How to Choose the Right Bookkeeping Firm
While it is rarely anyone's favorite component of running their own business, bookkeeping remains incredibly important, even for sole proprietors with a very “simple” income statement or balance sheet.
Bookkeeping is essential for a variety of reasons. With the right bookkeeping practices in place, a business can find ways to eliminate unnecessary expenses and pursue new opportunities for growth. Furthermore, good bookkeeping can help you stay on top of your taxes and remain in good standing with the IRS.
According to the Bureau of Labor Statistics, there are currently about one million accountants in the United States. Naturally, it is easy for small business owners to become overwhelmed by the sheer number of choices currently available.
By keeping a few key variables in mind, your business can limit its pool of options and find a bookkeeper that can effectively meet your needs.
Decision One: Internal or External
The first decision your business will need to make is whether it wants to hire a bookkeeping firm or hire an accountant to work in-house.
In most situations, hiring an external bookkeeper will be the most logical option. Internal bookkeepers can be very expensive and because they draw a salary, this creates a situation with very little flexibility for new business owners. An internal bookkeeper will need to be paid, whether you want them to make one entry or one thousand entries into your books.
An external bookkeeper, on the other hand, can be easily scaled as needed. If all you want is an hour or two to speak with a professional accountant, you will quickly discover that you have many choices available. Furthermore, whether your business doubles or halves in size overnight, you will be able to quickly adjust as needed.
Decision Two: Scale
Assuming your business is looking for external bookkeepers (you are still reading this article, after all), the next decision you will need to make is how large you want the firm you are partnering with to be.
It is important to select a firm that fits the size of your business. There are several firms out there that specialize in working with large corporations. They are equipped to handle the copious amount of regulatory and compliance issues that large corporations encounter. If you are a small or mid-sized business, you will also face regulatory and compliance issues, but generally not on the same scale. Also, the accounting principles applied are often different for small businesses versus large corporations. For small businesses, it would be best to select a bookkeeping firm that specializes in working with this size of company.
In addition, working with a single-member or otherwise small accounting firm can offer an additional level of personalization and intimacy. Small firms will have the time and scale needed to not only truly understand your business, but also get to know you as a person. As a result, many smaller business owners will choose to work with a similarly small accounting firm.
Decision Three: Services Offered
Even now that you have narrowed your search, there are still a few more important things to consider. Accountants and accounting firms can provide a wide range of services—some firms will offer their services a la carte, while others will create broad contracts that give you access to everything.
Taking some time to understand the unique needs of your business will help make it easier to ensure your accounting partner truly is the ideal fit. A few of the areas that they might be able to help include:
Data entry: most bookkeeping firms will take over the day-to-day tasks that your business encounters when it comes to bookkeeping. Although, it can seem simple to handle this on your own, keeping on top of categorizing transactions and reconciling statements monthly can often get away from busy business owners.
Statement Generation and Review: a good accountant will help ensure your balance sheet, income statement, statement of cash flows, and other relevant financial statements are all entirely up-to-date. Not only is this helpful for internal use, but if you will be sharing these statements with potential lenders or investors, this is very important.
QuickBooks Training: as the most popular accounting software in the world, you will want to be sure you are using QuickBooks correctly and maximizing its value. Many firms will offer either 1:1 or group training in QuickBooks software.
Tax Compliance: most business owners don’t make it a regular habit of reading tax law. The complexity and nuance of tax law often makes business owners worry if they are compliant or fear that there will be surprises down the line. Be sure to choose an accountant that can accurately and effectively answer all tax-related questions. It can help to select a firm that has a Certified Public Accountant to consult on tax compliance issues.
Other Services: Many business owners would like to outsource functions like invoicing or bill payment to their accounting firm. Be sure to check if the accounting firm you are interested in will perform these functions for you.
Planning and Advisory Services: if you want your business to grow—whether that’s adding more employees, opening another location, or anything else—you are going to need to plan in advance. A good accountant can help take you from where you are to where you want to be.
These are just a few of the ways a bookkeeping firm can add value to your business. In most cases, they will be willing to craft an arrangement that is tailored for your business.
Making the Final Decision
Hopefully, once you have taken these factors into consideration, you will have a short list of possible bookkeeping/accounting options. But even once you’ve narrowed down your list to just a few firms, you will still want to conduct a preliminary interview to make sure they really are the best fit. A quality firm will gladly answer your questions, explain their price structure, and help establish the level of trust that is needed in the world of finance.
You might also want to consider choosing a firm that specifically works with businesses that are similar to your own. If you work in the creative industry, for example, you should look for an accountant that understands the challenges you face with structuring your business, monetizing intangibles, and ensuring your taxes are always paid.
The more you can do to understand your own business, the easier making your final decision will be.