This question has become quite the mantra for more than a few business owners in their quest to gather financial transactions for a smooth transition from one fiscal year to the next. Unfortunately, the search has been disappointing for many and often costly. My story began here almost ten years ago.
I came to the United States as a professional on a sabbatical and met my husband who also happened to be a small business owner. I quickly merged into a new position as bookkeeper in his company for which he used the popular software Quickbooks to retain records. I soon realized that I did not have the slightest clue as to what I was doing with the program, which prompted me to go back to school and learn more about accounting. A new world emerged in front of my eyes, to say the least.
Long story short, once I began learning all the essential components of the theories and methods of accounting, I became more in sync with Quickbooks. I could tell by our accountant’s reaction at the next corporate tax deadline that I was onto something. After working for many different clients in various industries for the past seven years while earning credits towards my degree in forensic accounting, I recognized my early beginnings as a pattern in the field. It is quite common for a business owner to look for an office assistant/bookkeeper. The understanding of this reality magnified my comprehension of what a bookkeeper is capable of doing and where the tax accountant takes over, and the grey area in between.
My days as a bookkeeper are coming to an end with the start of XFile Accounting, but this just means that a new challenge is ahead of me. The new question at the helm of my efforts is, “What can be done to make a small business owner less dependent on luck in his search for a bookkeeper?” After all, a bookkeeper is often the only connection between the financial transactions of a business and the tax accountant. CPAs are officially licensed to audit the financial statements of publicly traded companies, but clerks who keep the books of most small businesses more often are not. And the business owner carries the burden of accuracy while signing a waiver of liability for the tax accountant.
So, let’s say we were never to connect and all you will ever read or hear from me are these lines in this article. This is what I would like to pass along to you on your journey:
- Always do a professional reference check upon hiring a new bookkeeper. Don’t forget to ask for explanations when employment gaps are evident. Reasons for bookkeepers parting ways with prior clients/employers can be quite revealing.
- Always do background checks via legal channels. There are services you can subscribe to, or have businesses like ours do this for you.
- Have your accountant run a few test questions by the candidate. A person claiming to be knowledgeable in bookkeeping should the components of an owner’s draw is and when it would be debited or credited, for example. Another ideal question involves the bookkeeper explaining the difference is between a car loan payment and depreciation expenses. We are happy to assist in this process as well!
- Always use a professional payroll service such as ADP to process payroll and file your company’s payroll returns. Too much can go wrong in this regard, and the consequences are detrimental.
While the list could go on further, I would like to add one more thing: Once you decide on your new bookkeeper always remember to keep the reins in your hands. Have the right checks and balances in place. A clerk, for example, should never be allowed to be the sole responsible person for the following task – enter a bill, make out and sign a check, and reconcile the bank statement. Such authority strengthens one of the elements of the Fraud Triangle – opportunity.
Good luck! And regardless at what capacity, we are always happy to help.
Bernadette Ruggiero
CEO of XFile
