Small businesses try to save money or avoid professional fees by hiring an administrative assistant (AA) to handle their bookkeeping.
In other cases, they contract independent contractors selling bookkeeping services with little or no accounting background. Their “little” experience might be based on previously running a family member’s business (not necessarily an accounting business), or working a job where the accounting tasks were delegated to them without any formal training, thus being forced to account for company finances one way or another. They might have paid some bills in QuickBooks or created and sent some invoices to customers within the program. That does not make them a bookkeeper, but only an AA forced to handle some accounting-related tasks. This is when a small business owners need to be aware of what to look for in a bookkeeper to know how to differentiate between accounting and administrative personnel.
While I appreciate the new software programs evolving today like Outright and Kashoo (Clarity) offering “easy” ways to manage small business bookkeeping, these programs are only making it easier for a group of people to pose as experienced, knowledgeable accounting professionals. These software packages may have slogans like “we make bookkeeping suck less” or “free yourself from accounting.” In the end, you still need the experience and the expertise of a bookkeeper/accountant to answer your accounting- and tax-related questions, and most importantly, to make sure you are compliant with government agencies. You should also consider the person’s expertise with the software they’re going to use. Even in the accounting professionals world, not knowing a software program thoroughly can mean the difference between accurate reports and figures just slapped together. Imagine how much more challenging it is for an AA- and how risky it is for you- to hire based on their claim of having a few accounting-related tasks delegated to them with no formal training or education in accounting. If an AA is handling accounting-related tasks, they MUST always be supervised and guided by a bookkeeper and/or accountant.
Accounting is a science- and an art, I might add. It requires a specific set of skills and method of processing numerical data. Not to mention that in today’s accounting world, you MUST keep up with the technology available in our field to streamline and speed up accounting processes. This technology, however, must be combined with accounting and business management knowledge and experience. When a small business owner tries to save money by hiring and AA, I often see them, in the end, paying the fees they tried to avoid initially, if not more. Taking into account mistakes made in a file and the time it takes to later fix these mistakes, which might not be found until years later. Sometimes, these mistakes bring with them penalties and interest due to incorrect reporting on returns.
I have been in the accounting and business management field for over 16 years. The last 6 years as a self-employed accounting professional. I have seen my share of messes, not only by AA’s but even by so called “bookkeepers” and “accountants.” I cannot tell you how many people I’ve seen throw away their money and valuable time in trying to save a few dollars. I’ve had to clean-up my share of very messy books and correctly prepare them for the CPA/Tax Preparer. I’ve worked on several years at a time bringing up delinquent businesses up to date to be able to file their tax returns. I cringe at the thought of returns filed based on these so called bookkeepers’ figures not carefully reviewed by the owner nor the CPA/Tax Preparer. They will most of the time contain errors that if audited, can have a huge impact on the business’s tax liability.
An administrative assistant cannot fill a bookkeeper’s shoes.
A bookkeeper may cost you more than an AA would, but you are paying for extensive experience in a certain area that happens to be the area that can make or break your business. You’re paying for efficiency, knowledge, and speed that in the end will save you lots of time, penalties, and stress. The time it takes an inexperienced AA to update your accounting file, a bookkeeper can do twice as fast because of their knowledge of accounting programs, of accounting processes, and financial systems.
Use these questions to avoid hiring an administrative assistant when you are really looking for a bookkeeper or to evaluate your current bookkeeping team:
1. What are their qualifications and experience? What industries have they worked with? What level of responsibility did they handle?
2. Are they members and/or certified by a professional association they go to for support and continued education?
3. Are they knowledgeable in current tax laws and are they connected to CPA’s or Enrolled Agents, or successful and knowledgeable Tax Preparers?
4. Are they able to advise on financial matters based on your books (at least what’s on the reports they provide)? Do they answer your questions related to your industry, your entity, and the way you run your business?
5. Do they have recent bookkeeping work history, verifiable testimonials, and/or client references?
6. Do they have a steady client base, is this what they really do for a living, have they gone through formal training, and/or obtained certifications or degrees in the field? (A degree is not enough without related work experience).
I recently read in a blog that having a newly hired bookkeeper look at your financial file is like being seen in your underwear. So, in addition to doing the above research, to make sure you know what you’ll be getting from a bookkeeper, I highly recommend administering a QuickBooks or other software test and/or a bookkeeping test before handing over one of the most intimate parts of your life.