What is Bookkeeping? Questions to Ask Before Starting a Bookkeeping Job for a Client

It will give you a sense of their accounts receivable situation and workload. It would also be best to ask whether they have a separate system for billing clients. Some companies use different software to manage and send invoices that might or might not be integrated with their bookkeeping software. Inventory management can be demanding and requires in-depth skills and knowledge. Understanding your client’s inventory situations helps you provide the best inventory management services, if needed. A reporting date determines what date (most people look at things monthly) something gets categorized.

This phrase couldn’t be more true, especially when it comes to taking up your business’s accounting. And when it comes to your responsibilities, you probably have a million accounting questions—even if you don’t know exactly what they are. Good bookkeepers know as much about technology as they do about accounting principles. Look for someone with a broad technical background, as well as extensive experience with your specific accounting solution.

Deferred revenue is money the company has received but has not earned. For example, imagine a client pre-pays for their driveway to be repaved. Their payment is counted as deferred revenue until the company fulfills the service and repaves the driveway. While every accountant should be familiar with EBITDA, it is crucial for certified management accountants (CMAs) since they deal primarily with the health and future performance of a company. Explore fundamental business and accounting skills with this free job simulation.

How are your services billed? Flat Fee or Hourly?

The challenge is identifying which bookkeepers you can trust with your finances before you actually formalize your relationship. Create pre-employment assessments in minutes to screen candidates, save time, and hire the best talent. You’ll also be certain that you’re hiring the right person, because we’ve picked questions to help you assess not just applicants’ skill sets, but their personalities, too. Hiring the right bookkeeper for the job is always tricky, but TestGorilla can facilitate your hiring process. These can be hard to spot at a glance, so often you have to redo many of the calculations. Ledger errors aren’t uncommon, as they are often simply due to human error, so a good candidate will provide a clear answer of the process they would follow to resolve the situation.

• It usually goes into “Deferred Revenue” on the balance sheet as a liability if the revenue has not been earned yet.
• We strongly advise you seek the advice of accounting and tax professionals before making any accounting related decisions.
• Bookkeeping is a similar profession to accounting in that they both handle the finances of a business, company, or individual.
• We support all Quickbooks products, Xero and many different Point of Sale software products that interface with the accounting software.
• If your potential client has employees, you’ll want to also ask what type of payroll service they use.

FIA has the right software and other features in place to ensure that our remote clients get the highest quality service. These types of questions will not give you insights into whether or not your candidate is a good choice for the position. But you may learn something important about your candidate through these open-ended questions, and it will give a chance for any nervousness or anxiety to settle down. It is not uncommon for companies to have ongoing challenges with various regulatory bodies, from the IRS to labor bodies.

In your accounting questionnaire for clients, it’s essential to ask if their business is suffering from any wage or benefits issues. Examples might include union negotiations, labor disputes, or potential minimum wage increases. When it comes to financial services, ‘financial advisor’ receives a whopping 1 million annual searches. So, it’s great news if your potential client realizes your value as both an accountant and a financial advisor. Before discussing anything else, you need to have an idea of what kind of business your prospective client has. Your new accounting client checklist should start with this open-ended question.

Salaries for bookkeepers range between $37K to $48K with the median being $59K.

This question essentially allows you to gain a sense of how much the candidate knows about the fundamentals of bookkeeping. It also helps you determine what responsibilities the interviewee is expecting to have, should they get the job. But as a recruiter, you won’t just be analyzing your future hire’s bookkeeping knowledge, you’ll also be evaluating their personality and soft skills.

You may even want to include a short skills test in your hiring process. If a company purchases a $5,000 piece of machinery on credit, that is a $5,000 liability and a $5,000 asset. The machinery’s value should be added to the company’s PP&E on balance sheets, the cost of the machinery is an expense on income sheets, and the transaction is recorded on cash flow statements. Additionally, the machinery’s depreciation will affect all of the company’s financial statements. Before starting a bookkeeping job for a client, you must gather all the necessary information to ensure you can do the job effectively. As a basic accounting position, bookkeepers only need a high school degree for most entry-level positions.

What is the balance sheet equation?

The aim is to set up a new checklist of bookkeeping items to request depending on the business’s longevity and existing bookkeeping system. That’s where having a client onboarding Bookkeeping questions questionnaire comes in handy. It serves as a guide to asking the right questions for better decision-making when structuring the services you can offer the client.

Proper bookkeeping also gives businesses a clear understanding of their financial position, enabling them to make informed decisions based on real-time data. Negative working capital is common in some industries, such as grocery retail and the restaurant business. For a grocery store, customers pay upfront, inventory moves relatively quickly, but suppliers often give 30 days (or more) credit. This means that the company receives cash from customers before it needs the cash to pay suppliers. Negative working capital is a sign of efficiency in businesses with low inventory and accounts receivable. In other industries, negative working capital may signal a company is facing financial trouble.

We strongly advise you seek the advice of accounting and tax professionals before making any accounting related decisions. The questions are available in text and video formats, the answers are available in text at the bottom of this page. If you have difficulty answering the following questions, learn more about this topic by reading our Bookkeeping (Explanation). For multiple-choice and true/false questions, simply press or click on what you think is the correct answer.

The structure you choose impacts taxes, liability, control, and how to pay yourself from your business. It usually goes into “Deferred Revenue” on the balance sheet as a liability if the revenue has not been earned yet. Interviewing a bookkeeper is the most important part of the vetting process, but checking their references comes in a close second. Any bookkeeper should be eager and able to connect you with past clients. Some bookkeepers are a one-man operation while others work within large and diverse teams.

How profitable was my company last month?

It is also essential to see if they have a primary banker in the event of multiple bank accounts. It could be just the utility company, rent for the leased office space, or a car lease. There is a possibility some of the vendors are paid regularly, and others are paid once or twice a year. So, what will be the bookkeeping workload when it comes to the company’s accounts payable? There is only one way to know this—asking about their average monthly vendor invoice processing.

Crowdfunding is a financing method where you ask for investments or donations, generally from a large group of people. Keep in mind that you probably need to offer an incentive if you want crowdfunding to be effective (think about company-branded swag, early access to products, or personal shoutouts!). Take your learning and productivity to the next level with our Premium Templates. Having one on site makes it easier to exchange information and ask questions, but it also eats up office space. Establish where and when the work is performed, plus how you prefer to exchange information. Bookkeepers create important data for your company, but who “owns” this data if the relationship expires?

KPMG Career Catalyst: Tax

Driven Insights is experienced in leading service businesses on the journey to leveraging financial and operating metrics to accelerate growth. Our bookkeepers and controllers are charged with much more than simply “doing the books” – they ensure each client understands and uses the insights we share. It is important to let them know that if they decide to hire you, you will need their bank information and any additional information required. Typically, a business owner can create a separate login for their bank account so you’re not using their personal password. Many times business owners don’t even realize bookkeepers need to know all this type of information because they’re just going about their work. However, for bookkeepers, you need to know exactly where money is coming in and out of so you can track it accurately in the books and reconcile the transactions.

Then, move on to other fundamental questions that help you understand the essential elements of their business structure. For example, you’re a marketing firm and Bill’s Burger Restaurant owes you $1,000 for marketing services you completed to advertise their grand opening. You send an invoice to Bill’s Burger Restaurant to pay for your services. It provides readers with an idea of what the business owes and owns. After collecting sales tax from customers, remit it to your state or local government and record it in your books.

These bookkeeping questions will test accounting knowledge as well as applied knowledge that has been learned on the job at other bookkeeping positions. If you’re looking for simple workflow templates to stay on top of onboarding new bookkeeping clients, you can download one for free here. It also contains 31 other free accounting workflow templates to help you run your business more efficiently. Then simply transfer money from your personal bank account to your business bank account for the correct amount. Once I finally got setup to do my business’s bookkeeping and learned the basics, I thought I’d be all set.

Access the answers to hundreds of Bookkeeping questions that are explained in a way that’s easy for you to understand. The first step to hassle-free accounting, tax returns, and tax planning starts by reaching out to one of our representatives. For example, you’re a florist who purchases $500 worth of flowers from your supplier Fiona’s Flower Supply. You do not pay at the time of delivery, but receive an invoice for your debt of $500 that you have 90 days to pay. Debit stationery expense £50.00 and credit business current account £50.00.

However, because of the competition within the industry, a bachelor’s degree will help tremendously in securing a job. More important, however, is a good track record of communication and organizational skills as well as prior experience in recording financial statements. On the balance sheet, the asset account of inventory is reduced by the amount of the write-down, and so is shareholders’ equity. The income statement recognizes an expense in either COGS or a separate line item for the amount of the write-down, reducing net income. The balance sheet shows, at a point in time, what a company owns (assets), what it owes (liabilities), and what is left over (shareholders’ equity).