Does My Business Need a Bookkeeper?
by Kristina McMenamin, on Jul 21, 2017
Welcome to Part 1 of our “Does My Business Need…” series, where we break through financial gobbledigook to help you figure out your business’s needs. Jargon out, simplicity in.
What does a bookkeeper do?
The role of a bookkeeper is to enter, categorize, review, and reconcile transactions in a company's accounting system. Having sales and expense data properly categorized enables business owners to see where they are spending and making money.
Historically, a bookkeeper would receive a list of entries or transactions in the form of receipts, emails, bank statements, credit card statements, invoices, loan documents, etc. and assign them to different accounts based on the type of transaction. While this is still common practice, it doesn’t have to be.
Today, many accounting platforms automatically pull data in from bank accounts, credit cards, point of sales systems, or e-commerce tools, so instead of having to input data from scratch, the bookkeeper confirms that the various transactions are going into the correct accounts and manually moves them to different accounts if necessary.
Additionally, a bookkeeper can handle billing (accounts payable) and invoicing (accounts receivable) to help a business stay on top of the money coming in and leaving the business (their cash flows).
Essentially, a bookkeeper turns this:
Pretty sweet to see everything in one place, right?
When do I need a bookkeeper?
All businesses need bookkeeping, but many business owners choose to tackle this task themselves.
However, if you:
- Are too busy categorizing transactions to focus on other parts of your business (like selling, creating, or growing)
- Are behind on collecting on your accounts receivable
- Are behind on sending out client invoices
- Are literally keeping bills and receipts in a shoebox
- Have way too many accounts to gain any valuable business insights
- Don’t have clarity on what you’re spending and making
- Play crazy catch up every year-end to get your books in order for tax season
- Are spending more than 5 hours per month on bookkeeping tasks...
...Then, it may be time for your business to consider hiring a part time bookkeeper.
A dedicated bookkeeper can handle most of these functions in a few hours per month--depending on the complexity and size of your business--and provide you with regular finance updates, and a clear Profit & Loss statement and balance sheet, freeing you up to spend more time pursuing tasks that generate real value for your business.
Imagine you’re a cold-pressed juice company that has been growing consistently to the point that you’re considering expanding your product offering by selling catering services or to-go healthy lunches. But, rather than spending a the few hours a month you have on developing your launch plan, you’re stuck doing bookkeeping work.
If you value your time more than what you could pay someone to do your bookkeeping (or mow your lawn, post on social media, or most any non-critical task) you should pay someone else to do it... every time. In this case, it’s time to hire a part time, remote bookkeeper and allow them to tackle the data entry while you do what you do best--run your business!
Frequently asked questions about bookkeeping
How often should I be in touch with my bookkeeper?
This is totally up to you, but we recommend checking in bi-monthly (twice a month) at the very least. The amount you check-in may also depend on how confident you are that your bookkeeper is handling everything you need them to consistently and proactively.
How do I know my bookkeeper is doing a good job?
Your bank accounts and credit cards are being reconciled, your expenses are being categorized, you are getting financial reports on a regular basis, and these tasks are consistently getting done without you having to pester the bookkeeper.
Can a bookkeeper work with my current accountant or team of finance professionals?
Absolutely. If you already have an accountant but they need support, you have options: you can work with a bookkeeper they recommend, you can scour various sites and local listings to try to find someone on your own, or you can have Paro do all the legwork for you. We will connect you to a highly vetted freelance bookkeeper who has worked with many accountants, has experience in your industry, and is a good personality fit for your existing team.
Do I need a local bookkeeper or can I use a remote bookkeeper?
At the end of the day, it’s your call. But local bookkeepers are typically going to be generalists; by going with a remote bookkeeper, you can find someone with expertise in your industry. We’ve tried both approaches and find that clients and bookkeepers are happier with the arrangement when matched by industry and type of experience, rather than geography.
Where do I find a good bookkeeper?
Paro, obviously! All the bookkeepers in our network have made it through a multi-step vetting process that evaluates both their financial and communications skills. Out of the thousands of people who apply, we accept fewer than 5%. So, you can either spend your limited time browsing multiple freelancer sites, interviewing candidates, and checking references. Or, you can use Paro and know that you’re getting the best.