Our company, Core Developments, is considering hiring a bookkeeper to run our books. A few questions we have. 1. Is it better to hire one in house part-time? 2. What are the pros and cons? 3. Is it better to hire our accountant's bookkeeper at 3x the cost? 4. Is it true or not that the bookkeeping will be better if it is the accountant's because they will know our issues better and have better communication so at year end when taxes are being done there will be fewer questions?
It'd be great to hear from you if you have experience wrestling with this issue.
@Brian R. it would depend on the scope of your operation.
If you are needing a 20+ hour a week type of bookkeeper, it would probably be most cost effective to hire an internal bookkeeper and have an expert Quickbooks (or whatever software you use) consultant on retainer to make sure that everything is being input efficiently and correctly. The Quickbooks consultant could also help you to develop procedures for this position to make sure that proper policies are in place and that there are checks and balances. This will also help when there is turn over in order to keep everything up to date.
As a CPA, I prefer that when my clients do choose the internal bookkeeper route that they keep me in the loop. Your CPA should be involved with the bookkeeper and Quickbooks consultant to make sure that everything is set up correctly. Additionally, I suggest bringing in your CPA to verify monthly financials, entries, and to perform reconciliations.
Option 1 -
Pros - Cheaper, more oversight Cons - only as good as training, no outside expertise
Option 3 -
Pros - Better product at CPA's expectations, professionally trained for the duty Cons - expensive
Best option is to blend the best of both worlds.
My recommendation, assuming that you have a small- to medium-sized business, would be to hire a contract (1099) bookkeeper as opposed to hiring an in-house part-time bookkeeper.
The pros of this method is that you do not have to be concerned with the related rules and regulations of having an employee- either full-time or part-time- (such as employment taxes, HR considerations, policies and procedures, etc.). Another possible advantage would be that you do not have to worry about any indirect costs associated with the employee. Even if they don't get any employee benefits, a part-time employee will incur indirect costs, such as desk space, utilities, computer equipment, etc. A negative impact of this method would be that you have less control over them and their work product.
It may save you time come year-end if you utilize your accountant's bookkeeper, but if any bookkeeper is doing things correctly, there should not be too many differences in their product other than perhaps some formatting or a few variations on treatment/interpretation. Does your accountant charge by the hour or by the final delivery? If the former, it may be worth considering the cost impact of hiring the bookkeeper at 3 times the price for a full year vs your accountant's hourly rate and possible time savings come year end.
Hope this helps!
PM me if you'd like to chat in more detail, and we can set up a time to talk!
Personally I would go with your accountants bookkeeper. I've had some really bad bookkeeper experiences and you end up paying for these errors much more in the end. When it comes to your bookkeeping, spend the extra money and go with someone good.
@Brian R. Thanks for the post, I share a similar situation and questions.
@Jake Hottenrott @Jennifer B. How would the logistics work for the different options you've laid out. As in, if an outside contract book keeper, what would the system look like for getting your bills, mail, and other info the bookkeeper would need to do their job?
Our current book keeper has voiced the option for her to work from home and we've also considered hiring an outside contract bk but I'm just not sure the best way to go about it.
Any suggestion would be greatly appreciated.
That's a great question. Most bills, bank statements, and even tenant payments/other revenues are received electronically so the bookkeeper could either be given access directly to these accounts (would not recommend) or someone from the company could download the pertinent files for access. The remote bookkeeper could then either VDI onto your company's system, or you could set up a file sharing service like GoogleDrive for them to do their job. You'd want to find a balance between what you feel comfortable with from a security and a simplicity standpoint. Hope some of these ideas will benefit your business!
@Brian R. A lot of good ideas on this thread.
I agree with @Jennifer B. in that taking on an employee, while giving you more oversight, might be a bigger burden in terms of the compliance (not to mention the added payroll taxes).
Hiring a CPA/tax pro to do the bookkeeping will likely cost more, but would be more of an investment as oppose to an expense. A CPA will understand the day to day transactions in terms of the overall tax effect and be in a better position to advise you if he/she has regular access to the books. And yes-much fewer questions at year end.
There in lies my problem. We are small enough that our book keeper is also our mail retriever/document saver, etc. So to have an outside bk, we would still need the in house office personnel to file, document and share this info with the bk, which kind of negates the need for th outside...
I'm looked into mail service like earth class mail, etc. but none of them seem like an economic fit.
I work as a contract bookkeeper for several small businesses and mainly work on site so I'm able to handle their paperwork as well. I know I'm charging more than some of their past bookkeepers but their CPAs are all set at tax time and they are happy with the work and I believe I'm more efficient than some they've employed. If your CPA has a referral or you're able to find a Quickbooks pro Advisor, I think you are better off with this type of 1099 situation than an employee.
You have taken the first step recognizing how you can improve your back office process.
- Bookkeeper: Anyone can do bookkeeping, as long as they are trained right even in real estate and someone else is there to keep on eye on what they are doing. It is a specialized task and very detailed one at that. Tasks: Daily or weekly
- You as a business owner - need to learn how to review the reports and what to look for. Tasks: Daily
- Fractional CEO or a person who analyzes your books before you send your books to your CPA, strategized advisor, mentor, coach or tax preparer. Tasks: Monthly
- CPA or your tax preparer Tasks: Monthly or Quarterly - never Yearly
- Tax filing: When you follow the above tasks, you should be ready to file your tax return by January 31. After the tax return is filed, check if your book value is the same as reflected on your tax return.
Each one has a specialized expertise. That expertise should be in your specific niche. We have helped clients with 1, 2 3 and 5 steps individually or collectively. Another thing to keep in mind that all should be able to communicate and work together to get your financials in order. Over the course, I have seen a business suffer because one is intimated or afraid they are going to loose a client because of the other who also offers a similar service. Really? there is so much business to go around.
I have always preached - ask the person who you are hiring - do they have a niche? If they do what is their niche? Get an agreement signed with deliverables.
You have to work with technology. Besides hiring anyone, put a budget for your accounting office for eg. working with QuickBooks you would need a document management software, a software that automatically collects all your statement and bills, a high-speed scanner, use your cell to snap and send, and more...
Thanks to all of you for your input. We decided to hire a contract book keeper. She will come to the office one day a week and work from home as needed. She started today. It was stressful beginning to bring her up to speed but she had already spent time thinking and learning about our ways. By the end of our first meeting I could see we made a good decision and stress began to ebb in the books department of our business. I truly look forward to where and how she will help us get even better.
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