Pros and Cons of Using Your CPA’s Bookkeeper

Congratulations! You’ve reached the point in your business where keeping your own books is no longer an option. You’re just too busy making money to also be keeping track of it yourself.

You have a few options to choose from to address this:

1. Contract with a free-lance bookkeeper or bookkeeping service.
2. Bring the position in house
3. Have your CPA’s bookkeeping staff do your books.

In this post I will share with you the pros and cons of working with your CPA’s bookkeeper.

Pros:

1. The communication is seamless between the bookkeeper and the CPA.
   1. They have a working relationship already established. They’ve ironed out the kinks, so they can hit the ground running and won’t waste time calibrating with each other.
   2. The time between communications is greatly reduced because they are working together, usually in the same office.
2. The CPA manages and oversees the bookkeeper.
   1. This is huge. The CPA has vetted and hired the bookkeeper. The CPA, in essence, is vouching for the competency of the bookkeeper.
   2. If the bookkeeper leaves for whatever reason (emergency, relocation, retirement) it’s the CPA who replaces them.
3.  Your books are managed and maintained at the CPA’s office.
   1. This saves you the initial expense of purchasing software and the ongoing expense of upgrading software every year or two.
   2. They always back up their work. Can’t say enough about how important this is.

 

Cons:

1. It’s a higher cost to you as CPA’s usually mark up whatever they pay their bookkeeper.
2. You don’t manage or oversee the bookkeeper; you have less managerial control and input over when and how bookkeeper does her job because you are not her boss.
3. Books are set up and maintained with tax compliance in mind, not managerial analysis. The bookkeeper is working for a tax accountant so her perspective is all about getting the numbers together for the year-end tax return.
4. Books are not in your possession, so you don’t have access to them whenever you want.
5. If books are on your computer, you need a cloud based solution for bookkeeper to access. The fact that this is an added expense is not the real “con” here. It’s that cloud-based solutions add additional layers of complexity to accessing the data and depend on an internet connection.
6. Bookkeeper is not on your team, not invested in your business.
7. Bookkeeper works as an archivist, not in real time cutting checks, making deposits, issuing invoices or running payroll.

How do you decide whether farming out your books to your CPA is a good option for your business at this time?

Here’s some basic criteria:

1. You have a low transaction volume, no more than fifty checks, credit card charges and deposits per month.
2. Your business is service based, where you get paid commission or you are selling your time. You don’t have a complicated reporting structure such as job costing.
3. You send your bookkeeper your receipts and bank statements once a month in a batch.
4. You write the checks and make the deposits yourself.
5. Your books are kept on a cash, not accrual, basis.
6. If you have an employee you outsource your payroll to a payroll service.
7. You have no inventory and are not selling or manufacturing product.
8. Your business doesn’t own any depreciable or amortizable assets, such as buildings, equipment, or land.
9. Your cash flow is always positive, so you don’t need to monitor your numbers more than once a month.

These questions are a starting point.  There are probably circumstances unique to your situation that also need to be taken into consideration.

Would you like some support to get clear about whether or not this option would work for you? Drop me a line in the comment box below and we can talk about it.