot of people use the terms "bookkeeper" and "accountant" interchangeably, but the truth is, they play different roles in managing your business finances. Let’s break it down.
Bookkeepers
As I mentioned above, bookkeepers handle the day-to-day details of your business finances.
They record transactions, reconcile accounts, organize receipts, and maintain accurate financial records.
Their job is to ensure that your books are always up to date and error-free.
Accountants
Accountants, on the other hand, tend to focus on the big picture.
They analyze the data provided by your bookkeeper to prepare financial statements, advise on tax strategies, and guide your long-term financial planning.
While both bookkeepers and accountants are both detail-oriented, accountants tend to be more strategy-focused and are able to advise on more complicated tax issues.
Why Hire a Bookkeeper?
So why should you hire a bookkeeper? Here are three big reasons:
1. Save Time and Focus on Growth
Running a business is already a full-time job. Imagine trading hours of bookkeeping software and spreadsheets for time spent growing your business, or just taking that time to recharge and live life outside of work.
When you delegate bookkeeping tasks, you free up your mental bandwidth to focus on the big picture, like landing new clients or developing products.
It also means no more late nights spent reconciling accounts or worrying about keeping up with tax deadlines.
2. Stay Organized and Scalable
As your business grows, so do your financial needs. A great bookkeeper scales with you, offering more services like payroll, or more detailed financial reporting as you expand.
This flexibility is key. When you’re just starting out, you might only need help with monthly reconciliations.
But as you grow, your bookkeeper can handle things like tracking inventory, managing employee expenses, or filing sales taxes, allowing your financial processes to grow seamlessly alongside your business.
3. Access Financial Clarity Anytime
Thanks to cloud-based tools like Xero or QuickBooks Online, you can check your cash flow, overdue invoices, or profit margins anytime, anywhere. You’ll have your financial dashboard at your fingertips.
This kind of visibility gives you confidence.
Instead of wondering if you can afford to invest in new equipment or hire another employee, you’ll have the numbers to make those decisions with certainty.
Bookkeeping and Accounting Under One Roof
When we started Avalon, one of our key strategies was to combine bookkeeping and accounting under the same service provider, and for good reason.
So, what’s the benefit of having both services in one place?
Using a firm that offers both bookkeeping and accounting can save you significant time and ensure more efficient collaboration. Instead of juggling communication between separate providers, you have one team working together to manage your finances.
For instance, your bookkeeper and accountant can collaborate to streamline tax preparation, quickly address potential issues, and ensure nothing slips through the cracks. With everything handled in-house, the process is far more efficient.
This integrated approach makes your life easier and ensures that your financial strategy and daily operations work hand in hand.
It’s a one-stop shop for managing your books, planning for the future, and achieving your business goals.
Should You Hire a Local or Virtual Bookkeeper?
When hiring a bookkeeper, one of the decisions you’ll face is whether to go with a local bookkeeper or a virtual one.
Both options have their advantages, and the right choice depends on your business’s needs and your preferred way of working.
The Benefits of a Local Bookkeeper
A local bookkeeper is a great choice if you prefer face-to-face communication or need someone with in-depth knowledge of local regulations or complexities.
They’re great for businesses that prefer dropping off documents in person or want a bookkeeper who can visit their office regularly.
Having someone nearby can also be useful for industries with specific compliance needs, like restaurants or retail, where local knowledge and accessibility are key.
The Benefits of a Virtual Bookkeeper
A virtual bookkeeper, on the other hand, offers flexibility and access to a broader talent pool. With cloud-based tools like Xero or QuickBooks Online, you can collaborate just as effectively as you would in person, no matter where they’re located.
One major advantage is that you’re not limited to local options. This allows you to find a bookkeeper with the exact skills, industry knowledge, and experience that align with your business needs.
Virtual bookkeepers can also easily adapt to your schedule and workflow, making it easier to stay on top of your finances from anywhere.
Which Option is Best for You?
The choice between local and virtual really comes down to your comfort level and the nature of your business. If you’re already using cloud-based tools and prefer digital collaboration, a virtual bookkeeper could be the perfect fit.
On the other hand, if you want someone who can pop by the office or provide hands-on assistance, a local bookkeeper might be more suitable.
What to Look for in a Bookkeeper
Now let’s talk about what to look for when hiring a bookkeeper:
Experience and Specialization
First off, you’ll want to know that they have the experience or specialization that will help your specific business.
Do they have experience in your industry? A bookkeeper for a tech startup might handle things differently than one for a restaurant.
For example, restaurants deal with inventory, tip reporting, and cash transactions, while tech startups might focus more on managing investor funds or categorizing R&D related expenses to claim tax credits.
Finding a bookkeeper who understands the unique challenges of your industry can save you a lot of headaches.
Tech-Savvy Skills
You’ll also want someone who is tech-savvy.
Can your bookkeeper navigate tools like Xero or QuickBooks? And bonus points if they’re familiar with receipt management tools like Dext or Hubdoc.
The right tools can make a big difference. They help automate repetitive tasks, reduce errors, and give you real-time insights into your finances.
A tech-savvy bookkeeper can set up these tools and show you how to use them effectively.
Clear Communication
And a great bookkeeper doesn’t just crunch numbers, they help you understand them in a way that’s actually useful.
This means they’ll explain financial reports in plain language and highlight trends you should be aware of.
They should also be proactive about communicating potential issues, like cash flow shortages, so you can address them early.
Flexible and Scalable Services
You’ll also want someone who can grow with you, whether you need basic bookkeeping or help with things like payroll or tax prep.
A good bookkeeper can handle your current needs and also anticipate what’s coming next. For instance, they might suggest implementing new software before your transaction volume grows too large to manage efficiently.
Questions to Ask Before Hiring a Bookkeeper
Before you hire a bookkeeper, make sure to ask these key questions.
- What software do you use, and are you comfortable with my current tools? - You want someone who can hit the ground running with the tools you already use, or introduce better ones if needed.
- What is your experience in my industry? - Industry-specific expertise can make a big difference in keeping things running smoothly.
- Can you help with tax prep or coordinate with my accountant? - A bookkeeper who can liaise with your accountant saves you time and ensures a smoother tax season.
- How do you handle communication and updates? - Consistent and timely communication ensures you’re always on the same page and it helps to avoid surprises.
These questions will help you gauge their expertise and ensure they’re a good fit for your business.
Red Flags to Avoid
Of course, there are some red flags to watch out for.
Lack of Communication
I can’t stress this enough - proper communication is key. If your bookkeeper is slow to respond now, imagine the stress during tax season. Clear and timely communication is non-negotiable.
Overpromising
When looking for service providers, I’ve grown more aware of any big promises made during the sales process - you’ll want to take those with a grain of salt.
For example, be wary of anyone who guarantees things like ‘audit-proofing’ your business.
While it’s nice to have peace of mind that your bookkeeper has your back, it’s just not realistic to completely avoid questions from the CRA.
Outdated Methods
And if they’re not using modern tools, you’ll probably end up paying for inefficiency. A reluctance to adopt new technology could also indicate they’re not keeping up with best practices.
How to Find the Right Bookkeeper
So how do you find the right bookkeeper?
Ask for Referrals
The best way to start out is to reach out to other business owners or your accountant for recommendations. Word-of-mouth referrals often lead to trusted professionals.
Test the Fit
You can also start with a small project, like reconciling a few months of catch-up bookkeeping, to see how they work.
This trial run can reveal how well they communicate, how accurate their work is, and whether their style suits your business.
Proficiency and Experience
And certainly it’s important to consider their bookkeeping proficiency and level of experience.
Unfortunately, anyone can take an online course and call themselves a bookkeeper, but competence varies significantly from one provider to another.
At Avalon Accounting, we match businesses with experienced bookkeepers who know your industry and use the latest tools. If you’re looking for seamless support, we’re here to help.
Final Tips for Working with a Bookkeeper
Here are a couple of final tips for working with your bookkeeper:
- Establish a routine - Decide on a consistent schedule for updates or reports, whether it’s weekly, monthly or quarterly. This structure ensures you’re always aligned and on top of your finances.
- Provide complete and timely information - Your bookkeeper can only do their best work when they have all the necessary details. Make it a habit to send receipts, invoices, and other documents on time.
- Ask questions - Don’t hesitate to seek clarification on financial reports or terms you don’t understand. A great bookkeeper will explain things in a way that’s easy to follow, helping you make better business decisions.
When you have a great bookkeeper on board, your business runs smoother, and you gain peace of mind.
Summary
To recap, hiring the right bookkeeper saves you time, keeps you organized, and helps your business grow. Look for someone with experience, clear communication, and the ability to scale with your business.
If you’re ready to take the next step, check out Avalon Accounting. We’d love to help you find the perfect bookkeeper for your needs.
