How to find great Small Business Bookkeeping Services - even if you don't understand numbers?

How to find good Small Business Bookkeeping Services?

There’s a great list of small business bookkeeping services and what they are further below – it’s about halfway – you can scan it in seconds.

Here are 5 well-hidden traps people fall for, when considering a new bookkeeper.

Firstly, As you probably know, a good bookkeeper can make all the difference when it comes to getting things under control fast. But it is very easy to hire the wrong ones. The first one is the rate. You would think it’s obvious.

But it really isn’t as many of them will not tell you transparently how much they charge. Prices can vary between $60/hour to $94/hour.?In reality, you wouldn’t know.

For example, if the bookkeeper does not disclose their rate? They can invoice you a lump sum every month. But, Bookkeeper A charges you $300 and does 5 hours of work. Bookkeeper B charges you $300 and only does 3 hours of work.

B is doing almost half what A does. B is sloppy and rushes through things. Because, B doesn’t tell you the rate, you would not have a clue. Unless you are an accountant, you can’t tell the difference until the ATO is knocking down your doors, asking for way more money than you can afford.

We are not going to mention obvious things e.g. checking reviews, reference checks, interviewing skills, not hiring referrals and so on. Most of you do this already.

Secondly, you also need to hire for attitude. (Or hire us) Most people that offer bookkeeping services are actually accountants that did not want to get their CPA or tax agent license. However, they are still accountants and a rather taciturn breed.

They are not very chatty or forthcoming with information on their own. Usually they need to be prodded to reveal anything extra. They love just performing a service quietly in the back office. That’s a problem.

Here’s why. You don’t know what you don’t know. That is even truer when it comes to accounting, tax, bookkeeping and compliance in general. It is a very counterintuitive subject matter. So, how are you going to know what questions to ask this bookkeeper?

The answer is you won’t know when to push and ask for more information. If your bookkeeper is not a very chatty one, that also means, major issues go unnoticed, as the dull bookkeeper is all about efficiently lodging the BAS or coding the bank reconciliation. Now, that’s a real shame.?

For example, if you don’t provide any information on an important financial transaction, the garden variety bookkeeper simply ignores that, and processes the paperwork you have provided. He/she won’t even mention anything.

So, what can you do? You need to fix the problem before it even arises. Our bookkeepers are chatty! They have to be – now, I think you agree with us too. They also need to be proactive. For example, ours were reading about grants and Cash-flow boosts and telling their customers all about it and many other countless wins during the year.

If they identify these issues ahead of time, you actually have a chance to fix the issues. Otherwise, you never really had a chance to start with.

That is arguably a weird tip but that a proactive & chatty bookkeeper is a truly rare gem. In fact we only expand our team when we come across one, promptly refusing new clients if we don’t have capacity, instead of hiring the wrong ones, like most others providing small business bookkeeping services.

Next one, you hire for attitude again (once you have identify 2-3 equally skilled ones). This time look for people that are of a genuinely helpful nature. You know the type. You are a tourist in a foreign country, with a map opened in your hands.

This fellow will jump across the street to come and help you find that tucked away museum. That’s the fellow we hire. He/she is genuinely helpful in any situation. You can usually tell during the interview. Information is volunteered, even when you don’t ask for it. Again, that is the kind of information you can use to pre-empt entirely avoidable financial disasters, if you someone helpful gives you the “heads-up”.

Next, again, attitude! This is the weirdest but most useful one ever. Guilt! Hire for Guilt! We learned this trick from one of the best business coaches on the planet, Brendon Burchard (www.brendon.com), it is well worth following his advice.

Weird. We thought so too, at first. But ask prospective staff these questions at the interview: “When did you screw up something.. what did you do about it? Why?”

All bookkeepers screw up at one point or another, they are making thousands of micro-financial decisions every day. Even at 0.01 percent, statistically, they are still making mistakes. ALL of them. Why look for guilt?

You want to find out about whether or not they experience guilt when they do so. If they do, they will bend over backwards for you, and go beyond fixing their mistakes i.e. you will get value for money. Neat trick, right?

We can’t make a list like this without mentioning experience. But that is an obvious one. Here is what not so obvious about it. Number 5, with a bang! As a business owner (unless you are an accountant or have done the books for dozens of businesses), you will rarely have the right experience to gauge the skills and experience of a bookkeeper. You can only try your best here. At the risk of sounding self-serving, that is probably the main reason we have a good business. Because, no matter what you do, on this one, you will not fare well. As accountants, we can tell when a bookkeeper is experienced or not, by asking a few situational and technical questions. By gauging the candidates answers, we can make an informed decision. But it doesn’t have to be all doom and gloom. You can simply contact us and and ask us about our small business bookkeeping services.

Do’s And Don’ts for Small Business Bookkeeping Services

Bookkeeping is not the most exciting part of your business. Let’s face it. When you started your business, the first sales were very exciting. Doing the paperwork? That was probably less so, particularly if you were never too keen on number crunching. Eventually, this gets people to look to others to provide them small business bookkeeping services.

Small businesses also have compliance requirements, on top of mere bookkeeping. Unfortunately, if there is one thing that is dryer than bookkeeping, it’s compliance. It is very difficult to get excited by anything tax-related, unless you are an accountant or a bookkeeper. Let’s have a look at what a bookkeeper has to actually do in a small business, in simple terms.

Please bear in mind that to effectively manage a small business, you have to have a basic understanding of bookkeeping for small businesses. However, if this is really not your thing, this can be very alienating and frustrating.

Say, you are a creative person or you are more excited by watching your sales grow. Or, even that you actually love the feeling you get when you make a sales in your business more than anything.

People with bookkeeping skills will stand in awe of folks like you. However, if you are like that, that usually means you are not enthused by the prospect of learning about number crunching or compliance.

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The point of this page is not to turn you into an instant bookkeeping prodigy. Far from it. We don’t like making unsubstantiated claims. But we can at least point you in the right direction. If you’re aware of the basics, at least you “will know what you don’t know”.

You’ll have a better grasp of whether or not you are meeting your compliance obligations. Whether or not the numbers are well put together. Whether they are indicative of your profitability, or hiding dramatic secrets. Let’s have a look at some tips.

Businesses are hilariously unpredictable. A good bookkeeper and good record-keeping can make things feel more certain and tangible. Three things you need to know about record-keeping:

-What records you need to keep

-How to keep them?

-How long do you need to keep the records for?

Explain bookkeeping

Let’s define the activity. I think you will find this helpful. It is an ongoing controlled process. Financial transactions need to be recorded. They need to be organised. Once that has been accomplished, you actually know how much money or profit you generated.

Ever ask, “how much profit?” and get a blank stare in return? Or worse, do you actually know which areas of the business to expand to 2x your profit, for sure? You need really clear (and reliable) financial information to make these decisions. For instance, many have gotten themselves into loans they thought they could afford – because their financial reports were not put together properly i.e. they read the wrong information and made the wrong call.

These transactions used to be handwritten on pages, that were then bound into “books” as businesses grew in size and complexity, hence the term “bookkeeping”. Sometimes the two terms “bookkeeper” and “accountant” are used interchangeably. However, if we are holding fast to the definitions, then the whole accounting process needs to be split in more than one process.

Bookkeeping would be more involved with data collection and coding. Accounting would be more concerned with compliance and interpretation of that data. Bookkeeping used to be a fairly manual process e.g. involving cash books or sales journals. Nowadays, most of this is done via software e.g. experts in xero accounting or Quickbooks accountants.

For example, these are some of the activities a bookkeeper focuses on:

-Creating invoices

-Sending invoices

-Making payments

-Collecting overdue amounts (if you don’t use a debt collector)

-Some account management tasks

-Payroll (many times that is outsourced or the owner takes care of that)

Your accountant (and we are oversimplifying here) would deal more with interpreting the financial records and filing your taxes. BAS can be done by either. Certain financial transactions or mistakes can go bump in the night, accountants will then process adjustments to reflect what was supposed to happen initially. Also, certain odd transactions e.g. depreciation, will require the input and journals from accountants.

Certain businesses take care of everything too. For example, our business provides both accounting services and small business bookkeeping services. Whilst some of our customers prefer to have everything under one roof and able to get answers from all their questions from one point. – others have their own bookkeepers or accountants, and use us to fill the gap.

Yet, another version of this exists too. In this one, the bookkeeper starts out with the business, that then grows to an enormous scale with the bookkeeper training accordingly to keep up. In this instance, the bookkeeper starts also doing more and more of the accounting tasks. These larger businesses then simply get their taxes filed by an external firm. We also have a few of those.

There are many permutations and combinations of these arrangements with our clients. However, all share the same aspect of secrecy and confidentiality. Furthermore, many of the owners of the businesses get their family members and their returns done with us too, with clear separations between all of it. Everything, regardless, gets the same level of effort and accuracy.

Accuracy is the name of the game. It is supremely important because:

You, the business owner, need to know how much money you are making.

You need to know when you are spending more than you are making.

It’s great to know ahead how much money you are going to make!

That helps with planning future expenses or expansions.

You can identify holes in your cash flow, miles ahead. So you can do something about it, managing payments to suppliers and collecting more from customers, on time.

Most think fraud or major financial distress can’t happen to them. Because it is unpleasant to contemplate the opposite. Not because it doesn’t happen. Good books and controls help avoid all that. After, nothing is more unpleasant than that feeling of incompetence or “being the dumb one” after something tragic happens to a business – because of poorly kept books.

A good set of books means we don’t charge you more for your tax returns. If the books are kept well, we spend less time on your tax returns and charge you less.

Not to mention, if someone wants to invest money in your business, it is a breeze for them to do so. The same thing goes for lenders too, when you need an extra injection of cash.

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How do you then keep good records?

The ATO prefers electronic record-keeping. So that’s we encourage everyone to do. Besides most if not all of this accounting process is software driven. This has become much more blatant since their single touch payment implementation.

(There may be certain instances where you are required to keep hard copy legal documents. Also, we’ve noticed that some clients like to keep hard copies of company constitutions and trust deeds etc)

You don’t need a fancy scanner or be an electronics wizard. No need for hiring an expensive Gandalf of the IT realm.

You can simply use your phone to take a picture of your receipts. As long as it is fairly clear (and you took the right picture!), and is a true likeness of the original, ATO and other compliance entities are more and more accepting of this practice. Some of our customers only keep pictures of their receipts.

If you do decide to go for IT wizardry here (or call us to do it for you), Xero has some powerful integrations such as Hubdoc, where you take a picture of a document & your accounting software takes care of the rest. Yes, it does feel like wizardry the first time you use it. Technology in this area is getting more advanced, with some using AI to code bank reconciliations!

As a further sidenote, please have backups for your documents. ATO and others are not lenient when documents get lost and computers get hacked. The responsibility for providing documentation of financial transactions still stays squarely on your shoulders, no matter what.

We don’t think that is necessarily fair in all instances but that is unfortunately the law. Having said that, with all the options to back onsite, offsite and in the cloud, it is rather hard to get completely hacked – which could be why the ATO has such stance.

You need to have all access to it at all times, have all the passwords and be in total control of what happens with all the documents you store too. Think of it like the airport and your suitcase. Recall how they ask you whether you were in possession of your suitcase at all times. It is a bit like that and for similar prosecutable reasons.

If you recall, that’s when all payroll now requires software – if you have employees. There is no way around it. There is even talk of a “phase two”. ?

(As another advantage of using our small business bookkeeping services, we keep you up to date with all changes that come up e.g. the Director ID ASIC matters)

Tip: Some software are better than others with payroll. Xero is a bit less intuitive and clunkier than Quickbooks or Sage. MYOB still needs some tidying up and tightening of its bolts.

Let’s get back to said accounting process.

So, you have your chart of accounts, got your bookkeeping software – you are ready to rumble?

Each invoice and any other financial transactions must all be coded in the right accounts. If you get this wrong, then an accountant usually steps in with journals when reviewing your accounts before lodging tax returns.

That is a scenario you want to avoid at all costs – no pun intended. That is because accountants charge approximately 3 times as much as a bookkeeper. An hour’s work with a bookkeeper will set you back about $50-$80/hour. Accountants will charge around $160-$250/hr.

What sort of bookkeeping should a small business do?

If you are a micro business you may in rare instances have an option to have simplified bookkeeping. However, that can cost you more later. Unless you are an experienced, trained accountant, you will invariably make mistakes. Even we make mistakes that we pick up, because we review our work. So, if you are doing your own books, when you submit it to your tax accountant. They have to review and fix the numerous mistakes – at a very expensive rate.

You may still be ahead. Say you spend 100 hours to do your bookkeeping yourself. Instead of using our services at $60/hour. That saves you $6000. However, a tax accountant will review the mistakes and spend hours doing so, probably costing you $1600 or so. Then the accountant will charge you another $1600 to fix the issues. So you did save $3,000, but you worked at $30 per hour. The real question is then, would that time be better spent somewhere else?

Also, to be able to even do the bookkeeping you will need to spend anything between 50-100 hours getting trained too. Just a few things to consider when making delegation choices.

If you are such a small business and a sole trader, you may also get away with single entry bookkeeping. That’s just a fancy way of saying to use a spreadsheet and record all your income on one tab; your expenses on another.

But the genius of the accounting system, lies in double entry accounting. Whoever invented double-entry (i.e. Luca Pacioli) was a true genius. That’s what ensures your books are always balanced and second layer of controls ensuring transactions are coded to the right accounts. No need to worry about the complexity of your bookkeeping here.

This is all done in the software itself – unless you are using cash books, which we strongly recommend not using as your accountant will have an expensive nightmare sorting everything out for lodgements – which they will happily charge you. Quickbooks and Xero seem to be the inexpensive go-to of most small businesses when it comes to their bookkeeping.

However, if you decide to stay the manual course, you do have some advantages:

-Cheap to get going

-Simple to use

-Almost impossible to have duplicated transactions

Versus some of the advantages of the digital way (the preferred ATO way):

-Almost zero physical storage space

-Most calculations are automated

-Easier to generate reports

-A more elegant bookkeeping solution overall

-Easier to back up

-Protected against fires and theft-mostly

*Even if you are not using a software, you can still use a spreadsheet – which is better than all paper-based.

Software like Xero and Quickbooks (MYOB and a few others out there) present other advantages too:

-Easy to automate recording of many transactions

-minimise mistakes

-Accounts are updated by themselves and balanced

-GST is done and dusted

-Financial statements production is automated and pass all lenders scrutiny

-Invoices are produced fasted and accounted for (And even “debt collected” if you are using Xero)

Two things:

*Make sure your software is Standard Business Reporting compliant (SBR)

*Amazon accounting and other large platforms may have their own preferred accounting packages. Consult your accountant before jumping on those.

If you are going to use a spreadsheet, perhaps watch a video on youtube or Google how to do so. This will enable you to be familiar with some of the more advanced and useful features of Excel. For instance, knowing how to use VLOOKUPs and Pivot tables will make your life a lot easier and take remove hours and hours of tedious manual bookkeeping and calculations.

Have you heard of cloud accounting? Most of the mainstream accounting software have this option. In fact some of them are only cloud based, like Xero. This does present some security risk, although that is usually quite well mitigated. You then have the option to update your accounts from any location. For instance, you can code your deposit from the bank lobby! It is also quite cheap to “go digital”.

But if you want to find us "face-to-face", click here.

Common bookkeeping tasks for small businesses?

If you are going digital, you will be doing this from your couch, watching your favourite Netflix show:

-Your payroll

-Bank reconciliations

-Accounts receivable

-Accounts payable

But why spoil a good show. Ditch the laptop and grab some hot and buttery popcorn instead. And give us a call, so we offer you peace of mind. And give you the best of all small business bookkeeping services. Click here to reach out!