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R.4 Do You Need a New Bookkeeper or Tax-Preparer?

Authored by Winona Dorris and Poppy Davis

A Bookkeeper keeps your day-to-day and month-to-month records accurate and up to date. They may also be tax-preparers.

A tax preparer is usually not also a bookkeeper. A tax preparer uses your records at the end of the year to file taxes. They usually don’t manage your books year-round. You need a new bookkeeper if you thought your tax preparer was your bookkeeper but the only thing you ever get from them is your tax return.

What to expect from a tax preparer:

They should take the summary reports for the year, prepared by your bookkeeper, and enter them accurately onto the correct forms required to file state and federal income tax returns.
They should ask enough questions to understand your business, but as long as the reports prepared by your bookkeeper appear reasonable, they should not question the underlying accuracy of those reports.
They should bring it to your attention if they have reason to believe that the bookkeeper's reports are not complete and accurate and do not make sense.
They should particularly ask you questions about any purchase or sale of business machinery and equipment.
They should have a conversation with you about how to report business use of your personal automobile and business use of any vehicles owned by the business.
They should ask you questions about your non-business activities so they can complete the parts of your state and federal tax returns that are not related to your business.
They should communicate promptly and ensure that your tax return is timely filed, or you file a timely request for an extension of time in which to file.

What to expect from a bookkeeper:

Timely and accurate entry of your financial transactions into a double-entry bookkeeping system.
- Timely means generally within ten working days of receiving the information.
- Accurately means two things: all financial activity is recorded and transactions are recorded to accounting categories that accurately reflect the substance of the transaction.
Monthly reconciliations of all business bank accounts and credit card accounts.
Monthly balance sheet and income statement reports and a monthly list of questions or observations regarding the transactions they have recorded.

Warning signs your bookkeeper is not doing their job:

They have not established a clear and routine process for you to send them the information they need each week, or each month, or more frequently.
Your bookkeeper does not regularly ask you for clarifying information to help them accurately record transactions.
You do not receive a monthly balance sheet and profit and loss report.
You do not receive monthly bank and credit card reconciliation reports.
If you receive a profit and loss report there are many items in a category called “Uncategorized Transactions.”
They refuse to give you access to your own QuickBooks or accounting records.
They delay or fail to send records to others after you have requested in writing that they do so.