Stairway Consulting Inc.

Bookkeeping is not everybody’s thing.  In fact for most entrepreneurial types, data entry and crunching numbers saps the soul right out of them.  So as soon as they are able (and/or the tax man starts asking for paper) many companies bring a bookkeeper on board.  But watch out – it could cost you more than you think.

On-staff or external?   A quality on-staff bookkeeper will cost you about $20 per hour.  Any less and you need to be absolutely confident that you know their job better than they do.  You may get a screaming deal at $13-$15 but do not expect that they will be able to efficiently and effectively look after your books on their own.  A qualified external bookkeeper will average about $45 to $60 per hour.  While it sounds a lot more expensive, ask yourself:

• How do you supervise the quality of your bookkeeper’s work?
• Are they catching everything?
• Is your bookkeeper up to date?               
• Is your bookkeeper guessing at how to record complex transactions?
• Would you even know?

Unless doing a full audit, your external accountant who does your year-end financials and tax return typically does what is called a compilation engagement.  He makes you sign a waiver that he has not verified the accuracy of the books and is basing his work entirely on information that you have given him.  Consequently, he will typically not catch bookkeeping mistakes.

>Why should I pay more?  Simply put, pay now or pay later.  An accredited external bookkeeper will have certain standards of expertise or qualifications that they must adhere to.  Finding one that works with a designated accountant will give you added security as designated accountants are required to maintain these standards by their associations.  In addition, you don’t have to worry about staff turnover, holidays, benefits, WCB, employee contributions, evaluations, bonuses, motivation, providing a workspace, providing a computer, professional development, and a host of other costs that aren’t reflected in an hourly base wage.

What should I look for?  Not all external bookkeepers are created equal either.  Ask about:

• Experience of the bookkeeping team
• Is it a one man show or can they provide you with holiday coverage and additional resources such as additional people during crunch times like year end or special expertise beyond basic bookkeeping?
• What is the quality control process?
• Is there a senior accountant on staff for advice on complex transactions?
• Are monthly / weekly performance reports provided for management including financial ratios and Key Performance Indicators
• Do they take the time to understand your business?
• References

Final Word

This last piece is really critical.  Most small businesses view bookkeeping as a necessary evil, more often than not just to appease CRA.  But your books are a gold mine of valuable data that provides feedback to you about what in your company is working and what is not.  Using this data helps you to tactically and strategically drive your business forward.