We get it - bookkeeping can sometimes seem like a real drag. For one, it evokes a certain sleep-inducing image: spreadsheets, receipts, and ledgers. It's enough to make anyone's eyes glaze over. However, managing your business's financial records doesn't have to be a burden. If your small or mid-sized business is in its awkward teen years, where in-house bookkeepers seem barely adequate and hiring a controller seems overkill, a full-charge bookkeeper may be the right fit for you.
If you think that hiring someone who can don the hat of a bookkeeper and undertake additional, more complex duties in the realm of accounting is what your business needs, read on to evaluate if a full-charge bookkeeper could be the right fit for you.
Simply put, bookkeeping, which falls under the wide umbrella of accounting, is the process of keeping record of a business’s financial transactions. It includes the tasks of documenting the inflow and outflow of funds within a business, including customer payments and vendor payments. While physical books were used previously to maintain these records, we’ve come a long way; now, the process can be conducted largely digitally.
Bookkeepers, therefore, are responsible for tracking and recording a business's financial transactions accurately and such that they can be reviewed effortlessly. Their role holds significant importance in the smooth functioning of a thriving business.
A full-charge bookkeeper can be described as a Bookkeeper 2.0, if you will. Why? As the title itself suggests, “full-charge” means that this person is solely responsible for performing a company’s daily bookkeeping activities and undertaking additional full-cycle accounting duties as well.
While a bookkeeper does the following:
- Recording data and performing data entry
- Managing accounts payable and accounts receivable
- Utilizing accounting software and demonstrating proficiency in its use
- Handling bank and general ledger reconciliations
- Managing cash flow to ensure efficient financial operations
- Processing timesheets and accurately recording payroll
A full-charge bookkeeper also does the following:
- Managing full-cycle accounting duties
- Recording complex transactions
- Preparing financial statements (balance sheet, income statement, and cash flow statement) and reports as necessary
- Supervising other accounting staff, such as clerks and junior bookkeepers
- Preparing tax returns
- Remitting payroll taxes, sales taxes, use taxes, and income taxes
- Preparing depreciation schedules
- Tracking fixed assets to ensure accurate recording and reporting
Therefore, their role and the insights they provide go beyond the traditional responsibilities of bookkeepers and could become crucial for businesses aiming to expand and stay competitive in the market.
Consequently, full-time bookkeepers bear greater accountability and typically have a direct reporting line to a business’s upper management. In larger organizations, some of these tasks might be handled by accountants or controllers.
Let’s take a closer look at the role of a full-charge bookkeeper.
Well, it really does depend on where your business is at, its size, what its current accounting/bookkeeping requirements are like, and several other considerations. Not every company will find the full-charge bookkeeping role suitable for their needs.
If you are a small or medium-sized business, you may find that the role of a full-charge bookkeeper serves as a missing link in your accounting function. However, there is no one-size-fits-all approach you can take to making this decision.
For instance, if your business is in the early stages, you may choose to rely on DIY-ing your bookkeeping, hiring in-house bookkeepers, or outsourcing bookkeeping tasks until your operations reach a certain level. Once your business grows or your operations reach a certain limit, you may consider hiring for higher-level roles such as controllers or CPAs full time.
But it is important to know when the role of a full-charge bookkeeper may be right for you.
As your business continues to grow, you may find that the challenges and demands on your current bookkeeping staff increase too. While you could manage with, say, a less experienced “standard” bookkeeper and your involvement or that of a management member, you should ask yourself an important question: Is your current setup adequately equipped to sustain your company's financials effectively? If any of the following points resonate with you, it may be time to consider hiring a full-charge bookkeeper:
- Lack of bookkeeping training: If you or your team are not trained in bookkeeping, it can lead to potential errors and gaps in financial management. A full-charge bookkeeper brings the necessary expertise and knowledge to handle complex bookkeeping tasks.
- Need for supervision: You should consider hiring a full-charge bookkeeper if you have a team that requires supervision and guidance in bookkeeping and accounting processes; they can provide the necessary oversight to ensure accuracy and efficiency in financial operations.
- Time constraints: If management and current staff members are already stretched thin with their responsibilities and do not have adequate time to dedicate to bookkeeping, hiring a full-charge bookkeeper can alleviate the burden and allow them to focus on their core tasks.
- Growing business revenue: If your business revenue is steadily increasing, it indicates the need for more robust financial management. A full-charge bookkeeper is equipped to handle the complexities that come with business growth, as they handle a wide range of functions. Therefore, by hiring them, you could ensure your finances are properly managed as your business expands.
It is important to note, however, that filling the role of a full-charge bookkeeper requires careful consideration. Companies need to source candidates thoughtfully and provide appropriate training.
For instance, if you are a company with in-house bookkeepers, you may consider training them to fulfill the role of a full-charge bookkeeper. On the other hand, you could find it advantageous to bring in new talent. Therefore, each company should assess its specific needs and resources to determine the best approach to hiring or outsourcing a full-charge bookkeeper.
Before we get into how the role of a full-charge bookkeeper compares to that of a controller or CPA, let’s take a closer look at what their general responsibilities could look like besides recording a business’s financial transactions:
- Managing accounts payable: Managing accounts payable involves recording and paying bills, tracking expenses, and maintaining vendor relationships. The full-charge bookkeeper ensures that bills are accurate, approved, and paid in a timely manner.
- Managing accounts receivable: In this role, the full-charge bookkeeper tracks customer invoices, processes payments, and follows up on overdue accounts. They play a crucial role in maintaining positive cash flow by ensuring timely collection of outstanding payments.
- Bank reconciliation: Reconciling bank statements with company records is an essential part of full-charge bookkeeping. Bookkeepers compare bank transactions with the general ledger to identify any discrepancies and ensure accurate financial reporting.
- Payroll processing: Full-charge bookkeepers often handle the payroll process, including calculating employee wages, withholding deductions, etc. They generate payroll reports and ensure compliance with relevant tax regulations. This also involves the processing of employees' timesheets and ensuring accurate and timely compensation.
- Preparing monthly and quarterly tax returns for review: They could be responsible for preparing monthly and quarterly tax returns and compiling and completing any related documentation. These returns are then reviewed by appropriate parties, such as CPAs and the upper management, to ensure accuracy and compliance with tax regulations.
- Preparing financial reports and statements for review: Their responsibilities may include generating financial reports and statements that provide a snapshot of a company's financial performance. These reports are prepared for review by management, stakeholders, or external parties to assess the financial health and make informed decisions.
- Remitting taxes: Part of a full-charge bookkeeper’s responsibilities could be handling the process of remitting various taxes on behalf of the company. This includes payroll taxes (taxes both employers and employees pay on salaries, wages, etc.) such as Social Security and Medicare, as well as sales taxes, use taxes, and income taxes. They ensure that the appropriate taxes are accurately calculated and paid to the respective tax authorities in a timely manner.
- Overseeing other accounting staff: Supervising accounting staff involves overseeing and managing a team of specialized professionals within a business’s accounting department, such as billing clerks. In this role, the full-charge bookkeeper provides guidance, support, and direction to the accounting staff, ensuring that their work is performed accurately, efficiently, and in alignment with established policies and procedures.
If you already have in-house bookkeepers on board, you must be wondering if or when you should consider onboarding or outsourcing a resource to perform your bookkeeping 2.0 duties.
As seen earlier, business growth means evolving financial needs. As your finances get more complex, you may need someone whose role sits somewhere between that of a bookkeeper and a controller. The full-charge bookkeeper’s role is far more comprehensive than that of an in-house bookkeeper. Therefore, this is where hiring a full-charge bookkeeper should be considered.
A controller oversees a firm’s accounting activities. The role of a controller is wider than that of an accountant or a bookkeeper. They are often experienced individuals with several certifications. Their role may be more wide-ranging in smaller companies and supervisory in bigger organizations.
Controllers perform several key functions that differentiate them from full-charge bookkeepers. These include:
- Financial strategy and planning: Controllers can develop and implement financial strategies that align with an organization's goals. They analyze financial data, identify trends, and provide insights to guide organizational decision-making.
- Financial analysis and reporting: Controllers oversee the preparation and analysis of financial reports and statements, ensuring accuracy, compliance, and meaningful interpretation of the data. Full-charge bookkeepers primarily focus on preparing financial statements but may not possess the same level of expertise in complex financial analysis.
- Internal controls and risk management: While full-charge bookkeepers typically do not have the same level of involvement in these areas, controllers establish and maintain internal control systems to safeguard a company's assets, prevent fraud, and ensure compliance with regulations. They assess and mitigate risks and monitor the company’s financial activities.
- Budgeting and forecasting: They may also be involved in budgeting and forecasting processes, working closely with a company’s management to set financial goals, create budgets, and track performance against targets. They provide insights into variances and recommend corrective actions.
- Hiring and training: Controllers often oversee the accounting department, including hiring and training full-charge bookkeepers and other accounting staff. They provide guidance, training, and performance management to ensure the efficient operation of the accounting function.
It mainly depends on the volume and complexity of your business transactions. As your accounting function grows and the roles get distributed across more employees, a controller could help oversee your accounting function. They are also typically adept at handling complex transactions, which full-charge bookkeepers may not necessarily be.
As per Indeed’s numbers, the average base salary of a controller is around $46.33 per hour. For comparison, the average base salary of a full-charge bookkeeper per hour is $21.26. This could vary based on factors such as location, education, and prior experience.
A CPA, or a certified public accountant, is a licensed accounting professional. A state's Board of Accountancy grants the CPA license, while the American Institute of Certified Public Accountants (AICPA) offers guidance and resources on obtaining this license. CPAs are required to adhere to a code of ethics. Needless to say, CPAs are highly skilled specialists when it comes to finance.
CPAs can do everything that a full-charge bookkeeper can do and more. Let’s see how the role of a CPA differs from that of a full-charge bookkeeper:
- Advanced accounting knowledge: CPAs undergo rigorous education and training in accounting, earning a professional certification. They possess a deep understanding of accounting principles, financial reporting standards, and complex accounting issues.
- Financial statement audits: CPAs are qualified to conduct financial statement audits, which involve a thorough examination of a company's financial records, processes, and controls. They provide an independent and objective opinion on the fairness and accuracy of the financial statements, ensuring compliance with accounting standards.
- Compliance and regulatory expertise: CPAs stay up to date with evolving accounting and financial regulations. They ensure that businesses comply with relevant regulations, such as the Generally Accepted Accounting Principles (GAAP) (which apply to public companies) and tax laws. They are well-versed in complex financial reporting requirements and can assist in maintaining regulatory compliance.
- Tax planning: Taxation can be intricate, especially for businesses in their early stages. Small businesses often face challenges and potential financial losses due to mistakes or insufficient understanding of tax laws, resulting in overpayment. Engaging the services of a CPA eliminates the need to stress about tax planning, as they possess the expertise to guide you through the complex tax filing procedures.
- IRS audit: A CPA is the qualified personnel to represent you if you ever find yourself in a situation where you have to undergo an IRS audit.
If you are a small business, you may not need to hire a CPA. But their expertise can be valuable when it comes to managing your taxes, accounting, etc. However, do note that the charge you pay per hour for a CPA could be $150 to $250 or even $500 based on their location and experience level.
- Bookkeeping can be perceived as a tedious task, but it doesn't have to be a burden. Hiring a full-charge bookkeeper may be a suitable solution for small or mid-sized businesses in a transitional growth stage.
- Full-charge bookkeepers are responsible for recording financial transactions accurately and providing comprehensive financial oversight. They undertake additional accounting duties beyond standard bookkeeping tasks.
- Hiring a full-charge bookkeeper depends on various factors, including business size, accounting requirements, and current resources. Not every company will find this role suitable for their needs.
- Full-charge bookkeepers handle tasks such as managing accounts payable and accounts receivable, bank reconciliations, cash flow management, payroll processing, tax return preparation, financial reporting, and supervising accounting staff.
- Controllers have a wider role than full-charge bookkeepers, overseeing accounting activities, financial strategy and planning, financial analysis and reporting, internal controls and risk management, budgeting and forecasting, and hiring and training.
- CPAs possess advanced accounting knowledge, are qualified to conduct financial audits, provide compliance expertise, and can represent businesses during IRS audits. However, their services come at a higher cost compared to full-charge bookkeepers.
- The decision to hire a full-charge bookkeeper, controller, or CPA depends on the specific needs, size, and complexity of your business's financial operations.
- Evaluating the cost and benefits of hiring a full-charge bookkeeper, controller, or CPA is crucial for making an informed decision that aligns with your business's requirements and financial resources.
Your business is ever-evolving as are your bookkeeping and accounting needs. You may wonder how to balance your business’s bookkeeping and accounting needs with how much you spend on hiring personnel to perform these duties. By evaluating your company’s circumstances and understanding the value that a full-charge bookkeeper can bring to your business, you can make an informed decision about whether hiring one is the right step to support your company's financial stability and growth.
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