You’ve passed the point of DIY bookkeeping, and you’re finally ready to hire a bookkeeper. (YAY, congrats!) Naturally though, in the midst of the excitement of taking another big step as a business owner, you might be feeling some hesitation around sharing all of the nitty-gritty details of what’s happening financially in your business with another person. I get it, it takes a lot of trust to let someone else in on what you’re spending your money on and how much you have (or haven’t) saved for taxes.
First, bookkeepers aren’t here to judge you. We’re here to help you make the best use of your money and make sure you’re prepared for tax season. Second, what I find helps entrepreneurs feel more confident when hiring a bookkeeper is when they know exactly what to expect. That’s why I thought it would be useful to give you a behind-the-scenes look into what it’s really like to work with one.
I: When You Start
When you start working with a bookkeeper, you might switch over to his preferred software, which is something you may have discussed during your initial consultation.
Once your account is set up in a cloud-based bookkeeping software, like Xero or Quickbooks Online, you’ll need to figure out how you’ll send all of your financial documents (bank statements, credit card statements, PayPal transactions, Square transactions, Etsy transactions, etc.) to your bookkeeper each month. She might ask that you send the documents to her via a file-sharing service like Dropbox, or she may have you use a more specific service like Hubdoc. You’ll also want to clarify in advance who is responsible for filing quarterly and yearly taxes. If you’re in Canada, like I am, quarterly sales taxes are due at the end of the month and you have to sign up for them in advance.
II: Monthly Work
At the beginning of each new month, you’ll send all of your financial documents and receipts to your bookkeeper. Here’s a tip: If you’re in Canada, you’ll need to keep all of your receipts for at least seven years — even if you’ve already submitted them to your bookkeeper. If you’re in the States, you don’t have to worry about this. A credit / bank statement suffices as proof. Your bookkeeper will then be able to reconcile your accounts, or make sure your bank account balance matches your bookkeeping software balance.
Throughout this process, your bookkeeper will be able to check for any outstanding invoices that still need to be paid and can write off any bad debt from invoices that won’t be paid. I recommend marking this on your calendar so you’re less at risk of letting financial documents pile up and then inundating your bookkeeper with them after three months. Some bookkeepers may offer a monthly meeting to discuss your financial reports with you as well.
III: Quarterly and Yearly
If you pay sales and income tax on a quarterly basis, your bookkeeper will send all of your financial documents to your tax preparer. She’ll also review your profit and loss reports, otherwise known as an income statement, to help you evaluate the financial health of your business. Finally, at the end of the year, she’ll do something called “closing your books,” which is a process that helps you get ready for tax time and gives you all of the juicy information you need to review your year so you can plan for the next one. Overall, I know that hiring a bookkeeper can feel like a big leap for a creative solopreneur, but doing so will also free up your time, save you money, and help you relax during tax season.
Make sure you hire a bookkeeper you can trust, hand over the money stuff you never enjoyed anyway, and then rest easy knowing she has your best interests in mind.
