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Things You Need to Know If You’re Going to Hire A Bookkeeper

(or, Conversations I’ve Had Over and Over with Clients for the Last 11+ Years)

Hi there! In my last article, I talked about the essential bookkeeping services that your business needs. In it, I mentioned that you might want to hire someone to do your books.

Here’s the deal. You’re a busy, head-strong, take-charge business owner – I get it. However, you still need to be aware of how things work before you start working with your bookkeeper and I’ve listed a few here. 

This list is by no means all-encompassing, but I think it’s a good start for any small business owner that is thinking about hiring an outside bookkeeping company or contracted bookkeeper. It comes from years of working with clients of all types – super engaged or totally checked out, and everything in between. It’s a list to help make the relationship work really well for the long-term.

1. Please, learn to read financial statements.

This is part of Owning a Business 101 – you really, really, REALLY need to know the difference between a P&L and a Balance Sheet.

I got this one here.

A P&L (Profit & Loss, or Income Statement) is a report that shows you how much you’ve made, and how much you’ve spent over a period of time (day, week, month, quarter, year). These expenses can be paid via check, credit card or on terms with vendors. This is important, because some of that means they’ll be paid later, and will affect your balance sheet.

A Balance Sheet is a snapshot in time of your company’s worth. It shows everything your company has of value: the assets – cash, money owed to you, inventory, property, vehicles, equipment, etc. It also shows everything your company owes: sales or payroll tax liabilities, loans or those credit card or vendor bills I just mentioned. Last, it shows the equity, which is calculated by calculating assets – liabilities. This is what your company is worth at the end of the day.

You can view these reports on a cash basis, which shows income as the payments are received and expenses as they are paid out. You can also view them on an accrual basis which shows income and expenses as they are incurred.

And, you need to understand that your net income will Never. Equal. Your. Bank Balance.

Like, ever, dude.

The third basic report is a statement of cash flows. The easiest way to explain this is to say this is all the cash coming in and going out. Inflow examples are payments from customers, interest earned, obtaining financing/investing or sale of assets. Outflow examples are operating expenses, purchasing materials, payroll or loan or credit payments.

If you’re a brand new business owner, I generally don’t expect you to know all of this, and will explain all of it. If you come to Kildal Services and you’ve been in business a few years, we expect (assume?) that you’ve got a decent handle on the basics – but that doesn’t mean we won’t take the time to make sure you’re getting it. The frustration on our end comes when clients don’t know, don’t tell us they don’t know, and keep asking the same questions over and over. Just ask! We’re always glad to talk about a P&L!

2. Know the difference between a contractor and employee.

If they’re sending you an invoice, and you’re not taking taxes out of the check, they’re not an employee; please do NOT put “payroll” in the memo field of the check. If they only work for you, and you pay them every week, use your tools, do everything the way you tell them to do it and when you tell them to do it – they’re an employee – even if you pay them with cash.


If you don’t know whether they’re an employee or an independent contractor – better yet, if you don’t know much about payroll in general, trust me, don’t just assume you can do it all on your own – PLEASE HIRE SOMEONE TO HELP YOU.

If you decide not to, don’t be surprised if someone you’ve hired comes back a few years later with an employment attorney and you end up owing 4 years worth of back taxes. #justsayin 

3. Don’t commingle funds!

It’s okay if you have a credit card that’s in your personal name – use it for business purchases ONLY. This makes it really easy for both of us. It’s pretty awkward for everyone when I have to ask a client about her charges: the one from (sounds super sketch, but it was a cute dress) or about that other charge, from House of Tricks (also sounds sketchy, but it was legit; she took some clients out to dinner).  Let’s pick ONE card for business, and ANOTHER card for personal.

4. No, you can’t write that off as a business expense.

Not the vacation you and the family took to Disney. Not the “secret” apartment you have for your girlfriend (Yeah, that happened). Not every cup of coffee from Starbucks, not every app you buy from iTunes. Not the Harley you bought because you’re 50 something and saw a rerun of “Wild Hogs” on TNT a few weeks ago and thought John Travolta looked cool. Your tax preparer AND the IRS will tell you the same thing.

5. Yes, you have to claim cash income.

If you’re not going to claim it, THEN PLEASE DON’T MENTION IT TO ME. Once you tell me about it, I’m obligated to make sure it gets properly recorded in the books so that you, me and your tax preparer don’t get in trouble.

Guess what happens if we know ALL about it and just ignore it?

Seriously though, you need to claim ALL OF THE INCOME. The cash. The PayPal. The bitcoin. No matter how a customer pays your for goods and/or services, you need to record it.

6. Please don’t try to hide stuff, because we’ll find it.

When you force that bank rec, guess what? QuickBooks automatically creates an account called “Reconciliation Discrepancies” and even if you see it on your P&L and change it before we review your books, we’ll find it. All of the time. It’s like when my kids tell me they’ve “cleaned” their rooms but really all they’ve done is shoved all their crap under their beds and in their closets. Nice try. I know you’ve moved that adjustment to Office Expense or Cost of Goods Sold.

How do we find it? One way is that QuickBooks Online has an Audit Log. One of the first things I do when I log into a client account is look at the audit log to see what’s been happening. I’ve caught fraud 4 times in 11 years with it. I use it to see when you try to hide a forced bank reconciliation. Another way is to go to the Reconciliation History screen:


Hint: It’s the auto adjustment column. Doesn’t matter if you change the account. We still see it.

You hire us to do this for you. We’re here to help you; that’s what we want to do. Please, please ask us what to do if you’re not sure. If you’re reconciling your own accounts and get stuck – just stop and let us know. You don’t have to finish right then – you can come back and finish later. Or, we can finish it for you. A question I ask almost all of my clients is “Did you start your business so that you could do bank reconciliations every month? No? Well, I did, so let’s all be happy and let me do them.”

What happens if you’re entering in a transaction and aren’t sure what account to use? Most of us will create a special account just for this – something along the lines of “Ask My Accountant” or “Ask My Bookkeeper”- that we review on a regular basis for these sort of situations.

7. Ask us questions & let us know where you want your business to go.  

We love it when you come and tell us you need to hire someone but aren’t sure if you can afford full- or part-time, or how much you can afford to pay them. We can help you figure this out!  

Let us know what your vision for your business is – now and in the future. Since many of us service a variety of clients, there may be ways we can help you other than just letting you know that your office supplies expense seemed way out of whack this month. I’m always more than willing to introduce clients to each other, or to someone else in my business or personal network, if I think it could benefit them.  

The point of this list – you hired us because we’re bookkeepers, and we’re good at, you know, keeping books. Help us do our jobs: be an active participant in the process, listen to us, trust our judgment and let us know what your plans or vision for the future might be. You hired us for our knowledge and our experience and our insight. We’re a team, and your continued success is in our best interest as well!

We are passionate about giving our clients the data and tools to run their businesses in a way that will help them grow; one phrase I say often to my clients is “Well, let’s get this process in place now, so that when you start taking over the world, you won’t have to worry about it.”

It may seem contrary to what you’d expect, but I’m so proud when one of our clients outgrows us and needs to hire a full-time, direct-hire bookkeeper. It’s like watching one of my baby birds leave the nest.

But seriously, that’s never going to happen if I have to keep answering: “How come my net income isn’t the same as my bank balance?”

I think that’s it for now.

Stacy Kildal

Stacy Kildal

Contributor at Fundera
Stacy Kildal is owner/operator of Kildal Services LLC—an accounting and technology consulting company that specializes in all things QuickBooks. In 2012 & 2013, Stacy was named one of CPA Practice Advisor’s Most Powerful Women In Accounting. Stacy is one of the three hosts for the QB Show and has also been featured frequently on Intuit’s Accountant Blog, Community "Ask the Expert" forums, at various Intuit Academy To Go podcasts, as well as hosting a number of Intuit Small Business Online Town Hall sessions. She is a big fan of working mobile and has been recognized by Intuit as being an expert on QuickBooks Online, having written Intuit’s original courses for the US, Singapore and Canadian versions.
Stacy Kildal