Transcript Episode 26: 8 Questions to Ask When Hiring a Bookkeeper
Transcript Episode 26
Stephanie Skryzowski:
Welcome to the 100 Degrees of Entrepreneurship podcast. The show for purpose-driven entrepreneurs who want to get inspired to step outside of your comfort zone, expand it to your purpose and grow your business in a big way. I’m your host, Stephanie Skryzowski, a globe-trotting CFO, whose mission is to empower leaders to better understand their numbers, to grow their impact, and their income. Let’s dive in.
Hey, everybody. Welcome back to the 100 Degrees of Entrepreneurship podcast. I’m your host, Stephanie Skryzowski, and I’m really excited to chat with you today about how to hire a bookkeeper. You may know, we’ve done an episode before all about the four different finance professionals you might need in your business or nonprofit. If you haven’t listened to it, it’s actually episode three. Episode three, it’s in the beginning because it is so important to really understand the difference between a bookkeeper, a CPA, or an accountant, a CFO, a financial planner, a financial coach. I think I threw that one in there as well. It’s really important to understand the difference because they are all different. They are different roles that you need in your business or your organization. And I get the question a lot, what’s the difference? So episode three, if you haven’t listened to it yet. But what we’re talking about today is how to hire a bookkeeper.
So maybe you have identified that you need a bookkeeper in your business. And so you’re going out there. You’re Googling, “Bookkeeper for X type of business or bookkeeper in my city.” So I want to help you. Give you some tools to help you hire a bookkeeper. Know the right questions to ask and really understand what you are getting because there’s a lot of different things out there. There’s also a lot of online services where you pay maybe $89 a month, and you have a bookkeeper overseas who’s managing your numbers, but you can’t really see anything. You can’t log into whatever software they’re using to be able to see your numbers. So I think it’s really important to just know what questions to ask. I think the other thing is we are often given the advice that, “Hey, if you don’t like something, outsource it. Outsource it from day one.”
I feel like in the online business space, especially, that’s a message that we’re hearing all the time, just outsource, outsource, outsource, and there’s a little bit of value there. But there’s also a lot of value in doing things yourself before you outsource. I have not done that before. I’ve done the opposite. In fact, I didn’t understand Facebook Ads, but I was sort of attracted by the siren song of Facebook Ads and wanted to run Facebook Ads for my course. And instead of learning about the sort of ins and outs, and even just the basics, I just hired somebody to do it for me. You want to know the result? I got burned. They didn’t understand my business. I didn’t understand what I really needed to ask of them. And I ended up making no money on those Facebook Ads, and in fact, losing money on what I paid to that person to help me run those ads.
So I do not want that to happen to you. I don’t want that to happen to you when it comes to hiring a bookkeeper, thinking that you’re getting one thing but really getting something else. And so we’re going to talk today about eight different questions that you should ask any potential bookkeeper before you hire them in your business or your organization. All right. Are you ready? Let’s dive in. This is a good one. If you are doing something else, if you’re multitasking, maybe just make sure that you have a piece of paper and a pen handy so that you can write these questions down or pop on over to 100degreesconsulting.com/podcast, where you can get the show notes and the transcript for this episode. So if you want to go back to it later, you will be able to see the eight questions you want to make sure that you are asking as you are hiring a bookkeeper.
All right. Are we ready to dive in? Let’s do it. Number one, the one question you want to ask, how often will you reconcile? So most bookkeepers are reconciling your accounts on a monthly basis. Monthly should be minimum, by the way. So what’s the right answer to this question? Monthly at minimum, right. We want them to be looking at your numbers, at least every single month, so that you have monthly financial reports. In fact, to kind of take it to the next level, you want to ask for a date, right. We want to know, “Okay, by the X date of every month, when will my books be reconciled?” So you want to make sure you know that question. I have heard lots of, I won’t say horror stories, but I have heard lots of stories where business owners, non-profit leaders, they’re not getting their financials until months later.
So they’re getting their May numbers in July or August. And that’s not really helpful for decision-making, right. What happened in May is no longer relevant in August. So you want to know how often your bookkeeper is going to reconcile your accounts, with monthly being the right answer. Now, some businesses actually have their bookkeepers reconciling and doing the accounts weekly. That’s fine. That is not necessarily a bad thing, especially if you have a lot of movement in the business and you want to have your reports weekly. So weekly is another option, but monthly at minimum. Okay. Number two. Will we meet? So you want to know if you are going to meet with your bookkeeper with any type of frequency, right. Depending on the size of your business, this might not be that important to you. Maybe you don’t really need to meet with your bookkeeper on a monthly basis, or maybe you have a lot of transactions, and maybe there’s often some changes, and you want to make sure you just have a live meeting to capture those changes, make sure everything is in the right line items in your books.
This question, will we meet? There’s not necessarily a right or wrong answer. I think it really depends on your preferences and your sort of volume of transactions. So if you don’t meet, that’s fine. If you do meet, that’s fine too. I think a happy medium might even just be quarterly, just meeting quarterly, making sure everything is in the right buckets in the accounting system. And that you’re on the same page. I think that is a great option. So question number three, what reports will I get? What reports is your bookkeeper going to run for you? At minimum, you want to see a comparative profit and loss statement. So a profit and loss for last month compared to either the prior months or the same month last year. So if we’re looking at May financials, that comparison would either be to April or it would be to May of last year.
So you definitely want a comparative P&L both for last month and year to date. So last month would be May. Year to date would be January through May. The whole year altogether, right. So that’s the first one, your comparative P&L, as well as a balance sheet. I want to see a comparative balance sheet as well. So again, same thing with the comparison. You can either compare to last month or the same month last year and you want to make sure that you are seeing a balance sheet. Now, there might be others that you want to see as well and that’s really going to depend on your business. So at minimum, we want to comparative P&L, a comparative balance sheet, and then others, depending on your business. So other popular ones are maybe a budget versus actual. So if you have a budget that was entered into QuickBooks or whatever software you use, you might want to see a budget versus actual.
So that’s showing you exactly what it sounds like. Your budget compared to what you actually did, both revenue and expenses. Another popular report is your accounts receivable aging summary. So this basically is telling you what invoices are outstanding, right. What receivables do you have as a business? And if your business is like mine, where you invoice clients every single month. Then there are probably going to be clients that are not paying you instantly, right. And so there are going to be receivables that are outstanding. So this is a report that I look at every single month in my business, my accounts receivable aging summary. So again, depending on your business, there may be others, but you want to make sure that you’re going to get these reports delivered to your inbox every single month. So that’s a great question to ask.
Okay. Question number four. What software do you use? Now, a lot of bookkeepers have a preference in software. And if you were to ask a hundred different bookkeepers, what is your favorite bookkeeping software? You are going to get some different answers. I would say the most popular ones in the business space are definitely QuickBooks Online. I would say Xero is another popular one. And that’s X-E-R-O, Xero but starting with an X. And then in the non-profit space, there are a ton of different ones. There are lots of bigger sort of more specialty softwares. But I would say QuickBooks Online and Xero are probably the top two. You want to make sure that your bookkeeper is very experienced, if not certified in some way, in the software that you already use. Now, if you don’t have a preference, or I would say, actually, if you don’t already use something, take a look at QuickBooks, take a look at Xero and see which one really resonates with you.
Not only the cost but the functionality of it, the user interface. Because at the end of the day, yes, you’re handing off your bookkeeping to someone, but you don’t want to have no access to your accounting system, to your bookkeeping system. You want to be able to access it yourself. So make sure that it’s a software that really works for you. If asked to my preference, it is QuickBooks Online all day, every day. We love QBO here at 100 Degrees Consulting. And so, if we have clients that come to us that are using something else, we will often recommend QuickBooks Online, and we will help them with that transition. It’s just really, really nice. It’s got a great user interface, and it also connects with a lot of different software, which we love. But it’s really important as your hanger bookkeeper to ask what software they are using. Are they certified? And if you will have access to it?
One of the most frequent questions I hear is, “What’s the difference between a CFO, a bookkeeper, an accountant, and which one do I actually need in my business?” So I have created a quiz to help you figure out just that. Pop on over to 100degreesconsulting.com/quiz, answer just a couple of questions about your money management style and your business. And we will tell you exactly the right person that you need to help you manage your business money. Again, 100degreesconsulting.com/quiz.
The next question, number five. What about taxes? You want to ask your bookkeeper how they will handle your taxes. So are they doing your taxes for you. A lot of times, a bookkeeper is often a CPA or an enrolled agent and will prepare your taxes, or if they are not doing your taxes, will they work with your tax accountant? So will they coordinate at tax time with your tax accountant to make sure that your tax accountant has all of the reports that they need in order to prepare your taxes. And making sure, throughout the year, that expenses are coded the right way. That if you have inventory or something like that. If you’ve got any fixed assets, that everything is handled correctly in the books so that at tax time, things are just a breeze for your tax accountant. So you want to understand if they’re going to do your taxes, or if not, if they’re going to work with your tax accountant to help make that process really streamlined and smooth for of you.
So that’s question number five. Question number six is, do you have experience with businesses like mine or with nonprofits like mine? As you can imagine, business models that are different have very different bookkeeping structures, right. So a service business, like my business, like 100 Degrees, where we provide services for clients, one-on-one services, has a very different bookkeeping structure compared to an e-commerce business who are selling products through an online store. And that business model has very different bookkeeping than an online course creator who is running Facebook Ads and selling digital products, right. That’s very different bookkeeping, which is also very different bookkeeping from a nonprofit, right. There are different requirements, different legal requirements, and sort of accounting standards for each of those different businesses. There are different software that are used for each of those different business models. And there are different revenue streams and expenses for each of those.
And we’re dealing with payroll, and some are dealing with contractors and Stripe and different tax structures. So there’s a lot of nuance depending upon your business model. And there is no right or wrong here, right. There’s no easier or harder, or better, or worse type of business model or type of bookkeeping. But it’s really important to make sure that your bookkeeper has experience with your type of business model. Now, if there’s a bookkeeper that you really want to work with, or you know them, or they’re trusted or whatever, and they don’t necessarily have experience with your type of business model, that’s not a hard, no. But you, as the CEO, as the business owner, you need to understand like, “Okay, they don’t understand e-commerce. I’m an e-commerce business. So what gaps are there that they’re going to need to fill in to really do my bookkeeping correctly?” Right.
If that’s a risk that you’re willing to take, that’s fine. But you just need to know. Here’s the thing, you don’t want to get to the end of the year at tax time, and your tax accountant is telling you, “Hey, I need your financials to look like this so that we can file your taxes.” And then, realized later after the fact that your bookkeeper was not recording things the right way because they didn’t really understand your business model, right. We never ever want to get to that point where there’re surprises because we weren’t doing things the right way from the beginning. So ask your bookkeeper, “Do you have experience with my type of business?” Whatever that is for you. Okay. Question number seven. When will I receive my reports? So this kind of goes back to question number one. When we asked, how often will you reconcile? Understanding a date or a target date every month, when you’re going to receive your reports, when you might have your meeting with your bookkeeper. Knowing what that date is, is going to help you really plan for decision-making, right.
So if you know that you’re going to receive your reports from your bookkeeper on the 20th of every single month you know, “Okay, by the 25th, I’ll be ready to make that decision, or I’ll be ready to make that investment that I’ve been thinking about, because I will have seen my reports. I know what my business looks like, and I’ll be ready to make that decision.” And also, it helps keep you accountable as the CEO. And it also helps keep your bookkeeper accountable. We don’t want them falling behind months upon months in your numbers, and then you sort of lose track of it. It falls off your radar. And then, before we know it, six months have gone by, and we haven’t really paid attention to our numbers. You all know if you have been listening to this podcast for any amount of time that I always say, “What you focus on expands.” Right.
“And where your attention goes, the energy flows.” And so if your attention is not on your money because things just kind of fall off of your radar and your bookkeeper’s radar, the energy is not flowing into your money where you want it to flow. So just understanding what that date is when you’re going to receive your reports from your bookkeeper is a good accountability measure for both of you. And you know what, if things fluctuate by a couple of days, “Hey, it’s January, and we were absolutely swamped getting your 1099s and your W-2s out the door. And so we’re going to be a couple of days late with your bookkeeping.” That’s fine. You don’t need to hold your bookkeeper to a super strict deadline and fire them if they don’t meet it once. That’s not what I’m talking about. But just making sure that you understand what the general monthly flow looks like for them.
And my last question, question eight, that you want to ask any potential bookkeeper for your business or your organization is, do you work with insert integration software here. Right. So do you work with Stripe? Do you work with Shopify? Do you work with this particular donor database, right? So understanding what other software and integrations they work with and understand is going to be really helpful for making sure that your books are super accurate and up to date. So Stripe, Shopify, PayPal, Gusto those are all really popular ones that we work with with a lot of our clients. And so our bookkeepers, we all understand really, really well how those tie into QuickBooks. And so that helps us be very efficient and accurate bookkeepers because we know how information flows between all of those different software. And so, again, this is not necessarily a hard stop if your bookkeeper has never worked with Gusto before. But you, as the CEO, need to understand that that’s going to be a gap.
If they don’t understand how Gusto ties to QuickBooks, they’re going to have to figure it out. And can they figure it out? Of course, they probably can figure it out. But it’s a potential blind spot that I want to make sure that you avoid as you’re hiring a bookkeeper. So just to recap. We just talked about eight different questions that you can ask any potential bookkeepers as you are looking to hire them and bring them into either your business or your nonprofit. So I’m going to run through the list again, and if you’re not able to write them down right now, that’s fine. Just pop on over to 100degreesconsulting.com/podcast, where you can find the show notes and the transcript for this episode. So you can print it out, keep it handy, copy and paste it as you are interviewing potential bookkeepers for your business.
Before I get to recapping it, I just want to say if you are at the point where you are outsourcing your bookkeeping, congratulations. This is a big step. This is really exciting to be able to find somebody that you trust to manage your numbers for you and to really help you grow. Outsourcing something as important as your numbers is a huge step that a lot of business owners take. And I just want to say I’m really proud of you. So let’s do it. Let’s recap to your eight questions that you want to ask when you’re hiring a bookkeeper. First, how often will you reconcile? Will we meet? And if so, at what frequency? What reports will I get? What software do you use? Will you do my taxes, or will you work with my tax accountant? Do you have experience with my type of business? When will I receive my reports? And do you work with the different software that I use in my business?
So there you have it, my friends, eight questions that are going to help you find and hire an amazing bookkeeper to support you with your numbers so that you are more empowered. You have more clarity in your numbers and confidence in your own decision-making because you are making decisions based on black and white numbers and analysis and strategy. So as always, I hope you enjoyed this episode. If you did, [inaudible 00:19:47] a screenshot on your phone. Tag me over on Instagram @stephanie.skry, and I will catch you next time.
Thanks for listening to the 100 Degrees of Entrepreneurship podcast. To access our show notes and bonus content, visit 100degreesconsulting.com/podcast. Make sure to snap a screenshot on your phone of this episode and tag me on Instagram @stephanie.skry, and I’ll be sure to share. Thanks for being here, friends, and I’ll see you next time.
Transcript Episode 26
