You realize it’s time to hire a bookkeeper for your company.
Your business may be expanding, and you’re having difficulty keeping track of your cash. Or maybe you’re thinking about selling your company and know you’ll need perfect books.
Fortunately, there are many excellent bookkeepers available. We’ll review a few factors to consider when deciding whether bookkeepers are right for your small business.
Freelance, firm, and remote bookkeeping
You probably don’t need a full-time, in-house accountant unless your company has thirty or more employees or more than a million dollars in annual revenue.
You now have three options:
- Hire a freelancer.
- Collaborate with an accounting firm.
- Use a remote bookkeeping solution.
Each strategy has advantages and disadvantages that determine whether it is the best bookkeeping solution for you.
Hiring a Contractor
If your finances are basic and you’re okay with your bookkeeper not being accessible daily, a freelance bookkeeper is the most cost-effective solution.
Because they have less overhead, independent bookkeepers typically charge lower fees than firms. A freelance bookkeeper will bill on an hourly or flat-rate basis.
The number of transactions processed monthly decides the time a bookkeeper devotes to your company if you have workers and the complexity of your industry.
In addition, if you have catch-up bookkeeping for them, that will be an additional, one-time project for them to perform.
As you work with them longer, a flat cost may become realistic, providing the convenience of a predictable bookkeeping expense in your monthly budget.
A local freelance bookkeeper should be able to come to your office and gather and organize your papers.
You may feel more at ease hiring and dealing with a freelancer online if you have a paperless office with electronic records.
If you use specialist bookkeeping software, ensure your bookkeeper utilizes the same brand. They may be able to import expenses remotely, eliminating the need for lengthy email threads or trips to the office.
A freelancer may or may not have firsthand experience working with CPAs. During the consultation process, inquire about their ability to assist an accountant in filing your taxes on time.
Working with a solitary freelancer has the disadvantage of leaving you hanging if you go on vacation or become ill unexpectedly.
Bookkeeping also has a busy season. This usually occurs towards the conclusion of the fiscal year, when clients’ books must be “closed” in preparation for tax season. During this time of year, your bookkeeper may be unable to devote as much attention to your business as they normally would.
To avoid surprises throughout the year, ask about these topics beforehand.
Even if your bookkeeper is covered by errors and omissions insurance, you—or your company—will be held liable in the event of an error. The consequences of wrong books could range from improper business decisions to misreported taxes (and the related IRS penalties) on your company’s part.
That is why it is critical to hire an experienced bookkeeper. However, skill is assessed by more than just years of experience or third-party credentials. The books of an ecommerce company are not the same as those of a dentist; try to identify a bookkeeper who has previously worked with firms similar to yours and has experience in your niche.
Finding a good freelancer
There are other websites where you may discover a decent freelance bookkeeper, but Upwork.com is a fantastic place to start. Simply look for a bookkeeper that has received positive feedback from previous clients.
Collaboration with a company
A bookkeeping firm houses several bookkeepers under one roof. If you’re concerned about not having someone you can rely on daily and are willing to pay a little more, a bookkeeping firm is a good option.
Hiring a firm is typically more expensive than hiring a freelance bookkeeper because firms have higher costs to cover.
A bookkeeping company may charge an hourly or monthly fee. As with a freelance bookkeeper, how much you’re charged will depend on how long it takes someone to do your books and whether you have any catch-up bookkeeping to do.
With the growing popularity of cloud-based services, many businesses now work with clients remotely. In this instance, you’ll need to learn about and use the same bookkeeping services that your company does.
This could be a learning experience for you. However, it is a step toward creating a paperless office.
Another alternative is to have someone from the firm come to your place of business to collect papers or to drop off documents at the firm’s office personally.
Because some bookkeeping companies also employ accountants, they may be able to handle your tax filing and other accountant duties in-house. If they can’t, they should be able to recommend local accountants. This is something you should inquire about at your initial encounter.
Because a company manages the work of several personnel, you are unlikely to face the same service gaps that you would expect from a single freelance bookkeeper. You don’t have to be concerned if your bookkeeper becomes ill or goes on vacation because other bookkeepers within the firm can pick up your books.
A company may hire a variety of bookkeepers, from novices to experts. It is critical to inquire whether they guarantee a certain degree of quality so that accuracy does not vary from person to person.
How to Find a Good Company
Hiring a local bookkeeping service is usually as simple as Googling to check which firms are in your region and then conducting your research to determine which ones fit your company best. You may typically ask for references from clients comparable to you to obtain an accurate image of what it’s like to deal with that organization.
Or you can consider offshore accounting services to optimize labor costs and other advantages.
Outsourcing accounting services offers significant advantages, including cost savings, access to expertise, scalability, and the ability to focus on core business activities. By partnering with a reputable outsourcing firm, you can ensure accurate financial management and compliance with regulations and gain valuable insights to drive your business forward. Consider your business’s unique needs and goals when evaluating the benefits of outsourcing accounting services.
Selecting a Remote Bookkeeping Service
An online bookkeeping service (such as Bench) connects you with a team of bookkeepers who do your books for you via cloud-based software. It’s similar to a bookkeeping firm but less expensive because automation eliminates most physical labor. This is an excellent option for most small enterprises that do not deal in cash.
Remote bookkeeping services often charge a flat monthly price based on the time it takes to finish your books each month. The number of accounts you’ll be tracking, as well as the frequency of transactions, may have an impact on this.
Merchant processors, loans, and lines of credit may also be considered.
It is often less expensive than hiring a freelancer or a firm for a small business with simple finances.
A remote bookkeeping service may use a specialized interface that allows you to message your bookkeeper directly. Otherwise, you may need to contact them by email.
Furthermore, remote bookkeeping systems may automatically import your financial information, such as transactions from bank and credit accounts. Physical receipts may need to be scanned and submitted online.
As you look around, see if the remote service you’re contemplating can collaborate with accountants. Bench bookkeepers, for example, work directly with their clients’ accountants to give all the information required for tax filing—and can even connect you directly with a CPA to get your taxes filed.
Remote bookkeeping services, like firms, have a large number of personnel. This allows businesses to avoid the kinds of service gaps a freelancer may encounter.
Any remote accounting service should be prepared to handle the workload rush toward the end of the fiscal year when clients’ books must be “closed.”
A remote bookkeeping service should be able to guarantee a particular degree of quality if it is worth using. At Bench, for example, all bookkeepers receive in-house training and continued education in bookkeeping, in addition to having a full-time staff dedicated solely to quality and standards.
Read more: Top 10 Bookkeeping Tips for Small Businesses
Do certifications matter?
In contrast to accounting, where a CPA credential is required, bookkeeping certificates are entirely voluntary. However, it is still necessary to comprehend what they symbolize.
Certified public bookkeeper
The CPB is certified by the National Association of Certified Public Bookkeepers (NACPB) and is the more accessible of the two certs.
In order to receive the CPB, a bookkeeper must have one year, or two thousand hours, of on-the-job bookkeeping experience, agree to abide by NACPB’s Code of Professional Conduct, and successfully complete an exam.
A Certified Bookkeeper has received a stamp of approval from the American Institute of Professional Bookkeepers (AIPB).
According to the AIPB, the purpose of the CB is to prepare bookkeepers so they can act as a small business’s “de facto Chief Financial Officer.”
To receive the CB, an individual needs to have two years of on-the-job bookkeeping experience. They’ll also need to sign the AIPB’s Code of Ethics, and complete the exam. The exam for a CB is longer and more thorough than one for a CPB.
Finding the right bookkeeper for your small business is the first step toward gaining a better understanding of your finances and planning for future growth. Once you have a bookkeeper in place, the next step is to consider hiring an accountant who can use the information provided by your bookkeeper to assist you in making long-term business decisions. To learn more about the differences between bookkeepers and accountants, you can refer to our article “The Difference Between Bookkeepers and Accountants.”
Remember, thorough research, referrals, and reviewing customer feedback are vital when choosing a bookkeeper or bookkeeping service that aligns with your business’s unique needs.