Often business owners are perplexed by this simple question – How do I know if I have a good bookkeeper? It is not only expected that the entrepreneur has to be a champion at what he or she is good at doing i.e. make and sell his/her products but also be able to correctly evaluate the technical abilities of a bookkeeper. This is pushing the envelope a bit too far.
So how does the business owner decide to acquire a good bookkeeper? There are two ways of doing this. First is the time tested way of asking friends, relatives and business associates. Second is to scout on the internet by either placing a help wanted advertisement or going through bookkeeping firms’ postings.
Most bookkeepers are competent in what they are instructed to carry out. Bookkeeping is defined as – The practice or profession of recording the accounts and transactions of a business. Often the business person’s misconception is that he or she expects the bookkeeper to be an Accountant – a person who is professionally trained to provide an opinion on the financial transactions of the business.
In my opinion, a bookkeeper must first understand the client’s business and then prepare a customized chart of accounts suitable for the specific need of the organization. Most bookkeepers fail in this task which results in only recording transactions, while providing no benefit for the decision makers in providing accurate data enabling them to make an informed decision on the progress of their business. The second pit fall – what if the bookkeeper makes a mistake in recording a transaction? When does the owner even discover the error has been made….weeks or months later at year end? How does an entrepreneur get the error corrected and at what cost to his or her business?
Whenever possible it is always advisable to hire a bookkeeping firm headed by a designated accountant with years of industry experience. This will minimize two major risks. Firstly, the designated accountant will be able to instruct the bookkeeper to prepare the accounts as per the needs of the organization. Secondly, should the bookkeeper need guidance she or he always has a fall back resource in place in the designated accountant.
Don’t make the mistake made by so many entrepreneurs and hire the lowest priced bookkeeper you can find. Accurate and timely financial data by which you direct your business is just too important.
So choose wisely.