Editor's Note: Learn from a panel of experts and entrepreneurs who have successfully financed their own ventures and are helping others do it at the Thought Leaders Live 2013 event May 29, in Long Beach, Calif. Event and ticket information can be found here.
As business owners, we like to think we can learn any skill it takes to run our companies better. But can just anyone learn to do their books? That's like saying anyone can learn to be an artist. Is it true? Maybe. However, some will learn the skills easily and others will work at developing the skills for years and still only be "average."
You may be a successful business owner with a multitude of skills, but if bookkeeping is one of your weakest links, you should probably hire a bookkeeper to help you out. But before you bring someone on board, you need to make sure they know what to do, and you'll want to set expectations for them in order to get what you need.
Here are 11 expectations you should establish for your bookkeeper to ensure that they're going to provide the service your business needs:
1. Your bookkeeper must have a basic understanding of bookkeeping/accounting terms. They should have a basic understanding of the difference between the five basic types of accounts (assets, liabilities, equity, income and expenses).
2. They must be detail oriented. You need someone who's going to be able to focus on the little things: This will enable the big things to take care of themselves. You don't have time to babysit them; they need to be able to take charge and take care of all the little things that need attention when it comes to your basic financial operations.
3. They must have an understanding of the big picture. If you buy a piece of equipment, are they going to understand the concept of setting up the asset and liability accounts? Do they know how to allocate the payment to interest expense and liability principal reduction?
4. They must have a willingness to follow through. You want someone who'll ensure that projects and questions are followed through to completion. They need to be responsible for the follow through because you're just too busy to be the one in charge of project completion. You're there to assist with questions, but the financial projects have to be something they're in charge of.
5. They must have monthly financial statements available by the 10th of the following month. The three basic financial statements include the balance sheet, the profit/loss statement and the cash flow statement.
6. They must understand how to do proper job costing. It's important that they are tracking all the costs by item and job detail. Job costing is critical to the success of knowing how much your projects are truly cost. You have to be able to depend on their information to be reliable.
7. They must have a basic understanding of your industry. While this is something that can be learned, you'll be miles ahead on the learning curve if the person you hire has a general understanding of your industry. And while bookkeeping for a retail store, hair salon, internet service business and many others have the same basic bookkeeping fundamentals, it's not exactly the same. Each industry has different terms and insider aspects that can only be learned on the job, so be sure to look for someone with experience in your industry.
8. They must have good communication skills. If your bookkeeper doesn't understand something, they've got to be willing to ask for clarification or help. Communication is critical so that you'll have a good understanding of what's taking place in the office without you having to be the one doing the day-to-day work.
9. They must be computer literate. The days of doing almost anything by hand are long gone. You must have a computerized bookkeeping system to be able to get quality reports. Your bookkeeper should not only know the basics of your bookkeeping software but should also be familiar with Word, Excel, e-mail and the internet.
10. They must be interested in continuing their education. They should be committed to enhancing their skills with additional classes or self-study to ensure that they're staying up to date with the accounting skills your business demands.
11. They must be willing to make a strong commitment to your business. If you're hiring a part-time bookkeeper, it's essential that you find someone who will make your business a priority. Don't let your part-time bookkeeper "squeeze" their responsibilities to you into their personal life. This is one of the biggest issues I see with many small businesses. The owners allow their bookkeepers to do their work whenever they have time. But by doing this, you're enabling them to put your business at the bottom of their "priority" list. You need someone who's focused on ensuring things get done.
If you want your company to truly function in a profitable way, it's critical that you set expectations for your bookkeeper before you bring them on board. Good financial records are fundamental to the success of your business. If you can't rely on your books--or your bookkeeper--then how are you going to know where your business is headed? Set these expectations for your bookkeeper so they'll be a successful part of your team. You'll be setting your business up for success.