Bookkeeping: what to know

What the job involves, what changes the price, and what to ask a pro.

What bookkeeping is

A bookkeeper records income and expenses, categorizes transactions, reconciles bank accounts and keeps your records current for reporting and tax preparation. Small businesses and households hire one when receipts and statements pile up. This is general information, not tax or financial advice.

Signs you need it

  • You have months of receipts and statements you have not recorded
  • You cannot tell how much you spent on a category or how much you earned in a month
  • Your accounting software is out of balance with the bank
  • You mix personal and business spending in the same account
  • Your tax preparer keeps asking for records you do not have
  • You are spending nights and weekends entering transactions

What the pro does

  • Connect to your bank and card accounts or collect statements
  • Categorize each transaction into income and expense accounts
  • Match deposits to invoices and payments to bills
  • Reconcile each account to the statement balance at month end
  • Record payroll entries, sales tax or loan payments if they apply
  • Deliver a monthly summary and answer questions about unusual items

What changes the price

Every job is different, so we do not publish prices. These are the things that move the quote up or down.

  • Number of bank and card accounts
  • Volume of transactions each month
  • How far behind the records are
  • Whether invoicing, bills or payroll entries are included
  • Whether inventory is tracked
  • Your software and how clean the setup is
  • Whether the work is ongoing or a cleanup project

What a written quote should spell out

  • Services included each month, such as categorizing and reconciling
  • Cleanup of past months, with the period covered
  • Software the bookkeeper will use
  • Reports delivered and schedule
  • What you must send and by when

Questions to ask before you hire

  • Which accounting software do you use, and can I keep ownership of my file?
  • Do you offer a cleanup of past months?
  • What certification or training do you have, if any?
  • How do you handle receipts and documents?
  • What happens if there are unexplained transactions?
  • Who sees my bank information and how is it protected?
  • Do you work with my tax preparer at year end?

Red flags

  • A bookkeeper who keeps records in a file you cannot access
  • Asking for banking passwords instead of a secure read only connection
  • No written scope
  • A bookkeeper who gives tax advice without a credential
  • Records that never reconcile to the bank statement

What you can do yourself

You can separate business and personal accounts, save receipts as you go, and record transactions weekly with basic software. Hire a bookkeeper when you fall behind, handle payroll or want monthly reports you can rely on. Tax questions belong with a CPA or enrolled agent.

Licenses and permits

Bookkeeping usually does not require a license. Ask about training or certification such as a bookkeeping credential, and ask for references from similar clients.

Bookkeeping questions

What is the difference between a bookkeeper and an accountant?

Bookkeepers record and reconcile. Accountants usually review, report and advise. Roles can overlap.

Can a bookkeeper file my taxes?

Only if they are also qualified to prepare returns. Ask about credentials.

Who owns the records?

You should. Confirm that in writing.

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