What to Look For When Hiring a Construction Bookkeeper
Hiring a bookkeeper can be a great relief for any business owner and one of the most important steps for any successful construction business. Your business relies on who you chose, so take some time to think about who you’re going to hire. The last thing you want to do is run a construction company AND micromanage a bookkeeper. A common mistake is hiring a friend of a friend and not interviewing them like you would any other employee. You want someone who’s sharp, reliable and preferably a wizard when it comes to bookkeeping.
The biggest things you want to look for are:
- Construction industry bookkeeping experience
- Software knowledge
- Services offered
- Overall presence
Construction Industry Background
Construction bookkeeping is not one size fits all. Just because someone has experience bookkeeping in one industry does not necessarily mean they’re a great fit for construction bookkeeping. Ask your bookkeeper candidate questions like: Are you familiar with project based accounting and job costing? You want someone who understands your business and the accounting differences the construction industry faces. The better your bookkeeper is at their job, the less you need to interfere with their work or spend time looking over their shoulder.
Which accounting softwares are your bookkeepers familiar with? Whether you're on Quickbooks, Xero or Sage, etc., your bookkeeper needs to know the ins and outs. Mistakes can be costly for your business, so being familiarized and already trained on your accounting software is very important. If they’re on an hourly rate, the last thing you want is for them to spend twice the amount of time trying to figure things out for the very first time.
A common mistake when hiring a bookkeeper is thinking they’re going to do x, y and z, but they only offer a, b and c. Depending on what stage your business is at, you might require a laundry list of services like tax preparation, payroll, accounts payable, accounts receivable, cash flow management etc.. One familiar story we continue to hear is a contractor thinking they’re getting an entire suite of services and really it’s just account reconciliation. It often makes sense to have a bookkeeper who’s a one stop shop and can bundle all these services together.
Generates a report showing what your accounting softwares says you should have in your bank account vs what you actually have in your bank account.
Anything that needs to go outbound from your bank account - your bills. You can easily set up a protocol where your bookkeeper prepares to pay a bill and you authorize it.
Anything going into your bank account - usually from invoices. Invoice duties include: drafting, sending, receiving / recording, following up, issuing receipts etc.
Paying employees and subcontractors while making sure all laws, regulations, insurances and taxes are accounted for.
Monthly Financial Reporting
Monthly financial statements prepared for your business. This allows you to analyze your profit and loss statement. You can use these reports to create budgets and optimize your business.
Bookkeepers prepare your documents to help create your tax returns so that everything is ready for your CPA to file.
These problems arise on both sides. For example, say the bookkeeper has $5k of receipts for materials and they can’t determine what job they were used for. The bookkeeper calls the contractor, but they don’t answer. Next, they send a text. Now 4 days later the contractor says “Hey, sorry. Just saw this message. Those go to the 2411 Washington job.” Bookkeeper sees this 2 days later and resolves this the following day. This is just an example of one bad communication issue. Imagine if it compounded over and over - it’s inefficient and leads to poor bookkeeping.
The door should always be open between you and your bookkeeper. Some contractors check in once a month, others might check in every Monday. Always respect each other's time. If you contact your bookkeeper, you probably expect a response within a reasonable amount of time. The same should be true when your bookkeeper contacts you!
Hopefully you’re not playing the “where’s my bookkeeper” game too often. Are you getting your reports on time? If you expect/pay for them to arrive on the 6th, but you get them on the 12th, do they have the same value? If you’re going with a freelancer, a couple of important questions to ask your bookkeeper are: “how many clients do you currently have?” and “how many can you handle?”. If they can help you optimize your business, they should be able to optimize their own!
Everyone deserves a vacation - especially your bookkeeper! What’s the plan while they're away? Do they have someone designated to step up in their place? Are you on your own during those weeks? It’s always better to ask what their policy is during your consideration period than learning on the fly.
You’ll be working closely with your bookkeeper and communicating often. Some important questions you can ask yourself are “Do I like this person?” or “Is this someone I can talk to on a daily basis?”
Making sure you and your bookkeeper are on the same page or wave length before you hire them will save you a lot of headaches. If you don’t like your bookkeeper, find one you do like before you hire them!
Hire the Right Bookkeeper!
There are lots of things to consider when hiring a bookkeeper. Remember that being a great bookkeeper for a random small business doesn’t translate to being a great bookkeeper in construction. Be sure to ask lots of questions!
Tell me about:
- Your bookkeeping experience in the construction industry?
- Your software knowledge?
- What services do you offer?
- How many customers do you have?
- Can you handle another customer?
- What happens when you take a vacation