:weightlifter: :clapping:Thumbs Up:nod::terribletowel:

 

When to hire a professional?
My (biased) opinion, from day one.

You're going to love this question, what does a bookkeeper do?

Ok, after everybody has a good laugh seriously. How often do you visit the bookkeeper? Do you even visit them? Do you bring the months/quarters receipts? Do you email those documents? What will a solo generally pay if he's grossing say, $10k a month? What about electronic payments like Venmo? I have a business Venmo and I push it with new clients.

Also, thanks for taking interest in my request :drinkup:

 

So it really depends, but in short a bookkeeper manages the day to day financial transactions. This can encompass different things for different types of businesses but typically includes, allocating expenses, tracking income, send/managing invoices (accounts receivable), managing bills (accounts payable), monthly sales and use tax reporting, month end production of financial statements and sometimes, payroll and workmans comp reporting.

When/how often you see the bookkeeper depends on you. In my practice, I like to meet with clients every month to review the financial reports from the previous month, though some clients could careless and we don't meet. I also offer "unlimited support" for my clients so they can ask questions throughout the month as well.

As a virtual bookkeeper, I utilize cloud storage to access receipts and other documents, like Google drive/hubdoc/dropbox/etc. You never have to "drop off" a box of receipts. Just scan or snap and photo of the document and send it into the cloud.

As far as cost, I price my services based on the volume of transactions and other needs, and I charge a flat monthly rate. If you gross $10K a month but only have 5 transaction each month you'll pay a lot less than if you have 100 transactions for the same gross income. If you want to talk specifics DM me and we can chat (this goes for everyone).

Venmo is more or less considered a bank account and you would have to access their statements to reconcile the transactions in your books.

He would would separate everything and add it up, then make a monthly Profit & Loss Statement, that I would bring back to the customers along with their receipts.

A lot of the successful small businesses in the area used the service. Restaurants, Bars, Dry Cleaners, Mechanics etc.

A monthly P & L is very helpful and lets you compare month to month and a particular month in one year to corresponding month in the current year, so you can compare and make adjustments, rather then find out at the end of the year, that things did not go as well as you would have liked, and at that point you can only adjust for the upcoming year.

I just wanted to point a few key things @oqueoque said;
1) A lot of the SUCCESSFUL small businesses used a bookkeeper
2) How helpful having a monthly P&L is but more importantly understanding that P&L.

Most people are familiar with a P&L but that is just one financial statement. For my clients, I always produce and review the Balance Sheet, P&L (income statement) and the Statement of Cash Flows. The latter of which is the most uncommon but is the only statement that gives you a real understanding of where your actual cash is going each month. If you are using invoices/bills that you pay later, a P&L can give you a false sense of how much cash you need each month to operate successfully.

My previous CPA (I've not talked to my current CPA about this so I don't know) wanted $500 a month (on top of end of year filing fees) to go through my "books" i.e. look at my QB etc and make sure everything was good to go. Yeah I'll pass on that for now. But maybe one day.

To be honest, that's not too far off for costs. But again it really depends on your specific business. Also consider how much time you are spending on your books each month. What's more valuable to you? That time or that $500?

Good point made about separating business and personal. I disagree with need for a bookkeeper. One needs education, the books aren't that hard with today's tech quickbooks and many others almost do it all for you. Just good to know the process of it. It can be confusing but bit of learning basics and good to go. Accounting is simple, even at MBA level. Easiest thing I have ever done. Just dont over think and complicate it.

Quickbooks and a little bit of education is all most small businesses need. QB can automate many things, such as capturing credit card and bank feeds, and paying bills. Once you get to the size where bookkeeping starts turning into a part-time or full-time job, that is when hiring or outsourcing a bookkeeper becomes a must.

So I totally agree with both of you, it is super helpful, and important, to have an understanding of the bookkeeping process (QBO training is a service I offer). But today's bookkeeping professional is different than the "bean counter" of the past. Yes, modern software takes care of most of the "bean counting" for you. The software will do a lot for you but there a some things it won't. For example isn't going read and interpret your reports for you, its not going to track depreciate, it won't allocate prepaid expenses over the period they apply, and, most importantly, its not going to give you a custom chart of accounts.
When you sign up for QBO (or any other software) you get a generic chart of accounts. It doesn't matter what industry you are in or how your business operates. With a custom COA you can gain so much more insights into your business operations and get a much better understanding of where your money is coming from and where its going.

I also agree that once the books become a part/full time job you should look to outsource but why not sooner? You didn't start a lawn care company to be a bookkeeper...

 

In the 70's I worked for a company, Bookkeepers Business Service in Ft Lauderdale for a few months. I was a salesman and would go around knocking on doors trying to get businesses to use our service. I also had accounts that I received a small fee from.

Besides selling I had to go around picking up the monthly receipts and sales information from the accounts, which I brought back to the office and the guy in the office had one of those old adding machines that looked like half of a typewriter with a handle on the side.

He would would separate everything and add it up, then make a monthly Profit & Loss Statement, that I would bring back to the customers along with their receipts.

A lot of the successful small businesses in the area used the service. Restaurants, Bars, Dry Cleaners, Mechanics etc.

A monthly P & L is very helpful and lets you compare month to month and a particular month in one year to corresponding month in the current year, so you can compare and make adjustments, rather then find out at the end of the year, that things did not go as well as you would have liked, and at that point you can only adjust for the upcoming year.

 

My previous CPA (I've not talked to my current CPA about this so I don't know) wanted $500 a month (on top of end of year filing fees) to go through my "books" i.e. look at my QB etc and make sure everything was good to go. Yeah I'll pass on that for now. But maybe one day.

 

Having one account just for biz though is king. Run everything through that account. As was said by @NicktheBookkeeper makes life easier and tax time easier as well. Sure you can do owner draws off the account if you use it for personal (I'm talking only for sole props here) but it makes things messy.

 

Good point made about separating business and personal. I disagree with need for a bookkeeper. One needs education, the books aren't that hard with today's tech quickbooks and many others almost do it all for you. Just good to know the process of it. It can be confusing but bit of learning basics and good to go. Accounting is simple, even at MBA level. Easiest thing I have ever done. Just dont over think and complicate it.

 

Quickbooks and a little bit of education is all most small businesses need. QB can automate many things, such as capturing credit card and bank feeds, and paying bills. Once you get to the size where bookkeeping starts turning into a part-time or full-time job, that is when hiring or outsourcing a bookkeeper becomes a must.

 

I'm a solo operator.
I have 2 checking accounts.
I use 3 register books.
One for personal 2 business.
One business is 35% of all deposits. For tax purposes.
I pay my quarterly taxes all at once.
What I did not need for what I have set aside. I put into business operation book.
One business operation.
For any business transaction.
And transfer to personal for me to pay my personal bills / spending.
After all . All the money's in the accounts is mine. AFTER TAXES.
As far as tracking.
Microsoft Excel.
On a laptop or computer.
Entering all end of day or week.
I go as far as separating receipts.
Into envelope marked by category.
There is not much to enter as a solo operator.
The spreadsheet makes is so I can see year to date. At a click.
My register books tell me what I have. To work with.

 

I have an accountant but not a book keeper. Accountant files and reminds me of all taxes due / all new tax laws etc / takes care of payroll & my town property tax filing and end of the year sends me a “tax packet”. I just add up my #s and fill in maybe 10 lines on the form & thats all they need.
my business account I can change the title of each transaction. So to me it’s not that difficult to separate expenses . Total deposits - materials - state sales tax - expenses are only a handful of diff categories : mower gas - tools - repairs - etc. I grossed around $125k last year and didn’t find it that over whelming & that’s adding up everything w a calculator.
my goal this year is to learn quickbooks though.

 

Personally I prefer to keep the accounting fees for myself. Like others mentioned accounting software is a dime a dozen. It doesn’t take a lot of time to manage books. What does an accountant really do for you ? Tell u how to do ur books? Just educate urself and save the money. It will only help you if u understand it anyway and it’s not as complicated as one would think. The internet has made it to easy to access Information regarding pretty much anything. If ur grossing 200-500k a year there is no reason to throw away 15-20 k a year on some basic accounting principles u could easily learn urself. Just my opinion. Everyone is different but I think a lot people think having an accountant means u made it. U can say “well I have an accountant” don’t under estimate ur own abilities. Even guys who aren’t very “paper smart” can do it themselves . U started a successful business. U can mange books too. Just take the time.. at least this way you know exactly where every penny is going. We might be lawn guys.. but we are all not dumb..

 

Personally I prefer to keep the accounting fees for myself. Like others mentioned accounting software is a dime a dozen. It doesn't take a lot of time to manage books. What does an accountant really do for you ? Tell u how to do ur books? Just educate urself and save the money. It will only help you if u understand it anyway and it's not as complicated as one would think. The internet has made it to easy to access Information regarding pretty much anything. If ur grossing 200-500k a year there is no reason to throw away 15-20 k a year on some basic accounting principles u could easily learn urself. Just my opinion. Everyone is different but I think a lot people think having an accountant means u made it. U can say "well I have an accountant" don't under estimate ur own abilities. Even guys who aren't very "paper smart" can do it themselves . U started a successful business. U can mange books too. Just take the time.. at least this way you know exactly where every penny is going. We might be lawn guys.. but we are all not dumb..

I totally understand wanting to do this yourself, and I commend you for learning basic accounting principles. I lot of people hire bookkeepers (and accountants) not because they're dumb but because they value their time more than the cost of a bookkeeper.

Also, I think you might be mixing a bookkeeper and an accountants duties together. An accountant is responsible for more financial planning and year end tasks, like filing taxes. A bookkeeper is going to manage your day-to-day financial transactions.
Where did you get those numbers from? $15-20K/yr ($1,250-$1,666/mo) sounds excessive, at least compared to my rates.