You already know it’s time to hire a bookkeeper for your business.
Your company may be growing, and you’re having trouble keeping track of your finances. Or you may be thinking about selling your business down the line, and know you need immaculate books to do so.
Or maybe you’re just tired of Quickbooks.
Thankfully, there are lots of good bookkeepers out there. We’ll show you a few things to keep in mind so you can identify which bookkeepers are the best fit for your small business.
Freelance, firm, and remote bookkeeping
Unless your business has roughly thirty or more employees, or over a million dollars annual revenue, you probably don’t need to hire a full-time, in-house bookkeeper.
That leaves you with three options: hiring a freelancer, working with a bookkeeping firm, or using a remote bookkeeping solution. Each approach has its benefits and its drawbacks, which will determine whether it’s the best bookkeeping solution for you.
Hiring a freelancer
A freelance bookkeeper is the most affordable option if your finances are simple, and you’re okay with your bookkeeper not being available for you every single business day.
On average, freelance bookkeepers charge lower rates than firms do, since they have less overhead. A freelance bookkeeper will charge either an hourly or flat rate.
The time a bookkeeper puts into your business is determined by how many transactions you process per month, whether you have employees, and how complex your industry is.
Also, if you have catch-up bookkeeping for them to complete, that will be an additional, one-time project that they need to handle.
As you continue working with them, a flat rate may become feasible, and offer the benefit of a predictable bookkeeping expense in your monthly budget.
A local freelance bookkeeper should be able to visit your business in person in order to collect and organize your paperwork.
If you have a paperless office with digitized documents, you may find you’re comfortable hiring and working with a freelancer online.
In both cases, if you use dedicated bookkeeping software, you should ensure that your bookkeeper uses the same brand. They may be able to import expenses remotely, cutting out email threads or trips to the office.
A freelancer may or may not have experience working directly with CPAs. Ask about this during the consultation process, to determine their capacity for helping an accountant file your taxes on time.
One drawback of working with a solo freelancer is they may leave you hanging if they go on vacation or get sick unexpectedly.
Also, bookkeeping has its busy season. This typically comes at the end of the financial year, when clients’ books need to be “closed” for tax season. Your bookkeeper may not be able to devote as much attention to your business during this time of year as they normally would.
Ask about these things in advance so there’s no surprises throughout the year.
Even if your bookkeeper is insured against errors and omissions, you—or your business—are on the hook in case of errors. The effect of incorrect books could range from misinformed business decisions on your part, to misreported taxes (and the resulting IRS penalties) on the part of your business.
That’s why it’s important to find a bookkeeper who knows what they’re doing. However, expertise is not only measured by years of operation, or by third-party certifications. The books of an ecommerce startup are different from the books of a dentist; try to find a bookkeeper who has worked with businesses like your own before, and has experience in your niche.
Finding a good freelancer
There are lots of places online to find a quality freelance bookkeeper, but Upwork.com is a good place to start. Just look for a bookkeeper with high reviews from other customers like you.
Working with a firm
A bookkeeping firm employs multiple bookkeepers under one roof. If you’re worried about not having someone you can count on everyday, and don’t mind paying a bit more, a bookkeeping firm is a smart choice.
Typically, it’s more expensive to hire a firm than a freelance bookkeeper, since firms have higher overhead to cover.
A bookkeeping firm may charge either an hourly or monthly rate. How much you’re charged will depend—as it does with a freelance bookkeeper—on how much time it takes for someone to do your books, and whether you have catch-up bookkeeping to be completed.
With the growing popularity of cloud-based services, many firms work remotely with clients. In this case, you’ll need to become acquainted with and use the same bookkeeping services your firm does.
This may present a learning curve for you. On the other hand, it’s a step towards building a paperless office.
Other options may include having a someone from the firm come by your business to pick up paperwork, or dropping off paperwork at the firm’s office yourself.
Since some bookkeeping firms also employ accountants, they may be able to handle your tax filing—and other accountant duties—in-house. If not, they should be able to refer local accountants. This is worth asking about in your initial meeting.
Because a firm coordinates the work of multiple employees, it’s unlikely you’ll encounter the same service gaps you might expect from a single freelance bookkeeper. You don’t need to worry about your bookkeeper getting sick or leaving on vacation, since your books can be picked up by other other bookkeepers at the firm.
A firm may employ a range of bookkeepers, from beginners to experts. It’s important to ask if they guarantee a certain level of quality, so the accuracy doesn’t change from person to person.
How to find a good firm
Hiring a local bookkeeping firm is usually a matter of Googling to find which firms are in your area, and then doing your homework to see which ones are the best fit for your business. You can usually ask for references of customers similar to you, so you can get an honest picture of what it's like working with that firm.
Choosing a remote bookkeeping solution
An online bookkeeping solution uses cloud-based software to connect you with a team of bookkeepers, who do your books for you (like Bench). It’s similar to a bookkeeping firm, except more affordable, since automation cuts the bulk of manual work. This is a great choice for most small businesses that don't have cash-heavy transactions.
Remote bookkeeping services typically charge a flat monthly fee, based on how much time it will take to complete your books every month. The number of accounts you’ll be tracking—and the frequency of transactions—may affect this.
Merchant processors, loans, and lines of credit may also be taken into account.
For a small business with relatively straightforward finances, it’s generally more affordable than either a freelancer or a firm.
A remote bookkeeping service may use a custom app—as Bench does—that lets you message your bookkeeper directly. Otherwise, you may need to communicate with them by email.
Also, some remote bookkeeping services are able to automatically import your financial information—transactions from bank and credit accounts, for instance. You may need to scan and submit physical receipts online.
As you shop around, try to find out whether the remote service you’re considering is able to work with accountants. For instance, Bench bookkeepers work directly with their clients’ accountants to provide all the information necessary for filing taxes—and can even connect you directly with a CPA to get your taxes filed.
Remote bookkeeping services, like firms, have multiple employees. This lets them avoid the kinds of service gaps that may crop up with an individual freelancer.
Any remote bookkeeping service should be equipped to manage the surge in workflow that typically comes during the end of the financial year, when clients’ books need to be “closed.”
If a remote bookkeeping service is worth hiring, they ought to be able to guarantee a certain level of quality. For instance, at Bench, all bookkeepers get in-house training and ongoing education in bookkeeping, in addition to having multiple full-time staff dedicated just to quality and standards.
Do certifications matter?
Bookkeeping certifications are totally optional, unlike accounting, where a CPA designation is mandatory. But it’s still important to understand what they represent.
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.
Once you hire the right bookkeeper for your business, you’ve taken the first step to better understanding how your business works and plotting a course for future growth.
The next step is to find an accountant. They can take the information your bookkeeper provides, and use it to help you make long-term business decisions. A great place to start is our article The Difference Between Bookkeepers and Accountants.