Bookkeeping for Success

Updated: Jun 1, 2019

Bookkeeping is described as the recording of accounts or financial transactions of a business. It is much more though and hiring a bookkeeper with experience and skills will benefit your business exponentially.

“Don’t think what’s the cheapest way to do it or what’s the fastest way to do it… think what’s the most amazing way to do it.” Sir Richard Branson

A Smooth Process

Your bookkeeper should have a high-level of experience, have basic accounting knowledge and be able to have good discussions with you and your accountant on your business’s finances.

There are many things that contribute to your bookkeeping process running smoothly. As an owner this may seem that its out of your control but in fact its in your control and its up to you to make sure things are happening the way they should be throughout the year.

A Company’s Accounting Department

As businesses grow and become larger many specialized departments will be required to handle the load such as Purchasing, Accounts Payable, Billing, Accounts Receivable and Payroll. Additionally, there will be an Accounting Manager to oversee the general accounting activities and the accounting staff.

In a small or mid-size business though these functions most often belong solely to a bookkeeper who is experienced in all of them and completes all the daily, weekly, monthly and year-end activities and reports on them; effectively, acting as both a bookkeeper and an account manager. The fact is that an experienced bookkeeper is one of the greatest assets to your company.

Confidence in Your Books is a Requirement, Not a Want

We have Clients that have been in operation for a few or more years and some that are fresh into the business world. Regardless of how long they have been in business, they share commonalities when there is no confidence in the bookkeeping.

They may be unhappy with their bookkeeper’s quality of work, the time it takes them to complete tasks or there has been no communication or questions on any of the transactions - no discussion around what has transpired in the books. Job costing is missed, overlooked or inaccurate. At the end of the year, when they sit down with their accountant to review the year-end, they realize that there has been a lot of times during the year that they have not understood or known where their business was at.

For Clients using online platforms to do their own books, there are many benefits such as low start-up costs, having the ability to connect their books to their bank feeds for quicker more efficient use of their time. They also have instant visibility to clean dashboards to view their Profit & Loss and much more. The problem is all these features can create a sense of trust with a user that has no bookkeeping or accounting knowledge and is leaning towards speed vs accurate accounting. It can be a costly learning curve. Many of these business owners eventually hire bookkeepers to review and clean-up their data and fix the mistakes; and then keep them on permanently to tie off their month-ends and their year-end. It’s great to be able to review reports and dashboards at the click of a keyboard but only if they are right.

Set Things up Right

There are many contributors to a bad set of books. The initial, incorrect set up of a Chart of Accounts or postings to incorrect accounts can create a lot of rework and stress and ultimately the dashboards you love to view are not accurately representing your business’s financial position.

The payroll module is a good example of this. If the accounts aren’t set up right when you run your payroll you will have a lot of cleanup to do when its time to issue a Record of Employment or run T4’s. If you are running your payroll through an online provider that automatically pays your employees and your source deductions not only are you paying for the rework later, you are paying a fee for that service and you are sending them your money that sits in their bank account until the employees and Canada Revenue are paid.

In a nutshell, the program can’t do all the thinking for you and can end up costing you more money than you planned for.

Testing Your Bookkeeping Model

So how do you know if what you are doing is working?

Depending on your level of understanding there are many ways to keep tabs and assure that everything is flowing right. At a very basic level though, just reviewing your Profit & Loss Comparison Statement and your Balance Sheet regularly will be a great benefit. If anything jumps out at you, dig in and investigate it. If you have a bookkeeper, then have him review everything with you. Your bookkeeper should be able to explain everything that has transpired and explain the entries clearly to you.

If your bookkeeper never asks a question or communicates with you, then you need to question why. It may be as simple as opening the line of communications and providing more leadership to get the flow going or getting some additional training for him.

Understand that your accountant when preparing your year-end provides you with Unaudited Financial Statements, its up to you as a business owner to assure you have processes in place for your internal accounting procedures that creates confidence in your businesses financial position at any given point.

Your Bookkeeper and Your Accountant

Chances are your bookkeeper isn’t an accountant and your accountant isn’t a bookkeeper – unless, of course, you are able to afford to have an accountant do your bookkeeping.

These are two different expertise’s that work together to complete the accounting cycle but work independently on different functions. Your bookkeeper should have a high-level of experience, have at a very minimum basic accounting knowledge and be able to have good discussions with you and your accountant on your business’s finances. You should always feel that your bookkeeper is your go-to person, if you don’t then you should question why and fix it sooner than later.

Rachael Vaugeois

Construction Cost Consultant

Owner, Green and Beans Cost Consuting Inc.

Green and Beans Cost Consulting Inc.

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