Why you need a good bookkeeper for your design business (and to work with us)
I’ve had the conversation a few times.
“Before we can work together, you need to have a good bookkeeper”.
It’s nothing against you, promise. We may be a good fit for each other on many levels, but the fact of the matter is, we’re not able to give you the best service possible if your accounts aren’t up to date.
Although we may not be able to work with you right now – I don’t want to leave you empty handed. Because I get a fair amount of enquiries about this, I want to help you understand why a good bookkeeper is so vital to your business, and give you some tips on how to find the right person.
The bookkeeping needs to be accurate when it comes to your CPA
I was working with a client who changed bookkeepers in the middle of the year. We had used accurate projections in the past to make sure enough tax was paid in. In the third quarter of the year, the numbers stayed consistent and we were on track. During the fourth quarter, everyone got busy and stopped checking in on financial information.
Towards the end of the year, we logged in to see balance sheet liabilities with negative balances and balance sheet assets that were drastically different from the actual bank statement. The accounts had not been reconciled and we knew we could not rely on the numbers. When the designer asked the bookkeeper if everything was up to date, she admitted she had too many tasks and had fallen behind on inputting the information.
The lesson here is – If your bookkeeper hasn’t updated all your information, you can’t see how your business is doing and your CPA won’t know how much you owe in tax. You’re basically running your business in the dark.
In the example I just used, the company did have an internal bookkeeper, and sometimes that’s the case. Sometimes it isn’t, and you’re running the show yourself. Let’s dig a little further into some of the scenarios we come across regularly.
Are you one experiencing one of these?
Scenario A: You’re doing the books yourself
You have enough money that you could hire a bookkeeper, but you’ve been doing your best to carry out the financial tasks yourself. You’re at the point in your business where you’d love to talk long term goals with a CPA – but you just don’t have the time to put 100% effort into regularly updating the numbers.
I can say with confidence that you don’t want to be spending time paying bills and filing sales tax reports when you could be doing profitable design work. (If I’m wrong, then maybe you’re in the wrong profession and you should come and work with me!)
If I’m right though, even the best design specific project management software isn’t going to give you the time required to get all the information in, and updated, on a regular basis. You’re not able to do it all the way – review all the bank statements, all the credit card statements, enter all the transactions into Quickbooks – and that’s okay. A good bookkeeper will take over from you. The numbers will be their sole focus, and your days won’t be lost to tasks you didn’t go into business to do.
Scenario B: You have a good bookkeeper… you think?
You have a bookkeeper, but you haven’t heard from them in months. You’re on a monthly plan, but there’s no regular communication. You’re not sure how to get into Quickbooks, and you have no idea what has been reconciled. You may not even be totally sure what reconciled means*.
* Let’s bust that Jargon wide open right now. A monthly reconciliation means that what’s in your accounting software agrees with what is actually on the statement from the bank or the credit card company.
Here are some red flags to look out for if this is the case:
- Your cash amount looks higher on the balance sheet – If you’re looking at your balance sheet and it seems like your cash amount is a lot higher than it is on your bank statement, it could be an indication that your bookkeeper is falling behind. This is a sign that the expenses haven’t been added yet.
- Your credit card balance is negative – If your credit card balance on the liability section of the balance sheet is negative, this means the payments have been put in, but your bookkeeper hasn’t updated it with the credit card charges.
- Your expenses look low on the Profit and Loss statement – If you look at your profit and loss and your expenses seem to be too low, it could be that all the expenses haven’t been added.
- There are tons of transactions on your QB dashboard still– Occasionally there are situations where a couple of past transactions are still on the Quickbooks dashboard. They may have questions attached that haven’t been resolved yet. But generally, if there are a ton of transactions on the dashboard, it’s a red flag that your bookkeeper hasn’t put them all in. We can tell when a bookkeeper simply hasn’t been in the account.
How to find the right bookkeeper for your business
Get a referral from your project management software
If you have no idea where to look for a good bookkeeper, get in contact with your software provider. Often they have good recommendations for bookkeepers who know how to work with the software itself, and Quickbooks.
This is the ideal! It’s important for your bookkeeper to know how Ivy or Mydoma (or whatever you’re using) integrates with Quickbooks, because those are the systems they’re going to be working with when they partner with you.
Make sure they know the industry, and understand how you work
I’ve seen situations where Interior Designers are working with bookkeepers who don’t know their project management system, or the design industry at all, and the partnership just isn’t beneficial for the designer. The designer has been asked to off the integration between their PM system and Quickbooks in favor of manual double entry, when it should really be automated and streamlined.
Look for bookkeepers who already have clients in the industry, and can show that they’ve dealt with similar software and processes before.
Find out how they’re going to work with you
How often are they going to reconcile the bank? How often are they going to bill? How much communication will they have with you? These are vital questions to help you decide whether a bookkeeper is for you. They’re also the most important factors to know if you’re thinking of working with us, or any other CPA. Your numbers need to be regularly updated, so they’re accurate when they come to us. Be bold and ask the questions first, so you avoid disappointment down the line.
When you find the one, don’t forget your part in it all
You may hire the perfect bookkeeper, and be 110% confident they’re doing the work. But that doesn’t mean you’re done, finitio, outta here. You do still have to be a part of the process, making sure you’re reviewing bank statements, credit card statements, and keeping them on their toes. It’s important as a business owner to always be paying attention.
That being said – a great bookkeeper will give you insight into how well your business is performing, and confidence to use that insight to make a difference. Once you’ve found the right person for you, and your books are up to date – we’d love to hear from you. We’ll still be here.