How to know when your business needs a bookkeeper and how to choose the right one
Hiring your first bookkeeper can feel overwhelming. How do you know if you need one? Where do you even find a bookkeeper? How do you know if they’re the person your business needs?
I wanted to share the answers to common questions on hiring a bookkeeper.
When do I need to hire a bookkeeper?
If you’re already doing your own bookkeeping and are comfortable with your numbers, I recommend hiring a bookkeeper when you’re spending more than 1 hour each week coding your transactions in Xero and reconciling Xero to your bank account.
If you’re not comfortable with your numbers then you may want to hire sooner. I do recommend that you take the time to learn how to use your bookkeeping program, so you understand the tasks that you’ll want your bookkeeper to do.
The advantages of having a bookkeeper are that they will save your time (which you can use for income producing activities) and they'll spot any errors more easily, which can save you a lot of time down the road.
When you’re deciding if now is the right time, compare the cost of a bookkeeper with what you can do with that extra time to grow your business or deliver your services.
How do I find a bookkeeper?
Not knowing where to look for a bookkeeper can mean this hiring decision gets put off for longer than it should. That’s why I wanted to give you two resources to get you started.
Xero has a list of registered partners that includes bookkeepers. If you use Xero, then this can be a good place to start.
The Australian Bookkeepers Association’s website has a useful ‘Find A Bookkeeper’ page. Members of this association need to have a certain skill level to join.
Be aware that anyone can call themselves a bookkeeper, so you need to do your research before hiring.
How do I choose the right bookkeeper for my business?
Now that you have a list of bookkeepers, how do you choose the right one for your business?
It's like a job interview – you need to make sure they’re the right person for your business, and they need to make sure they want to work for you. The following are areas that I’d recommend you cover when interviewing potential hires:
1. Are they experienced in using your bookkeeping program?
2. What is their hourly rate? Bookkeepers' hourly rates are typically $80 to $120 an hour. If someone quotes you a much lower rate it may not be the bargain it appears, as they may have more of a data entry skill level rather than a bookkeeper.
3. Are they registered with the ATO? To be registered they need to do professional development each year, so you’ll know they’re on top of any tax changes.
4. Can they explain complex terms in a way you understand? No one wants to be confused by the people they hire!
5. Do they show an interest in your business? Did they have questions for you?
6. Are they familiar with your industry? This isn’t always necessary; it may be useful if your industry has specific grants etc that are unique to it.
7. What type of person does your business need? It's not always a good idea to hire someone who is just like you! You’d want someone who is organised, punctual, and detail focused.
8. Go over the tasks you want them to do and when - i.e. you want the work done each week, so you have access to up to date numbers.
Always ask for referees before making a final decision. By speaking to 2 or 3 of their current clients you’ll get a good sense of whether the person is a good fit for your business.
Do I really need a contract with my bookkeeper?
You need a contract. It’s as simple as that. Usually, your new bookkeeper would provide the contract.
It’s important that you take the time to read over it to make sure it reflects what was agreed. I highly recommend having a lawyer review the contract too. Yes, that’s an extra cost but it is money well spent. Think of it as an insurance policy that your business is protected.
The kinds of terms that your contract will include are confidentiality, the services that will be provided, how much you will pay and when, and how any disputes will be resolved.
Make sure that your bookkeeping program subscription stays under your control - don't transfer ownership to your bookkeeper. If there is a dispute you don’t want them in control of your program as they could lock you out.
How do I instruct my new bookkeeper?
Give them access to your bookkeeping program. Ask them to spend 15 minutes to familiarise themselves with your system.
Then hold an initial session to show them what you've been doing and if there are any special items in your accounts or business they should be aware of. You can also answer any questions they have. That session will take 1 to 2 hours depending on the level of complexity in your business.
If you have a process (written or video) for what you do, then you can share that too.
How do I maintain a good working relationship with my bookkeeper?
You want to be a good boss, so make sure you set aside time each week to answer any questions that your bookkeeper has.
Do allow them 2 to 3 weeks to settle in and become efficient at doing things your way. Remember they’re not a mind reader, so if you want things done a certain way then explain that to them.
I suggest having a review meeting after 2 to 3 weeks to make sure the relationship is working well for both of you. Then meet every two months after that.
Remember, having a bookkeeper doesn't mean you can forget about your numbers. Ultimately, they’re your responsibility. Your new bookkeeper is simply doing a job for you so take the time to review your numbers on a regular basis.
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