Bookkeepers are undervalued. It isn’t right, but it’s true.
The perception is that anyone can be a bookkeeper. Being a bookkeeper takes no education or specialized knowledge – anyone can do it without training or qualification. This is a significant problem because the results of lousy bookkeeping can be as severe as failed businesses, bankruptcy and blowing up people’s lives.
Real bookkeepers understand the bookkeeping cycle and how bookkeeping works. They know how to use the software and integrate it. They understand how taxes and deadlines can make or break a business and the impact of paying extra tax on it. Real bookkeepers are not data-entry clerks.
If you’re lucky enough to have a good bookkeeper, treat them like gold; there aren’t that many around.
Bookkeeping Can Be Expensive
But it doesn’t need to be.
One of bookkeeping clients’ most frequently asked questions is how to keep their bookkeeping costs down. Excuse the satirical nature of this post, but it is a fun and funny way to help people understand how they can pay less for bookkeeping.
1 – Treat your Bookkeeper like a Mushroom!
That’s right! Keep them in the dark and feed them, um… poop!
The most common challenge in the bookkeeping relationship is communication.
Receiving partial information, wrong information, information without context, or no information is a significant roadblock. Your bookkeeper reviews the documents that support your transactions to ensure the details are captured correctly in your bookkeeping system. They ensure you claim back the GST/HST you paid on your expenses so you don’t overpay when you file. They categorize things appropriately for the tax return. They are the single most crucial part of your business finances.
As the adage goes, “Garbage in, garbage out!” It doesn’t matter how good you are at running a business or how good the rest of your team is; if decisions are based on wrong information, the results can be disastrous!
Know what documents you receive and understand what to send your bookkeeper. Purchase orders, order confirmations, estimates, vendor statements, debit receipts, and wire transfer details don’t provide complete information. Your bookkeeper needs bills and receipts and may still have follow-up questions. Understand what documents you receive, what they are, what you need to keep, and what is trash. Keep what you need, send it to your bookkeeper, and trash the rest.
When you provide your business’ financial results to a lender, business management is responsible for the information and business results. If your bookkeeping is terrible, so is the information you’re giving the lender, which is your liability, not the bookkeeper’s.
Bills and receipts that aren’t itemized and have no dates or names are useless. Seeing an “Interac Transfer” or “Deposit” on a bank statement does not indicate where the funds went or why. As the business owner or manager, it’s your responsibility to tell your team what they need to know – and your bookkeeper is a part of your team.
Make sure your vendor is providing what you need. Don’t pay people without documentation. CRA can deny expenses that aren’t supported by correct documentation. No ticket, no ride!
If you start a new line of revenue, a new bank account, credit card or payment gateway, make sure to speak with your bookkeeper about it ahead of time. Help them set up systems correctly to avoid unforeseen tax liabilities or headaches. Bookkeepers can help mitigate problems BEFORE they occur if they know what’s coming – but they can’t rewrite history. Heading off problems before they happen can save a lot of money – it can even save your business.
When your bookkeeper asks questions, it isn’t to make you jump through hoops or annoy you; they need the information to do their job right. Include your responses’ dates, payment methods, and who was paid for what. The more back-and-forth you have with your bookkeeper, the more it will cost you. The more times you make them ask you the same question, the more it will cost you.
In today’s technology environment, getting ahead of most questions is easy. Write legibly on receipts and take pictures of them. Ensure you include the information CRA would expect to see if they look. Send these directly into your bookkeeping system. Fantastic apps like Dext and Hubdoc can help you get the documents to your bookkeeping team in near real-time. If they’re working on things regularly, you’ll be able to get a good insight into your business results and steer it toward a successful future.
Your bookkeeper wants to do an excellent job for you; help them help you! Make sure you have a good relationship. Be sure that they feel comfortable reaching out to you and that you feel comfortable speaking with them.
In our next blog post, we look at #2 on our list -> how to leave everything to the last minute. Be sure to keep an eye out for that blog post on how to pay more for bookkeeping services!