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The high price of a cheap bookkeeper: Part 3

Another caveat for business owners - if you send a mess to your CPA to prepare your income tax returns at the end of the year, your CPA will need to clean up that mess first, which can be very expensive!

That is what happened to my client, POA. There was no way POA's owners could get accurate financial information, not for their own understanding of how their business was doing, nor for any potential interested buyers of their business or to get their income tax returns done correctly. Their frustration level was extremely high when Marty brought me in to clean up the books.

Here is what every business owner needs to know when hiring a bookkeeper:

1. Most messes that have been created by previous incompetent bookkeepers CAN NOT be cleaned up. Every successive incompetent bookkeeper just adds their own mess on top of the prior bookkeeper's, compounding the chaos in the books. A bookkeeper that understands this will set up a new company file from a date certain and bring over balances, etc., in order to have a clean file in which to work. It is only a waste of time and money to try and clean up the "old" mess.

2. A business owner should always question the bookkeeper and check references during the interview process. Here are some very important questions to ask:

a. Do you reconcile the books to the bank statements every month? What happens if you find discrepancies?
b. Do you provide monthly financial statements to the business owner? Are they accurate?
c. Are you familiar with the reporting capabilities of QuickBooks (or the accounting software being used)?

The same questions should be asked of the bookkeeper's references:

a. Does your bookkeeper reconcile the books to the bank statements every month and what do they do if they find discrepancies?
b. Are you receiving monthly financial statements and do they look accurate?
c. Are you receiving other important reports from your bookkeeper and do they look accurate to you?

Here are some traits to look for when hiring a business bookkeeper that will save a lot of money and keep costs under control.

1. Detail oriented;
2. Very organized;
3. Speed;
4. Must understand accounting "concepts" - sees and understands the big picture of the business - not just a data entry person;
5. Must understand how to use the full functionality of the accounting software package including entering A/P, A/R, entering deposits correctly, Payroll, etc.;
6. Needs to know how to get the pertinent reports for the business and understand them in order to help the business owner understand them.
Are you going to be a responsible business owner so you understand the financial management of your business? If you say, "I don't want to know," then you've got a hobby and you will always have chaos in your books.

The combination of a good CFO and a competent bookkeeper will provide you with a greater ROI and significantly reduce the stress of creating a successful business that will last for years and/or will increase the value to a potential buyer. Accurate financial statements, which need to be reviewed monthly and be completely accurate, will help business owners get a handle on their business, tell them where they need to cut costs, show them how they can grow their business and educates them as to what their business is doing.

Financial statements tell the "Story of the Business" -- where it is at and where it needs to go, so the owner can understand their business and use the information to be successful. Bank lenders and investors expect you to understand what's going on in your business.
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Marty Koenig and Susan Commins

Marty Koenig is Founder and CEO of CxO To Go LLC. He loves what he does for a living, because he gets to work with so many great, world-changing people and help them succeed in their business. His team is dedicated to building financial, operational, strategic, technological excellence for small/mid size business owners and entrepreneurs. Marty has over 29 years of diversified experience in private and public companies, from startups and mid-size firms to multinational Fortune 30 companies including AT&T, General Electric, NCR Corporation and StorageTek. Marty performs in roles such as CFO, COO, COO and CIO for his private clients, and he has been nominated for Denver Business Journal 2011 CFO of the Year. Marty is an author, educator, and speaker. See his and his partner's recent books at Buchanan Publishing or visit www.cxotogo.com . Read his professional blog here. His private email is mkoenig@cxotogo.com.

Susan Commins, owner of All About Accounting LLC, is a recognized QuickBooks expert and a business management consultant that specializes in the financial management of businesses. Susan's business management experience includes 20+ years: first as a law firm administrator in Los Angeles, California, then as the owner of a law firm/business management consulting firm in Los Angeles and Sedona, Arizona, before relocating to Denver in 2005. Susan specializes in improving cash flow, cash management, and profitability for all types of businesses using QuickBooks as the financial management tool. She believes that "Smart Business Management through Smart Accounting" is what makes a business successful and profitable, especially in these difficult economic times. She creates all the reports that make it easy for business owners to make educated financial decisions to enhance profitability. Susan has been using QuickBooks since its genesis as DOS.1.0. Her website is www.AllAboutAccounting.net


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