These 9 Real-Life Examples Detail What a High-Quality Bookkeeper Can Do For You?[spacer height=”20px”]
What, exactly, can a high-quality bookkeeper do for me?
It’s a question I get quite often. It can be hard for business owners to imagine exactly what the right bookkeeper brings to the table (and takes off their plate). The best way for me to answer the question is to use a real-life example. My very first client was a bit of a guinea pig for my accounting and bookkeeping business – I knew I had the skills, but I needed to nail down the processes. That client has become an example I use whenever I sense confusion about what it is I do for my clients.[spacer height=”20px”]
I’ll preface this by pointing out this client has zero interest in being involved in the minutiae – he wants an “easy button” throughout the month and a high-level debriefing at month end. Every business is unique, as is each owner’s desired level of involvement in the financial activity generated by their business. Because of this uniqueness, the bookkeeper you choose needs to be very adaptable and extremely perceptive. I would also like to caution you – once you realize how much a high-quality bookkeeper can handle for you, you’ll be tempted to give him or her the keys to the kingdom. Resist this urge. Do not (I repeat – DO NOT) ever add your bookkeeper or accountant as a signer on your bank account or give them authorization to use your credit cards or lines of credit. There is a lot that can be automated, as you’re about to discover from reading the points below, but the automation has to be authorized by you. Any financial activity that cannot be automated must be authorized by you each and every time the activity occurs.[spacer height=”20px”]
Now let’s get on to answering that question…[spacer height=”20px”]
First, a little background – this example client has an LLC business structure with three alias (dba or ‘doing business as’) companies operating under the LLC. There isn’t any inventory to manage, but there are occasional capital expenditures. One of the companies is required to collect sales tax. Two of the companies provide services customers pay for on the spot, while the third company is project-based with customer billing occurring throughout the project. About 90% of customer payments are received via credit card (processed through Square) – the remaining 10% pay with cash or check.[spacer height=”20px”]
1. Choosing the best accounting software for the situation:
During the initial implementation phase, I researched the best accounting software for this client’s unique needs and determined QuickBooks Online was the right choice. I got him up and running in QBO and showed him how to grant me accountant access to his company QBO file. Once granted access, we were able to work together to set his bank and credit card accounts up with automatic bank feeds so transactions would flow into QBO to be recorded. This initial setup is pretty easy but extremely important – it sets up the foundation for trouble-free financial management.
2. Recording routine purchases throughout the month:
With the automatic bank feeds set up, transactions flow into QBO and wait to be classified. The client is able to snap a photo of his purchase receipts with his cell phone and email them to our Hubdoc account (included in all of my bookkeeping packages). Those receipts in Hubdoc will be matched up to the bank and credit card transactions waiting to be classified in QBO. This is easy for the client because he can toss the receipt and forget about it – and it’s easy for me because I can determine how to categorize each purchase based on the detailed receipt. The electronic receipt also gets attached to the expense in QBO, which will satisfy the IRS if he should ever be audited. Hubdoc will also capture most monthly recurring bills, like cell phone and internet service, for me to match up to the automated payment when it comes through QBO. For bills that are one-offs or don’t have automated payments set up, the client will email them to me for manual entry into QBO. For manual entry items, the client will pay them with his credit card or I’ll set up a check run in QBO and he just has to print, sign and mail the checks. Check runs are pretty rare with this particular client, but I have other clients who prefer to more closely manage their cash flow by printing out checks for payables and mailing them as they see fit.
3. Recording revenue received throughout the month:
My client has shared his electronic calendar with me and added my email address to be copied on any payment activity received through Square. Access to his calendar allows me to determine which of the three businesses each payment corresponds to so I can classify it correctly. Because I am copied on the emails from Square, I see the initial customer payment amount and then the deposited amount minus the fees the next day – it’s all the information I need. For the rare customer who pays with cash or a check, the client will deposit the funds into his bank account and email me the details for manual entry into QBO.
4. Recording capital expenditure activity throughout the year:
During the initial implementation phase, we discussed the criteria and threshold for capital expenditures. With that knowledge, I can accurately classify any capital expenditures that come through, as well as determine the proper depreciation schedule for them going forward – and I make any necessary journal entries for depreciation each month.
5. Handling quarterly estimated tax payments:
I handle the payment of quarterly estimated tax payments (determined by the CPA during annual tax preparation) and the recording of those payments in QBO.
6. Sales/Use Tax filings:
The amount of sales tax this client collects throughout the year is so small that he is only required to file/submit payment annually. I handled the initial registration with the State and handle the annual filing/payment of sales tax collected.
7. Reconciliation of accounts:
Monthly reconciliation of all bank and credit card accounts.
8. Monthly financial statements:
Preparation and presentation of the balance sheet, income statement (P&L), and statement of cash flows.
9. Basic financial support:
I keep an eye on cash flow and alert the client if I see trouble ahead, assist with completion of loan/financial documents when needed, communicate with the CPA/provide necessary data during annual tax preparation, and provide insight on possible cost savings opportunities.
It obviously takes a few months to get to the level of understanding I have with this client; but once we’re there, you get an expert who is intimately involved in the success of your business – without the added employer expense or headache.[spacer height=”20px”]
With that first question answered, can you guess what question typically comes up next?[spacer height=”20px”]
“I can’t afford that level of service, can I?” Well, you’d be surprised.[spacer height=”20px”]
Let’s assume you’re a typical small business with the average amount of financial transactions each month – my monthly fee for bookkeeping services would be right around $550 per month for everything listed above. That’s $6,600 per year – a plain and simple expense with no payroll taxes or benefits to worry about. What would an employee with my skill set cost you? You should be asking yourself why you waited this long to make the move.