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Helping Canadian businesses beat the odds!
Helping Canadian businesses beat the odds!
Hi everyone, it’s, I’m Josh Pearl from spurling associates charter professional accountants. Edmonton CPA here we’re here with our show ask spurl CPA and we’re helping businesses beat the odds through planning, reporting, and analysis. And today we’re talking about bookkeepers in hiring a bookkeeper and how you, knowing that if you have a bad bookkeeper, does that even matter what, what happens to a business? And here with me today is a synagogue from always bookkeeping. Thanks very much for being with us here today, Sydney. Um, so cindy, why don’t you tell us a little bit, a little bit of both, always bookkeeping and what’s important to you guys?
Well, first of all, thanks for having me, Josh. I’m always keeping always up to date, always ready to make decisions, pretty much automated bookkeeping services that I’m really keeps you on your toes and a bookkeeping that works for you while you sleep Edmonton CPA
right on, right on. So I think he has some questions for me today on, you know, from an accountant’s perspective, Edmonton CPA what did we see with bookkeepers? Right?
Absolutely Josh. So as an accountant, um, do you advise your clients to hire bookkeepers?
Yeah, I mean a bookkeeper can be a, uh, an absolute necessity for business owners, you know, ultimately, Edmonton CPA, in business there’s decisions and there’s no reset button on decisions. It’s not a video game. Um, you know, it, if you get the wrong decision, you know, when you’re out of business sometimes, and the way we make those decisions is you need to know your numbers and sometimes when you wait until year end financials, sometimes you’re gonna end up making a decision in the interim that the year end financials, all the, they might be great and they’re perfectly reliable. They’re not in time or not. The decision has to made midyear. Um, by the time you get those, you’re in financials. We’re talking about information that might be 18 months old. So when you’re deciding to hire a new person on or fire someone or buying a new piece of equipment and can you afford it? Unique quality interim records that your bookkeeper can give you.
Well that kind of answers my next question. When is the right time to hire a bookkeeper, Josh? Well, Edmonton CPA that’s actually,
there tends to be one really a really good differentiation factor and it’s when you start hiring employees who, who were real employees, not just the family members, you haven’t just hired, you know, your spouse or your kids are. I mean, we’re, we’re actually hiring arm’s length employees here now. And the reason for that, there’s a twofold reason for that. Number one, you know, payroll rules that they’re fairly complex as you know, cindy and business owners get themselves into trouble and they forget that, you know, all late payroll remittance. So you have a one day late, all of a sudden it can be 20 percent more. You had to pay $10,000 on Wednesday and on Thursday it’s $12,000 if you messed it up. Edmonton CPA, so, you know, keeping current on those sorts of deductions and paying them on time is so important. And having the payrolls or records organized so you can issue the t four is a, that’s so important.
The other thing is when you actually get those arms length employees, that’s when really the business has generally scale beyond your ability to look at bank statements and establish, did my cash up, did my cash go down. Now that asset test, sometimes business owners can reach that asset test before they have an employee, but I would suggest as soon as they reach an employee, now they’re at the point where they definitely need it. So before then it’s more of a judgment call. It’s dependent on the business, the owner or the industry, you know, how well they’re, they feel that they’re keeping track of it, but once they hit that point where they have an employee, Edmonton CPA I’ve just seen too many, too many businesses try to do it themselves and just not succeed at it. So why would suggest that’s your point where you got to look at. But when I have my one, I have an employee, I, I for sure need one at this point.
Um, so where would you start looking for a bookkeeper?
Whole. I, I mean, it, it’s a, it’s a tough goal to, to look for bookkeepers. Uh, you know, I, I, I’ve known you for a long time, I know always bookkeeping gives a, gives great service, so, um, you know, feel free to check these guys out to, um, but um, other than that, you know, you want to look at your referral network really. So your, your referral. Now if you can get a referral from someone who actually has a trusted bookkeeper, someone who’s been in the business for awhile, Edmonton CPA, you know, someone who has a resources behind them and who has a team behind them. It was a lot of people who just set up shop one day and say, I’m a bookkeeper. I’m like being a chartered accountant there. There are some professional bookkeeping designations, but there’s more people who have no designation and they just, you know, put up a shingle saying I’m a bookkeeper and they’re just one person who may or may not have the experience that you want. So you look at someone who has longevity. I’m someone who, uh, you know, has resources and a team behind them. Edmonton CPA, you know, even myself as a, as a CPA, two CPA’s are better than one for her to bounce ideas off each other. So I would look at your network and you’re really checking references and the longevity of those references is probably the, the, the crucial thing there.
So maybe ask other associates, business associates and this in your same field,
pass other business associates, I mean an accountant, does it affect hastick? That’s a fantastic position to advise on a bookkeeper because ultimately the accountant is the final check. Their, the, the exam marker if you, if you will, right. They’re the one making the adjustments of the year end and they know, no, did I make 50 adjustments at your individual or were these records clean? And I made five. I’m the sole. I think accountants are in a fantastic position to make that referral as well. Edmonton CPA. So why can’t they just do their own books? I mean it’s just pretty much expenses and revenues, right. Can do it. And I think a lot of that comes from the software manufacturers, you know, they really put some of those software programs out there saying, I’m making you think that you guys can just enter by banking credentials and everything will magically come up with the other side and you’ll maybe in 50 years we’re going to be having that discussion and that might be a little more realistic.
But, um, you know, from what I’ve seen right now that, you know, the, the automated software is fantastic. It’s a fantastic start, but you need a professional to organize that or else the records are generally not, um, you know, they’re not worthy of making really significant business decisions. Edmonton CPA again, there’s no coming back from these business decisions. It’s not a video game. There’s no reset button. That’s just not gonna Happen, right? You buy a hire someone at the wrong time or buy a piece of equipment at the wrong time. You run out of cash is, it’s a, it’s game over. So figure an accountant, can’t you just do bucks? Yeah, I mean, you could think that the accountant can do the books. But again, it comes to the timeliness of the information, especially if they’re running payroll, like sometimes it’s, it’s so difficult to go back 12 months and find, you know, you ask them, Edmonton CPA what did you do 12 months ago?
I don’t know, I don’t remember what I did 12 months ago yet I’m asking my client would they did 12 months ago and again in a solo preneur and there’s very few transactions, maybe they can actually, they can do that, right? Uh, but now they have employees and they have twice as much activity coming through and they just don’t have it organized. And trying to go back and answer a question. What happened 12 months ago is much more difficult than answering, you know, every month or every two weeks. So you’re answering some information about what happened two weeks ago. The business controlling, just rattle it off right off the bat, right off the tip of their tongue. And then I’m not even going back to it. So, Edmonton CPA you know, when you look at the options, you have an accountant do it. Sometimes that’s appropriate. Um, but, you know, again, going back to if they have an employee, it’s probably not appropriate anymore.
It’s probably going to take more time and lots of times that accounting side is going to cost more than the bookkeeper’s time, you know, and you know, Kenny, so you get the accountant to do it, you know, you had a problem there and you get the, you know, you, if you do it yourself or have a family member do it. Lots of times they’re just so inefficient. It’s like, you know, I, I, I want to change the transmission in my truck city. I did it. It took me a month and then mechanic probably could’ve done it in a day and that was a time in my life when I was younger and I have more time for stuff like that. Um, but, you know, sure, you could probably, I was lucky that it turned out it could have easily just as, as, as fried. Um, but, you know, in that case I was only out of transmission in an old truck. Um, but you know, in terms of your business, Edmonton CPA if you do it wrong,
now you’re out of really significant with your life savings are on the line, you’ve put years of your license to this thing and you’re using those numbers to make decisions, you know, that’s not somewhere to, you know, I don’t think it’s the right place to utilize the family health. Normally you can get that family member and scaled them, help use them to help you generate more revenue. Um, you know, it’s, goes back to five topic, but generally you don’t have an expense problem in your business. You generally have a revenue problem, uh, and if you got helping hands, you’re probably more qualified to teach them in the field that you’re operating in. Um, you know, if you’re, um, you know, used to selling guitars, Edmonton CPA, you’re probably more likely to be able to train your sister how to sell guitars then as a guitar, as a guitar player to be able to train your sister how to be an accountant. It just doesn’t make a lot of. It’s not as efficient. So
absolutely. Okay. So we’ve established that it’s important to have a bookkeeper. What are, I mean you’ve touched a little bit on this already, but more of the benefits for a client that uses a bookkeeper,
um, they get that quality of information in a timely matter and they’re able to stay focused on their business. You know, Edmonton CPA, you have so many tasks that you can do as a business if you can offload a couple of those tests so you can focus on what you do best, what adds the absolute most value. That’s really what’s, what’s going to help you is the ability to free up your time, um, that you can do, you know, what you do best. Really?
I couldn’t agree more. Okay. Now you as the accountant, having clients that have bookkeepers, what benefits do you see with your clients having, having like a bookkeeper?
Well, I mean ultimately like our businesses budget driven, right? Edmonton CPA when we get a client and their books come into us in shambles, we’re spending our budget on assembling records and, you know, data entry type tasks, and then the amount of time that we have available for the planning, help them save on their taxes or give them advice on how to improve their business. It becomes limited and it’s only a finite account. Clients don’t come in with a limited budget. They come in with a realistic price that they can pay, um, and we’ve got to give them a, a, a service that they can actually afford and they come in with clean records, you know, we can actually do what we do best and get them planning and advice rather than sitting there with our excel spreadsheets all day and doing data entry.
It makes sense. So what can happen on the flip side, what if you’ve got a bad bookkeeper?
Well, I, I, I think, I mean, the worst case scenario is you make a bad decision. You think you’re making a $10,000 a month and really you’re not making anything. Um, I’ll, I’ll go with an example I had in the past at a, at a client and he had a inventory and the inventory was a, was a stone. The stone came in slabs and installed it in people’s houses and his, his, his bookkeeper thought it was a great idea to value the inventory at um, at the same price once he cut the slab in half. So you have these slabs and when you put the slab on the countertop, it was, Edmonton CPA it was worth full price. But the minute you cut that slab in half, it was worth ten cents on the dollar and the stuff that you left away. So they would have a slab that costs $500 bucks, cut it in half and assume that they could sell the other half of the slap for $250 that it was still worth the same.
And it was virtually garbage if, you know, if you could dispose of it. So the client may significantly bad business decisions and you know, really dug themselves into a hole because they thought they were making money because they weren’t expensing the full slab that went into the project. So you only hire more staff, bought more equipment, Edmonton CPA couldn’t afford to pay the bills and wonder why the cash rent out. So, um, that’s, that’s Kinda what happens. Yeah, it can be payroll is the other bigger one. We touched on that before. It’s really common for business owners to get really far behind in payroll or gst and s and Siri is just not friendly when it comes. If you get behind on your taxes, that’s one thing. If you get behind on your payroll and your gst, they view those as trust accounts. So they knew that that was never your money to begin with. Edmonton CPA It better be there or you know, we’re going to freeze the accounts type of thing. Wow.
So besides your bank account getting frozen, what are other red flags, I guess to watch out for, Edmonton CPA, with your bookkeeper? What can spark you to realize that you’ve got it bad apple
keeper? Yeah. Great question. So, um, you, you could have a, have the discussion with your account, how are the books, you just asked them the scale from one to 10, you know, you’re hoping for a seven or above type of answer. Right? Um, the, the probably never gonna be perfect because the accountant wants to think they’re perfect, right? So a somewhat accountants are like that a little bit, but uh, you know, you’re getting a seven or above. That’s a good indicator I think the timeliness to, if you’re continually waiting for updates and if you’re supposed to get a monthly update or you’re supposed to get a quarterly update her, but, and this update never comes. Well probably nothing is getting done and when it does get done, Edmonton CPA it’s probably getting done in a rush and it’s getting done in a disorganized manner in the records, probably aren’t as reliable as you think they are.
So I would look at the timeliness of those reports that comes through. Edmonton CPA, does it make sense when, you know, when you get an answer, um, you know, is it a simple explanation that you can understand? Yeah, I think it was inside the center that, you know, if you, if you can’t explain it simply, you probably don’t understand it well enough. Uh, so if your bookkeeper can’t explain it to you and you don’t understand it, there’s a good chance that it probably is not the right answer. So you start to look for those timeless anomalies. Is there concerns from your accountant or is it just things happening on your, on your income statement and balance sheet that you just don’t understand would be good one. Edmonton CPA Another one is if you could drill into your adjusting journal entries. If you drill into your adjusting journal entries every year and you say, look back a year or two, and every year the first entry that they make is to adjust opening balances to actual.
If you see that in there and you see that every year, that means what happened is the bookkeeper didn’t take the accountants entries and make your records look like the year end financial statements. And so then you always have these two sets of books. One book that’s right that you’re getting at year end and the other book, Edmonton CPA that’s an interim book that you’re probably making your decisions all that’s wrong, so you could look for those three or four things. Thank you. Very good information, Josh. Thanks right on. Okay, thanks very much guys. We hope to see you guys next time and if you have any questions and look forward to seeing your comments below.