In any business, the bookkeeper is the source of all information relating to the business’ performance. So, if you have a bookkeeper who is not allocating expenses correctly or is not accurately keeping track of everything within your business then the information you draw out in terms of your Profit and Loss Statements and other reports is pretty much useless. As the business owner, you have a responsibility to make sure that your bookkeeper is doing what they need to and that they highlight anything else that is important to your business. How?
Ask your bookkeeper or prospective bookkeeper lots of questions. You need to find out what type of clients they are currently working with and what type of clients they have worked with in the past. You also need to know whether they usually work with home based and small businesses or if they have larger companies on board.
Secondly, ask them to produce a specific report for you. I would suggest your Profit and Loss Statements for the last three years. Then ask them to explain this report to you. Ask questions based on the report and make sure the bookkeeper is comfortable providing you with correct answers. Ask them for their opinion on your business’ performance, what your gross profit is and to provide comparisons from year to year and the like.
If your prospective bookkeeper or current bookkeeper can easily produce reports and answer these types of questions then this bookkeeper will not just enter data. Anyone in your business can punch the numbers into the system and allocate them to a specific spot. However, if they do not understand why the numbers are being allocated to specific places or what they are allowed to claim in terms of GST and tax, they may not feed the correct information into your software and you won’t receive the correct information in your reports.
Finally, you need to ask for referrals and/or the contact details of the accountants of the clients your bookkeeper is currently serving. As a bookkeeper the information they feed into the system feeds down to the accountant, so their clients’ accountants should be able to tell you if the information they are receiving has been correct and reliable for that specific business.
Be sure to visit to get my Top 3 Tips to Profit and Cash Flow Success! Or email me at tracey@confidentcashflows.com.au.
source
