Top five questions asked by new business owners, part four

Question #4: Why do you need my statements?

When I meet with new clients I tell them I will need all the bank statements, credit card statements, lines of credit statements and the like in order to get started on their accounting project. I’m frequently asked why I don’t just take their receipts and go from there.

Bank statements provide a clear indication of what has happened with your business. Bank activity can also be printed from most bank websites, but this isn’t enough for a diligent bookkeeper. True bank statements provide a beginning balance and an ending balance so that your bookkeeper can reconcile your account each month.

Banks now offer downloads directly into your QuickBooks software, and it is possible that these downloads can save you time and money. Retail businesses, bars and restaurants, and businesses that don’t use job costing can all benefit from bank downloads. Businesses that have real estate or utilize job costing do better to have manual data entry done on a QuickBooks file to ensure that each transaction is correctly coded; bank downloads aren’t right for these types of businesses.

No matter whether you utilize bank downloads or not, it is still important that you provide any and all bank statements for accounts used in the regular conduct of business to your bookkeeper. This will ensure that they have all that they need to provide you accurate, balanced books for year-end tax preparation.

Providing statements will also allow your bookkeeper to accurately quote you a price for your accounting project, saving you both the hassle of surprise bills and overages.

What is a bookkeeper?

People often ask me what a bookkeeper is and if they need one: “How is a bookkeeper different than a CPA? Why do I need a bookkeeper, isn’t tracking my cash flow in Excel enough?”

A bookkeeper is a professional who can accurately track income and expenses and provide you with a full accounting picture for your business or investment portfolio. In the simplest sense, a good bookkeeper draws a financial map to help lead you to better business planning and decision making. This map tells you where your business has been, where it is going, and can help you predict future trends and pitfalls.

A bookkeeper is also a bridge; bookkeepers can act as an intermediary between a business owner and tax agencies, CPAs, auditors and lending institutions. A good bookkeeper can speak the language of finance but should always be able to break it down into easily understood concepts for their client. Bookkeepers can pull reports, assist with tax filings, enter journal entries and negotiate fines and penalties with tax agencies.

A bookkeeper should work toward easing the burden on the clients he or she services. This means making recommendations, being knowledgeable about new laws, and helping with organization whenever possible. People start businesses to work at doing what they love or what they are good at. Just because you have passion to start a small business does not mean you know anything about how to organize an office or account for money earned and spent. A bookkeeper should be patient, able to put your mind at ease and take as much or as little of the accounting burden off your plate so you can focus on growing and running your business.

When looking for a bookkeeper, it pays to do some homework. A bookkeeper is not a CPA; they aren’t required to sit for an exam or defend a license issued by a state agency. A great bookkeeper should have great references, an impeccable reputation, professional insurance or be bonded. A well-rounded bookkeeper should hold some certificate of proficiency like being a QuickBooks Certified Pro-Advisor. As with all things, you get what you pay for with a bookkeeper; you are looking for an artisan of his or her trade. Business owners should be on the lookout for someone who takes pride in the work that they do and has solid back-up to prove it.

The most important thing your bookkeeper can do is be a part of your accounting and business team. Yes, you can track your bank balance in a spreadsheet, and it may give you a small piece of the full accounting puzzle. To get a full accounting picture you need a professional in your corner that has the best interest of your business at heart; that’s your bookkeeper.