My business needs a bookkeeper

Does your business need a bookkeeper?

Are you a business owner or operator who is considering outsourcing your bookkeeping? Then you’re in the right place!

Read on to discover the benefits of outsourcing your bookkeeping to a qualified professional. Find out what to look for in a bookkeeper, what skills they have, and how a bookkeeper can help you run a more successful, profitable business.

10 reasons to outsource your bookkeeping

Leveraging time is the goal of most smart business operators. Leveraging your time in business means that you achieve many tasks with the least personal input, thus reserving your time for the most important parts of your business.

Outsourcing is a powerful business tool for those committed to leveraging their time. Done well, it brings significant benefits to your business.

Consider the following 10 reasons to outsource your business’s bookkeeping.

Outsourcing will:

free you and your key personnel up to focus on your core business.
save you money. A contract bookkeeper is significantly more efficient at dealing with bookkeeping issues and accounting software. This efficiency means the cost of you performing your own bookkeeping is likely to be higher. The opportunity cost (due to your time being spent on bookkeeping) may be significant again.
offer you the ability to tap into a knowledge base not available internally.
give you peace of mind knowing that you have complied with your legislative obligations.
enable efficient dealings with the Tax Office, including lodgements.
improve your financial reporting abilities, thus improving your access to key information with which to run your business.
allow you to leverage the bookkeeper’s software knowledge, ensuring that you’re using the best software applications for your business.
streamline your accountant’s role by providing them with better information, which in turn saves you more money.
give you access to specialist services including payroll, software installation & training, debtor management, cash flow planning, management reporting, and troubleshooting.
provide better continuity of service when compared with casual employees, and a flexible service that can be readily scaled up or down, ensuring you only pay for what you are using.

Thus, when deciding whether or not to outsource your bookkeeping, start by asking yourself these three questions:

  1. Will outsourcing my bookkeeping free up time and resources that I can allocate to more appropriate and/or more important work?
  2. Is bookkeeping the best way for me to spend my time?
  3. Can someone else do my bookkeeping better and faster than me?


Outsourcing myths debunked

MYTH #1 I don’t need to outsource because I can do it myself

Outsourcing has nothing to do with your ability to perform the function yourself. You outsource because you have made a conscious decision as to which functions are of the highest value to you and the best use of your time.

MYTH #2 It’s cheaper if I do it myself

Rarely is this the case. Consider the raw costs involved in performing a task in house compared with outsourcing. If you accept that an expert is more efficient than you (or your in-house option), then consider the cost of the extra time you spend performing the function. For example, if the expert is 50% faster than you and you spend $50 for one hour’s worth of the outsourced function, then divide $50 by 150 (1 plus 50%) and you have valued your time at $37.50 to do the same task. But perhaps the greatest fallacy is considering only the raw cost of the function. What is the opportunity cost resulting from you devoting your time to a function that you could outsource? Invariably, outsourcing the task to a professional and devoting the time you save to sales and marketing, customer and supplier relations, or strategic planning will yield a better return on your time.

MYTH #3 It’s faster if I do it myself

Unless you are a skilled operator of software and have a detailed working knowledge of tax and GST laws, then rarely will it be cheaper to do your bookkeeping yourself.

MYTH #4 The job is only done right if I do it myself

As much as we hate to admit it, sometimes we don’t know everything. And unfortunately, it is also the case that we don’t know what we don’t know! We might think we are doing a sterling job but if we do not understand the tax and GST laws or the intricacies of software, we might be making inadvertent mistakes or even dealing with our bookkeeping at a sub-optimal level.

MYTH #5 It’s too hard to find someone to outsource the job to

Finding a good bookkeeper doesn’t have to be difficult—as long as you’re looking in the right places. Here are some good places to start:

  •  The Tax Practitioners Board (TPB). Bookkeepers who render services that deal with your BAS-related liabilities must register with the TPB, the regulatory body for tax practitioners in Australia. Once registered, the bookkeeper is known as a ‘BAS agent’. The TPB maintains a listing of BAS agents on their website (www.tpb.gov.au), and this is a great place to start to find someone qualified, or to ensure the person you’ve found is qualified.
  • Industry organisations like us, Australian Bookkeepers Network (ABN). Simply jump over to our Marketplace and search for bookkeepers in your area, or post up a job ad. • Your colleagues. Word-of-mouth is a common source of referrals in the bookkeeping industry, so be sure ask your colleagues, and even your friends and relatives, if they can recommend a good bookkeeper.
  • Your colleagues. Word-of-mouth is a common source of referrals in the bookkeeping industry, so be sure ask your colleagues, and even your friends and relatives, if they can recommend a good bookkeeper.

What should I look for in a bookkeeper?

Personal traits and fit with your team

Like any employee, your contract bookkeeper is going to be part of your team. There are a number of personal traits that
will help them fit with your business and enhance your working relationship with them. Consider the following questions:

  • Do they have a natural affinity with you and the personnel they will be dealing with?
  • Do they understand your business?
  • Are they knowledgeable and likely to add value to the relationship?
  • Are they reliable and punctual, with strong attention to detail?

Registered with the Tax Practitioners Board

All tax practitioners dealing with the public at large must be registered with the Tax Practitioners Board (TPB), the regulatory body for tax practitioners in Australia. Once registered, the practitioner becomes known as either a ‘BAS agent’ or a ‘tax agent’, depending on the types of services they will provide. For example, a bookkeeper who renders services that deal with your BAS-related liabilities will be registered and known as a BAS agent. This registration process is in place to afford consumer protection to the general public.

So how do you know whether or not a bookkeeper is registered? There are two ways:

  1. Firstly, they will have a registration number which can be verified via a public register on the TPB website (www.tpb.gov.au).
  2. Secondly, they may display the TPB symbol on their business card, brochure, website, etc. The symbol looks like this:

What registration means for you is that the BAS agent has satisfied the TPB that they have the following minimum qualifications and attributes:

  • They hold qualifications (at least a Certificate IV in bookkeeping or accounting).
  • They have experience (normally more than 1400 hours over the past 4 years).
  • They are a person of good character and reputation.
  • They undergo continuing professional education (CPE).
  • They abide by a legislated Code of Professional Conduct.
  • They hold professional indemnity insurance to a level specified by the TPB.

Back-up and support

A good bookkeeper will have back-up and support that they can use to quickly settle issues that may be outside their skill set or experience. Back-up and support can take the form of educational materials, explanatory resources, and access to other qualified practitioners from whom the bookkeeper can seek feedback. A bookkeeper might find such support from an industry organisation such as Australian Bookkeepers Network or Australian Bookkeepers Association. Bookkeepers might also seek back-up and support from franchise groups, or directly from other tax practitioners through informal networks.

Track record

Bookkeepers should be able to demonstrate they have experience relevant to the assignment you are offering. Many will likely have testimonials to evidence this fact.   

 

What skills can I expect my bookkeeper to have?

When looking to engage a bookkeeper, you should have an understanding of the key deliverables you are looking for. Be clear on the functions you are looking to outsource, and ensure those functions are within the skill set of the bookkeeper you are considering engaging. This is imperative to get the most from your outsourcing experience.

Different bookkeepers have different skill sets, often reflecting their background or particular areas of interest. Some also develop areas of specialisation. In general, however, bookkeepers normally have the following skills/knowledge:

  • solid understanding of bookkeeping/accounting principles, a methodical approach and attention to detail
  • software expertise
  • understanding of tax laws relevant to bookkeeping processes
  • ability to develop a strong understanding of your business
  • efficient with Tax Office lodgement practices and Tax Office dealings.

Other than the above general traits, some bookkeepers may have particular specialties including:

  • software installation
  • software training & support
  • management reporting
  • cash flow planning
  • debtor management and collection
  • creditor management
  • payroll
  • point of sale.

How to engage a bookkeeper

Understand what a bookkeeper can do for you

It is important to understand that most bookkeepers will tailor a service to meet your needs, so long as your needs are within their capabilities and areas of expertise. If the service you are looking for is outside their capabilities, then they may be able to refer you to someone else who is more appropriately skilled.

Typical bookkeeper appointments include:

  • establishing a system of accounting record-keeping
  • software set-up and training
  • software and bookkeeping troubleshooting
  • data entry into accounting software
  • reviewing, checking and reconciling postings to ensure accuracy of financial reporting
  • BAS preparation, checking and lodgement
  • management reporting on business performance
  • payroll processing, including dealing with the Tax Office and superannuation funds
  • preparation of end-of-year financial records for your accountant
  • debtor management
  • creditor management and bill paying
  • cash flow projections
  • payroll tax return preparation and lodgement.

 

Be clear in what you are looking for

Before you start interviewing bookkeepers, you should get a few things clear in your mind as this will help you make a better fitting appointment. Ask yourself the following questions:

  • Why am I outsourcing? What are the deliverables I am looking for to justify the decision to outsource? For example, you might want to tap into a skill set you don’t have, or you might want to free up 10 hours a week of your time to devote to a more valuable outcome for your business.
  • What functions are you looking to outsource? What specific tasks do you want someone else to do? For example, you might want to appoint a bookkeeper for a limited time to oversee of the installation of new software. Or you may want an ongoing appointment to handle your regular reporting needs and BAS lodgement.

Document your answers to the questions above, and articulate them to prospective bookkeepers. In this way, the bookkeeper can decide whether they have the capability to fill the assignment, or refer you to someone else.

Seek an engagement letter

To ensure your appointed bookkeeper has a solid frame of reference and there can be no confusion about the terms of your arrangement, condense and document your agreement in writing. In fact, a good bookkeeper will already have the template for such a document, usually referred to as an ‘engagement letter’.  Engagement letters are recommended practice for BAS agents by the Tax Practitioners Board.

The engagement letter can be quite a comprehensive document that spells out (among other things):

  • the terms of reference for the assignment
  • fees and charges
  • roles and responsibilities.

The engagement letter is typically drafted by the bookkeeper for your approval. Of course, it can be updated over time as the role of the bookkeeper evolves.

 

What other business owners have to say about outsourcing

Outsourcing is neither a trend nor a fad. Outsourcing is an increasingly popular management tool for people who are time-poor and looking to get better value out of their time. Here’s what some of the experts have to say about outsourcing:

“SME’s and business owners often try to do everything and they can’t. The best thing for a business is for them to focus on what they are good at and outsource the rest” Alex Goold – Sydney Woolahra Hotel

“By not outsourcing everything that does not foster creativity and growth, you may be creating an insurmountable barrier to growing your business” Michael Evans – Newport Group

 “Every small business has some essential but non-core business activities that eat into time that could be better be spent servicing existing customers or developing new ones” Patrina Kerr Consulting WorX

“Instead of trying to save a few dollars doing something for which you are not qualified, or not good at, try figuring out how you can MAKE a few extra dollars by doing the things you’re great at” Jeremy Britton - Wealth Coach

“It’s about having a good sense of value of your time and that, as a small business owner, you’re trying to grow your business and grow the revenue, and thinking of things that free up your time and free up your mental energy as investments in your business” Laura Vanderkam - Author

“Many entrepreneurs reject outsourcing because of the extra cost. However, they fail to calculate the value of opportunities lost because they sank too much time into energy-sapping tasks best left to others. Simply put, they save money but they do not make money” Jeff Shore - Shore Consulting 

The bookkeeper's top 10 tips for new businesses

Starting a new business can be both an exciting and challenging time, even for the experienced businessperson. There are so many things to get in order, such as marketing, premises, staffing, equipment, etc. Getting all aspects of your business off on the right footing is ultra important, and your record-keeping is no exception. This is where a good bookkeeper comes in. Invest some time in sourcing a good bookkeeper, and tick off our top 10 tips to get your business off to a good start!

1.       Get the right software

Gone are the days when you picked a brand of software and made your business systems fit its parameters. There have been significant advancements in accounting software and many of the new features are yielding significant efficiencies and labour-saving advantages to small businesses. Speak to a bookkeeper and assess the functional and informational needs of your business, and pick the software that best fits your business needs.

2.       Understand your software

Having selected the right software, you (and any appropriate staff) should understand how to operate the software and how to extract information from it to better run your business.

3.       Configure your software properly

Your software should be configured so that it delivers you the information you need to make the right business decisions. It also needs to be properly configured to report to statutory authorities such as the Tax Office. This all starts with ensuring that your general ledger is appropriately customised to your business.

4.       Build reporting disciplines

Great software is important but more important is the information that flows from it. Historic information about your business enables you to make the best decisions possible about the direction of your business. Decide on the type, timing and frequency of reporting, and on the roles undertaken by various individuals in producing reports. Many businesses underperform or even fail simply because they did not use, or did not know how to use, the information that was right at their fingertips.

5.       Build a strong accounting team

Ensure that your bookkeeper, accountant and any internal administrative staff have a close working relationship. This will ensure that each person has a clear understanding of their role, which will avoid duplication and issues falling between the cracks. Building a strong accounting team will improve the effectiveness of the reporting function and the quality of the information at your disposal.

6.       Confine each person’s role

The best leveraging of yours and your employees’ time is to confine each person’s role to the highest and best use of their time. In particular, as a business owner, you should not do tasks that limit your ability to operate at a higher level, as it will be to the detriment of your business’s profitability. Look at the bookkeeping function in this light and decide what tasks your bookkeeper should do to provide you and your employees with the greatest leverage of their time.

7.       Focus on cash flow

One of the most common reasons that a small business fails (especially in its early days) is cash flow. Failing to plan and manage cash flow will deprive your business of the lifeblood it needs to survive and thrive. Managing the billing cycle and collections will ensure you keep cash flow up. Prompt billing and receivables management are simple functions, but let them slide and you will run out of money. Forward cash flow planning is important in the early days in particular so that you can preserve cash flow and meet obligations as and when they fall due.

8.       Build good systems

Systems and processes drive efficiency in business, so look carefully at your record-keeping function and build robust systems around record-keeping procedures, source record filing, and reporting. Document the system and assign responsibilities to the appropriate persons, including employees, bookkeeper and accountant.

9.       Understand Tax Office reporting obligations

Many businesses fail or get themselves into trouble early because they fail to understand their record-keeping obligations for income tax and GST purposes. The ability to understand what you owe the Tax Office and when is crucial. If you understand what your obligations are, you should be able to avoid any nasty surprises and comfortably handle any level of enquiry from the Tax Office.

10.   Manage employee obligations

Australia is one of the more difficult places in the world to be a small business employer. There are a myriad of government and other authorities to deal with including the Fair Work Commission, Tax Office, Offices of State Revenue and Workers Compensation  each with their own set of rules and administration practices. Consider whether you want to face this workload alone or whether you should seek outsourced assistance from a bookkeeper.

Outsourcing is neither a trend nor a fad. Outsourcing is an increasingly popular management tool for people who are time-poor and looking to get better value out of their time. Here’s what some of the experts have to say about outsourcing:

Attention Bookkeepers: this video is available to share/link or embed to your website and social media channels. ABN Members you will find instructions on the Promo Material page in your members centre.