Hiring A Good BookkeeperWhat You Need To Know
A Special Report By Steph Wynne
Read this report before you hire a new bookkeeper
Dear Business Owner,
I’m writing this bookkeeping report at 3:17 in the morning because most business owners including indy contractors wait until the last minute to get their bookkeeping done for tax time. I know how important bookkeepers are so I wanted to give you some info about hiring one.
If you’re reading this report:
a) You do your own bookkeeping and can’t seem to bring it all together.
b) You got a new bookkeeper and it’s not working, or you’re old one quit or was fired.
c) You‘re a newbie business owner and need to bring your numbers together to file your taxes.
Besides accurate numbers, the sole purpose of bookkeeping is so you can file your taxes.
Choosing a bookkeeper isn’t easy. Why?
Because you’re bombarded with misleading reviews, Craigslist liars, fake testimonials, unreliable indy contractors who work from home, big companies that charge insane rates and your business ad that brings you a zillion emails from rookie bookkeepers and international tricksters.
So how do you determine what you need to know about hiring a qualified, competent and professional bookkeeper? You start by reading this report and in it you’ll discover:
2 types of bookkeepers.
3 Misconceptions about bookkeepers.
4 ways to avoid being ripped off by a bookkeeper.
5 mistakes to avoid when choosing a bookkeeper.
7 steps to hiring a competent, reliable and trustworthy bookkeeper.
How to determine if the bookkeeper should get a W2 (employee) or 1099 (contractor)?
A bookkeeper sample agreement.
There are two types of bookkeepers. One you can trust and one can’t trust.
Like the old saying goes, “Keep your friends close and your enemies closer.” Keep the bookkeeper you don’t trust 100%. Why? It’ll keep you on your toes. If you trust them you’ll start to relax.
I guess you want a combination. You want to trust that your bookkeeper will not sell your business information or use your checking account to pay their bills. You also don’t want to be too relaxed, you just want to stay alert for any cash decreases in your accounts.
3 Misconceptions about bookkeepers
Bookkeepers are not necessary. Bookkeepers are to a business like oil is to a car engine. If you don’t have a good bookkeeper, either you will pay lots of cash to your accountant or to the tax man (or both). Bookkeepers are a necessary evil.
Bookkeepers are not as important as the accountant. Really? Bookkeepers are like the nurse to a doctor. It’s the bookkeeper that tracks all of the cash that comes into your company and tracks all the bills paid.
The accountant gets the annual reports then files your taxes. In most cases if you got a bookkeeper with a tax background you don’t need an accountant. Ha! This peeves accountants.
Bookkeepers are cheap labor. I don’t think so.
You will get what you pay for. No bookkeeper that values their work will accept less than $20 per hour depending on what part of the country they’re in. In the major cities expect to pay at least $25 - $35 an hour for a professional bookkeeper and $35 per hour or more if they have a tax background.
The importance of value versus price. Price is what you pay. Value is what you get. It is possible to find a cheap bookkeeper, but that person will have limited experience or be desperate (you don’t want a desperate bookkeeper) otherwise they would charge more.
When you select a bookkeeper, you’ll choose from a rookie bookkeeper to a veteran with a wide range of skills and prices.
Look for the intangibles; like is the person reliable?
Can the person pass the bookkeeping and accounting test?
Does the person have bookkeeping and tax experience?
Does the person have Excel and Word experience?
Will the person understand bookkeeping and taxes and how it’s all ties together?
These valuable factors are important in figuring out how much to pay a bookkeeper.
4 ways to avoid being ripped off by a bookkeeper
Never under any circumstances should the bookkeeper have the passwords to your bank and credit card accounts. Yes there are emergencies when you need to give the bookkeeper the password, but be sure to immediately change it.
The bookkeeper will feel that you don’t trust them, and you don’t. Try password.com it keeps all your passwords in one place.
Review you monthly bank and credit card statements for anything suspicious. I know you hate those statements, but the sooner you find discrepancies the sooner you can catch a thief.
Make sure the bookkeeper doesn’t have access to your social security number, drivers licence # or date of birth. Lock up your ID or just make sure you don’t have a copy of your driver's license laying around.
You can do a background check, but don’t rely on it unless you go straight to the FBI which means having the bookkeeper pay $75 for a background and fingerprint scan, and if they’re clean you can reimburse them. This does not mean that their trust worthy, it just means they haven’t got caught and prosecuted.
Having these protocols will help a new business or existing business not wake up to see thousands of dollars gone and the bookkeeper laying on a beach sipping Margaritas.
5 mistakes to avoid when choosing a bookkeeper
Cheap labor. If you want to pay the bookkeeper minimum wage and the bookkeeper accepts, remember you will get what you pay for. So when it’s time to prepare your taxes expect to pay. Don’t be cheap when hiring a bookkeeper.
Unreliable. If within the first 72 hours the person has been late, called in sick or any other excuse you have a bad egg. This person will be a mistake and not reliable enough to keep good books. Get rid of ‘em.
No work experience. I love interns but not for bookkeeping. If you are an accountant or bookkeeper then it’s ok to mentor them. But if you don’t know what you’re doing don’t expect the intern to know even if they’re fresh out of college. It’s like the old saying “the blind leading the blind.”
No accounting program experience.
It’s possible to be a good bookkeeper without understanding an accounting program ie Quickbooks, Quicken, Xero etc. Those bookkeepers would rather use Excel. Unfortunately Excel can not stand up to the speed and accuracy of an accounting program. Do not hire a bookkeeper who doesn’t have experience with an accounting program.
No bookkeeping experience. There are cheaters that think they’re bookkeepers because they watched some Quickbooks youtube videos or passed a Quickbooks certification test. Yes they’ll know how to navigate in Quickbooks, but may not know how to bring it all together as it pertains to your business.
7 steps to hiring a competent, reliable and trustworthy bookkeeper
Hire someone with a tax background. Usually bookkeepers with a tax background often work with the IRS and know better than to steal from you. Just sayin’. Plus a bookkeeper with a tax background can save you money if they know what they’re doing.
Use referrals. Ask other business owners if they can refer you to a good bookkeeper. This will save you time and money. Not to say the referral will know what they’re doing or if they’re trustworthy, but it helps.
Test the bookkeeper. There are plenty of free bookkeeping and accounting test for bookkeepers. A test will weed out 60% of undesired applicants.
Verify references. Plenty of business owners that hire bookkeepers don’t verify references. They go by their “gut” feelings. Not cool. Check every reference by phone and research the location on line. If they don’t have at least 3 verifiable references then don’t bother.
Verify who they are. Take a copy of their references, SS#, and ID if they are indy contractors.
Beware of recruiting companies. Zip recruiter, Monster, Indeed and Glassdoor. Most of these companies cater to temp agencies and recruiters. You might speed a lot of cash advertising and still not get a good prospect.
Answer ads don’t place them. Of course you can advertise what you are looking for, but it may be easier to answer ads that have the skills you need. A person answering your ad can customize their skills to fit whereas an ad you answer you hope the person has the skills they advertise.
Most bookkeepers are ethical and underestimate their worth. If you find a good bookkeeper make sure you compensate according to their experience, reliability and knowledge.
Will the bookkeeper be an employee (W2) or 1099 contractor?
Technically if you provide them with a computer, a desk, you tell them what to do on a daily basis, provide tools like a calculator and tell the person what time to come and go, they’re most likely an employee.
You will provide most indy contractors with a table or desk. They’ll provide their own office supplies and laptop if they work from home. You do not tell them what to do and when to clock in and out. You mutually agree on the terms with a written agreement.
Aways get an agreement from indy bookkeepers.
Once you’re satisfied that you’ve researched, tested and found an honest, competent, professional bookkeeper, invite him/her into your business or home office and ask for a written agreement.
A written agreement gives you the assurance that you know exactly how much the bookkeeper will cost and work to be done with no surprises. Make sure the agreement outlines the duties, duration, hours, and price. See below Agreement sample.
It’s 5:31 in the morning and I wrote this report to help you better understand bookkeeping and bookkeepers. By following these 7 steps, you’ll gain all the information you need to make an informed, intelligent decision in hiring a good bookkeeper!
I hope you found this report helpful.
If you have any questions or comments please call me at 424 245-8070.