What it Looks Like to Outsource Your Bookkeeping
Whew! You got through Tax Day! If you're thinking about how not to be stressed again next year. Maybe you’re really scared and don’t even know if you’re profiting, or you haven’t kept up with your books for a few years, maybe you don’t like numbers, don’t like doing your books and it stresses you out, and if you’re in it for the long haul and want to invest in your business - these are reasons you would want to outsource your bookkeeping.
Your books are the heartbeat of your business showing you what’s working and what isn’t working. Half of businesses fail by the fifth year. What is the common denominator? They don’t know their numbers. Without doing your books you can’t navigate your business in the light.
We created a comprehensive guide to help you understand the in's and out's of what it looks like to outsource your bookkeeping.
WORKING WITH A BOOKKEEPER
HarQuin is a team of 100+ all over the country - and we are family, so when you hire HarQuin you join the family :) HarQuin Boutique Bookkeeping Co is boutique industry-specfic. When you outsource to bookkeepers that know your industry they can see things that others wouldn’t see.
A bookkeeper is involved in the month-to-month of your books - unlike a tax strategist. When we get to the end of the year, like December and then January, we close out the books and get things ready for your CPA to be able to file and do the taxes. You can't have a good business strategy, reconcile your books or confidently pay accurate taxes without bookkeeping. It's not your CPA's job to go line-by-line, expense-by-expense, categorizing things and making sure everything is reconciled. It's your bookkeeper's job.
PRICING
Outsourcing costs money but it’s an investment in an asset to your business.
What goes into our monthly pricing depends on how many bank accounts, cards, etc you have. We also look at how many different ways you receive payment. Each business is different, so your monthly price would reflect your specific needs and details of your business.
Think about what is the cost of NOT outsourcing your books and what is the cost of outsourcing your books?
Some of the costs of not outsourcing are not knowing when you can bring on employees or being super stressed in tax season because your books aren't accurate and prepared to hand off to your CPA (work that took all year, and paid off little by little). Bookkeeping is an investment in understanding your books so you can know what's working and not working in your business and make the necessary changes to grow. You need to know your numbers to know how to increase your profit margin, pay yourself, and scale.
All of our clients get individual quotes when they come to us, based on their unique situation - so they are never paying for services they are not using. HarQuin is very affordable - and not a one-size-fits-all cost because we never want you to pay for a service you’re not using. The first step is filling out the Estimate Form and then we have some of the information we need to give you a free quote so you can decide if you would like to move forward or not (oftentimes the quotes are estimated higher than what you'll actually end up paying). Each business has different needs even within the boutique industry - so you will have high and low months, busy and slow, and our services meet you where you're at each month.
The more accounts and transactions we need to keep track of, the more work it is - so this will raise the pricing. We are recording all of your income streams and expenses, loans, lines of credits and we make sure everything is accurate and reconciled every month. If you're an S Corp you have payroll at least for you as the owner, team members, etc so a little more plays into that. You also have the option of getting your reports weekly instead of monthly and since we will be in your books more often, the price can increase with that, but it is an option we offer our clients because some really like to see their reports more than once a month.
Note: If you're a bigger company with high sales and have an internal financial cash flow problem and your numbers are barely breaking through, you need CFO consulting to know how to turn things around and build profit.
ONBOARDING
During your onboarding call, you meet with your Success Team Member. We go over access to all of your accounts, we confirm your sales flow, talk about how you track inventory, tell you what you can expect with monthly bookkeeping, how communication is key, and we set you up with your Google doc for any transactions we need clarification on and you can use the Google doc to enter all of your transactions as needed - inbound shipping, cash transactions, irregular transactions.
WE GIVE YOU FIVE MAIN REPORTS (but hundreds of reports are available to you)
When used wisely, your financial reports become a tool for making smart business decisions and making sure you're not over paying or under paying in taxes!
The most common accounting software that people use is QuickBooks. We use the desktop version at HarQuin because it’s the most user-friendly and our clients don’t have to pay a subscription fee (we absorb that cost). Within QuickBooks there are a ton of different reports, depending on what you want to see - bar graphs and pie graphs, and different color options (we know how much boutique owners love different color options!) . There are common reports no matter what system you’re using. We will discuss these today.
Balance Sheet.
This one scares people, but it doesn’t always give the best, truest picture of someone’s business. Your balance sheet shows your business assets, which is everything that you own or that you have as an asset - your checking balances, big furniture purchases, a building purchase, the wholesale cost of your inventory, etc. It also shows your liabilities - everything outstanding that you owe, whether it’s outstanding gift cards to your customers, sales tax that you’ve collected that you have to payout, your payroll liabilities, any of your loans, outstanding credit card debt, etc. It takes all of your assets and puts it up against your liabilities and it takes into account your equity account so any personal transactions or contributions that came out of your account, get parked in your equity account. Then you’ll see retained earnings. And at the very bottom of your balance sheet you’ll have a net income. This net income is not commonly what most boutique owners are looking at, but more for a conversation with your CPA.
Income Statement or P&L.
The most common report that we use is your P&L or your income statement - which is your profit and loss statement. This report shows you what your company earns, which is all your revenue and everything it took to make that revenue - all your COGs - Cost of Goods sold, and all of your expenses going out - office supplies, payroll, interest, etc. This creates a net income at the bottom and it shows you how you washed out for whatever time period you’re pulling the report for. Usually you’re looking at your income statement and your balance sheet at the end of the year, trying to get all of your tax stuff CPA ready, so you’re looking at the whole year. But the nice thing about doing monthly bookkeeping, whether it’s DIY or outsourcing, is you get a monthly snapshot of where you are and then you can compare that as you’re going through the year.
Monthly Reports packet we send out to our boutique clients.
Every month we include a Profit & Loss by month. You can start looking at each month beside each other and see trends, if there’s any holes in the boat, things you need to change. You’ll also see your waves of busy seasons vs slow seasons. You’ll see those big purchase months, too.
The next report we send out is a Profit & Loss previous year comparison. This report gives you snapshot of where you are right now, compared to where you were last year.
We also send out a Profit & Loss by percent of income. This is good for anyone utilizing the Profit First method or any type of budgeting method. This shows you where your money is going percentage wise. It’s important to compare this on a percentage basis as opposed to a raw dollar basis. For example, you may make a million dollars one month, but you’ll need to know how much you had to spend to make that million dollars. This is where you’ll be able to determine if you’re marking your inventory up enough, moving things fast enough, spending too much on basic expenses, etc.
Balance sheet. This is a month-end snapshot. It simply shows you where you are in your business as of the last day of the month. Every bookkeeping company should be able to supply this.
Member’s draw detail or Owner’s draw detail. This shows any of those transactions sitting in your equity account - any transactions where you accidentally use your business card, so that transaction gets pulled out and doesn’t count as a business expense, so it’s sitting in your equity account.
Profit & Loss detail report. A one-month snapshot so you can make sure everything is categorized how you want it. You want to make sure you’re keeping a close eye on it month to month, rather than looking at it at the end of the year. This will prevent you from missing transactions and forgetting what the expenses were for - if you forget what something is for, you end up having to claim it as personal expense instead of a business expense. So this will be a benefit of keeping an eye on your reports monthly rather than just looking at them at the end of the year.
This is a general overview of some reports that we think are helpful for boutique owners specifically. Having someone specific to your industry will be beneficial because there are many things you may not know you can claim and expense. Boutique bookkeepers know exactly what you can claim! If you’re a client, we offer free monthly Reports Training with Lindsey, the founder of HarQuin. Spots are limited, so sign up here today. This is something we bless our clients with, that is normally something that would cost hundreds of dollars with other companies!
QUESTIONS TO ASK WHEN SEARCHING FOR A BOOKKEEPER
1. Ask what software they use and why? Will you be charged for software?
2. How do they work with CPAs and tax preparers? At the end of the year, the bookkeeper finalizes reports to hand off to a CPA.
3. How many clients have they worked with in the boutique industry? The boutique industry has unique aspects.
4. Ask what info they need from you? Will they need your answers to how to categorize expenses etc? Will they need your bank statements?
5. What are their response times? Will there usually be a 24-48 hour or earlier response from your bookkeeping team?
6. Ask who you will be working with? Your own dedicated bookkeeper? Your Success Team member? How does it work? What will be the form of communication? Email, text, phone, etc?
7. When are reports finalized and delivered?
8. What other services do they provide? Know how you can grow with the support of the bookkeeping company. Ideally you can stay with your bookkeeper and not have to leave to get other services, so you know you’re getting accurate numbers for the other services.
9. Your investment. What will you be charged for and based on what?