As an Independent business owner, you might already understand proper bookkeeping for your business, but what does it mean when a professional steps in? You might naturally feel 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 your financial data 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.
What is a bookkeeper?
Simply put, a professional bookkeeper is responsible for recording all of your financial transactions and ensuring everything is accurate. In the old days, bookkeepers did everything manually, but nowadays they can easily get you set up on an accounting software and ensure everything is recorded efficiently for your financial statements, self-employed taxes, business taxes, and more.
Why do I need to work with a bookkeeper?
You might be wondering why it’s even necessary to hire a bookkeeper when you know you can complete day-to-day data entry and financial reports, especially with the help of bookkeeping software. But ask yourself – Do I really have the time to figure out a new software, keep track of my financial records, and ensure everything is accurate?
As a business owner, the answer is probably no! Your time is already is taken up by so many different things. By hiring a bookkeeper full-time, you can make sure the financial part of your business is well taken care of, which will help a lot especially when it comes to tax filing.
Initial work with a bookkeeper
When you start working with a bookkeeper, you might switch over to their 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.
Pro Tip: If you use HoneyBook, you can automatically sync with your Quickbooks account to make sure your client payments are always recorded.
Monthly bookkeeping 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 move forward with reconciliations 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 online 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.
Quarterly and yearly bookkeeping
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 an Independent business owner, but doing so will also free up your time, save you money, and help you relax during tax season.
Hiring a bookkeeper
Now that you know how bookkeepers work, I hope you see how hiring a bookkeeper can help your business in the short- and long-term. To get started, you can browse the HoneyBook Pros who specialize in bookkeeping and accounting. The Pros are expert business owners who want to serve you and your business. They’ll dive into your accounts to help you get set up and organized!