Yep, I said it. Bookkeepers are a cheap investment, but not in the way you're probably thinking...
The Early Days
As your business is getting started, you will want to save as much cash as you can and not spend money unnecessarily.
Once of the first things to go is the idea of a bookkeeper. Many business owners make the mistake of assuming that the accountant they are working with can provide the end to to end service that they need.
The truth is that accountants and bookkeepers are vastly different and many accounts who offer a bookkeeping service outsource it to either a local contract bookkeeper, an employee bookkeeper or an outsourced overseas bookkeeper. It is considered that an accountant is above a bookkeeper on the food chain, however an accountant is not generally trained to deal with the daily records, their eye isn’t as accurate because they’re focused on the big picture overall. That is not to say that accountants don’t serve an important function - they are very important to the growth and success of both your business and your personal situations and in my opinion, you would be silly to operate a business without the backing of a really good accountant who gets your vision.
Then there are the business owners who opt for the DIY approach and try to keep it in house. In these cases they are either trying to catch up on the daily records after hours or they rope their significant others into assisting.
Short Term Solution
Both of these options are a short term solution and serve to plump up your perceived cash flow for a short time.
In my line of work, I feel it is important for a bookkeeper to get to know the front line and be my client’s biggest ally. In my experience, shoving the daily work to the accountant or utilising the free time of your significant other has a short useful life, at best.
Returns on Your Investment
Many business owners do not recognise the importance of having a few really good ally’s from the start. I always advise my clients to ensure that if they don’t have a good accountant and their bookkeeper from day 1, they need to make it their next highest priority.
Who wants to be sitting at their desk after a full days work, plugging in receipts or invoices? If bookkeeping was your calling, you’d be running your own show doing that. The longer you spend pulling your hair out just getting the data entry in, takes time away from the things you should be doing and more importantly, the things you’d rather be doing.
That doesn’t even account for any errors you may have made that can lead to big dramas later.
Major errors can cost you big down the line, in both time and money.
A bookkeeper and an accountant on your side can ensure:
Record Accuracy - so that you know the status of your business and can make informed decisions;
Efficiency - Bookkeepers and Accountants know what they are doing. While they don;t have the answers for absolutely everything, they know where to go to get them;
Time Management - Having someone else do the daily records and tax work, means it’s off your plate, allowing you to focus on your business and making it grow;
Completion - With a bookkeeper behind the scenes, you can be assured that your sales invoices are followed up and your creditors are paid on time and/or communicated with;
Up to Date - Bookkeepers and accountants are required to engage in ongoing learning. This means that they are constantly updating their skills and knowledge;
Investing Wisely
The moral here is you need to set yourself up for success. From the business side of things, you need 3 to start things and they need to be good:
A good back end system (for trade clients I recommend Xero + a relevant add on at minimum);
A really good accountant who gets your vision and knows their stuff, and;
A killer bookkeeper who takes the time to get to know you, your business and your vision and who can work with your system and your accountant to achieve the best outcome for you.
You went in to business because of a passion. These 3 things will allow you to focus on that passion and give you the backing and advice you need so that you don’t get burned out and so you can sleep easy after a long day of working on your business.
I often get the question, “Why should I outsource rather than hire an employee?”. The answer isn’t particularly a simple one because it will depend on the size and scope of your business. However, for tradies, outsourcing is definitely beneficial for a number of reasons:
Minimal (if any) superannuation payments to be made;
You control the level of involvement and work undertaken;
Contract bookkeepers invest in themselves to ensure that they have a well rounded knowledge;
Savings on equipment. Contract bookkeepers purchase their own equipment and purchase their own ergonomic office aides, and;
There could be no increase in your Worksafe premium.
Yes, contract bookkeepers on the face of things charge a fair bit more per hour than hiring an employee, however when you factor in leave entitlements, superannuation payments and other entitlements and expenses, it isn’t such a bad deal, is it?
What To Look For
When looking for THE one in a bookkeeper, remember that you will both be interviewing each other. It’s not personal, but you need to see if you mesh with them and they need to be sure that they mesh with you. Personalities and visions can often clash - especially when a bookkeeper is tasked with what we call the ‘clean up’ job. It can be very frustrating for us to come in and be ready and willing to help but the person we are trying to help blocks everything we suggest or questions every step we take.
All good bookkeepers know that it takes time to establish trust, and when you find the right one they will be one of your biggest champions on your road to success.
A good bookkeeper in your corner will advocate for you, help you understand the back end and give you facts and conversation, rather than throwing a report at you.
For me, this very reason is why I choose to work with tradies. Those in trades have a passion for their craft and love what they do. Like all good things, craftsmanship takes time and often doesn't leave a lot in the way or a work/life balance. To get that balance, they need someone that they can trust, who wants them to succeed and doesn't just see dollar signs.
Some questions to ask:
What is your experience? - important because no bookkeeper knows everything about everything. Make sure that their area of expertise compliments your business;
Are you qualified and / or registered? - important because the Tax Practitioners Board sets down minimum requirements for bookkeepers. The minimum level of education is the Certificate IV Bookkeeping / Certificate IV Accounting. Bookkeepers that are providing a BAS service for a fee or reward must either be registered as a BAS Agent or be operating under supervision such as ABN BAS or a supervising BAS Agent;
How familiar are you with my industry? - It is important that you align yourself with a bookkeeper and accountant who is familiar with your industry. This saves you time and money from the start;
How do you communicate with your clients? - Be sure to ask how they manage communications. Many bookkeepers will require that you send any files via Hubdoc or other such service, while others will be open to you providing hard copy receipts. How will they talk to you? Do they only text, or zoom, or call? Know the limitations and expectations upfront.
Is my data and information safe? - Be sure to ask your potential bookkeeper how they intend to ensure that your data is kept safe. If you currently operate on paper receipts, are you open to going digital in the cloud? Communicate your needs and fears from the start.
How do you structure your pricing? - Some bookkeepers operate by hour, others operate by package. Those that operate by package will often start on an hourly rate and then move to a package rate if your needs are repetitive and there is a sound structure;
Will I own my subscription? - this one is a big one. Many bookkeepers will offer to purchase and manage your system subscriptions. Now, for some things this isn’t a huge problem, but I always recommend that for your accounting system, you purchase and maintain the payments of your accounting software. From there you can invite advisers in or remove them as you need to. While most of the bookkeeping and accounting population has high standards and ethics, there will be the odd one who, for whatever reason, feels the need to block you from one of your biggest business assets - your accounting file.
If you haven't started your search for a good bookkeeper and accountant, now is the time to make that happen. You'll be surprised at the return of your investment into your business.
Not sure where to start? Let us point you in the right direction. We will build a free profile of you and your business, so you don't have to repeat yourself 100 times, and from there, if we don't mesh with you, we will help you find someone who does.
Ready to start? Request your free zoom consultation to get the ball rolling.
The bottom line is that having a bookkeeper, when you consider all the pros and cons, is one of the cheapest ongoing investments that you can make for your business. Having a good team behind you will give you some of your day back and allow you to have that down time each day to focus and work on growth in your market.