So, you are a small business owner and you have figured out that you should not be doing the accounting for your business yourself. First, congratulations! It is a huge step for a business owner to realize there are tasks that can and should be delegated. You cannot do it all, and if you try it will ultimately harm your business. Not to mention just flat wearing you out.
Second, how do you decide who to hire to take on these tasks? There are a ton of options available to you. The first decision you have to make is whether to hire an employee, or outsource the work to an independent contractor or accounting/bookkeeping firm. Most small companies will want to start with the outsourcing option. It typically saves money over an employee and there is rarely a need for training. A good accountant/bookkeeper should be able to hit the ground running.
Once the decision to outsource is made, how do you decide on the ‘Who”? Here are some things to consider when interviewing.
1. Competence. You would think this would go without saying, but it is important to verify. Have a conversation, ask some basic questions. Does the candidate understand the question and are they able to answer? Perhaps more importantly, do you understand their answer? If they hit you with a bunch of unintelligible to you accounting jargon at this stage, it is probably not going to get better as the relationship goes on. They should know what they are doing and be able to convey that to you.
2. Desired Skill Set. Many business owners fail to properly define their needs and end up hiring the wrong firm. What do you want from this person you are hiring/retaining? Do you need a bookkeeper to handle data entry needs? Do you need someone who can manage you basic accounting needs but can also fill the role of a Controller or CFO? Do you just need someone who can handle taxation and regulatory requirements? Are you looking for a ‘one-stop-shop’ that will do bookkeeping/taxes/advisement/investing? (not recommended, by the way) Have a very clear idea of your needs and use that to make your decision.
2.5 I will sneak in a bonus here: Value Add. Does the person you are looking to bring on add any value to your company, beyond just freeing up some of your time? Do they have experience in your industry? Will they go beyond printing a report? Can they analyze the information for you and present it in a manner that makes sense? Can they help you with cash flow and show you how to improve profitability? Will they take ownership in your business, treat it like their own and help you grow it? There are a lot of bookkeepers and accountants out there, but surprisingly few who will help you think strategically about your business rather than just telling you what has already happened.
3. Systems knowledge. It is important for your new bookkeeper/accountant to have a grasp of the software you are using. Or, if you are not using one to be able to recommend the best one (not every software fits every company) and give you the reasons why. The future of accounting is the cloud. Is your interviewee keeping up with the times? Can they tell you the various cloud options out there and why one is better than the other? Or why it is not a good choice for you yet?
4. References. Yes, checking references is still a good idea. Ask for a list of a few current clients. Actually call them! Ask some questions based on the above guidelines. Are they doing for their current clients what you are going to want them to do for you? Have there been any issues (most likely there have been, no one is perfect), and how have they been reacted to and addressed? Also ask for referrals from other business owners. They probably know someone they would recommend.
5. Specialization. For the most part, accounting is accounting. It does not vary a great deal form industry to industry, especially in small businesses. But it is desirable to have someone who has knowledge of your specific industry. If you are a home builder you are going to want to hire someone who knows construction and job costing and Work in Process accounting. Restaurants and retail have very different needs than an insurance office or cleaning service. Manufacturing has very different needs than an attorney. So, at the end of the day it is all pretty much debits and credits to the accounting mind, but that should not be the answer a prospect gives you. There can be specific criteria for your industry.
Finally, a word about cost. The cost of a bookkeeper/accountant can range from $20/hour upwards of $300/hour for a high end CPA in certain markets. The old adage of “you get what you pay for” holds true for this profession. The $20/hour person may be able to sort the mail and enter your bills, but do not expect much more. By the same token, The CPA may be worth every bit of $150 + per hour to handle your tax and regulatory matters, but may not be the best person to manage your books.
There are a lot of options out there. Be specific about your needs and ask a LOT of questions. You might not (are probably not) be the right person to handle your company’s accounting needs, but you need the right person in place.
