Hiring a bookkeeper can be an overwhelming process for many small business owners. Before starting your search, it is important to determine the type of experience and skills you need. Are you looking for someone to analyze the numbers for you and create a budget or do you really just need someone to enter the data for the accounts and invoices?
If you have someone to help you figure out the numbers, or if you have a solid background in accounting and financial management, it is probably good to find someone who has mastered your accounting software and whose experience and personality are tailored to your business. On the other hand, if you don’t have someone to make sure the numbers are correct, the data entry counter is not a good idea. In this case, you will want to find someone with full accounting experience. That is, the ability to reconcile the balance and make a monthly closing. Bookkeepers typically don’t have the skill set to help you with financial management beyond accurate financial reporting.
Once you place an ad, you will be treated with a smorgasbord of candidates. You will have to narrow down the number of candidates to those who meet the needs of your job description and then the interview fun will begin. You’ll want to ask questions that ensure that the bookkeeper actually has the right skills and fits into your business culture. Here are 8 questions to ask your potential accountant:
1) Do you think accrual or cash reporting is better for business management?
Find an advanced bookkeeper to explain that accrual accounting provides better financial reporting, but the cash basis is generally preferred for taxes. We can keep the books on an accrual basis for management reports and the tax accountant can make adjustments for cash taxes. A standard accountant will likely tell you what her experience has been and will have no preference for either.
2) What is the accounting equation (or the balance equation) or explain the balance.
A good bookkeeper will explain that the balance sheet has assets, liabilities, and equity. This is mandatory for anyone who expects you to provide accurate financial reports. Ideally, they will tell you that the equation is: Assets = Liabilities + Equity. If they can’t explain the balance sheet, ask them to describe an asset and liability account. You don’t want someone who doesn’t know the balance responsible for the month-end close, but if someone else is ensuring accuracy, just knowing how assets and liabilities are used is fine.
3) The bank account has a discount of $ 0.72. How long will you spend looking for the problem and what steps will you take to find it?
This problem is misleading and it really depends on what you would like to see in the correct bookkeeper. Some will not stop searching until they find it. Sure, there could be a lot of things causing a discrepancy, so you want them to spend some time looking for the problem. But how long? Is spending 2 hours looking for $ 0.72 the best use of time? If we look at ROI, that’s absolutely a waste of time. If you respond 2 hours, you’ll want to investigate your tolerance for less than perfect circumstances. If you are in the creative field, an extreme perfectionist can drive you crazy. However, if they aren’t looking for the bug at all, their attention to detail is probably not strong enough and you should keep looking.
When looking for the error, the ideal candidate will say that it is likely a transposition error and would start there first (transposition errors are divisible by 9). They might just say that they would check each line item against the declaration, which is perfectly valid.
4) In cash accounting, how would you record an annual insurance premium of $ 600?
The correct answer for the cash basis is $ 600 debit insurance expense, credit cash, or accounts payable. All bookkeepers should understand this well.
5) How would you record an annual insurance premium of $ 600 using accrual accounting?
The correct answer here is $ 600 Prepaid Secure Debit, Cash Credit or Accounts Payable. Ask them to find out when the insurance expense is recognized. It must be $ 50 / month with a Debit to Insurance Expense and a Prepaid Insurance Credit. If the candidate cannot answer this question, do not expect them to keep their books based on accrual accounting. You will want to depend on someone else for management reports.
6) How many gas stations (or coffee shops, etc.) do you think there are in the US?
With this question, we are looking for good critical thinking skills. It is not okay to just guess a number without explanation or say they would “google” it. You want the candidate to have a process to get to their guess, no matter how far away they are. There are so many gas stations in my city, I guess so many cities in my state …
7) Rank the following in order of importance to business success: Sales, Teamwork, Quality, Integrity, Profitability, Service
There is no right or wrong answer to this question, but it will indicate whether the candidate is aligned with your company culture and will also demonstrate critical thinking skills. Look for a justification for why they responded the way they did. Does it align with how you would answer the question? For example, if they say that Profitability is the most important thing. Why is that the case? If they say teamwork is the least important thing, you probably want to dig a little deeper if teamwork is high on your priority list.
A bookkeeper would prefer to include profitability further down the list because he wants to know that the entire business is being considered, not just his work. You would also like to see integrity at the top of the list. Do you really want a bookkeeper who doesn’t value integrity?
8) Tell me about a time when you disagreed with something your boss asked you to do.
The correct answer here will depend on the personality you are looking for. Do you want a follower who does what you say? Are you looking for an advisor to tell you what to do? Perhaps a combination is the right answer for you, someone who is confident enough to speak his mind, but who is willing to take the lead.
There are tons of possible interview questions to ask when interviewing bookkeepers. The ones listed above can give you a good indication of whether or not the candidate is a good fit. For a better assessment of accounting skill, see the AIPB Accounting Test. Be sure to check references and try to speak to a CPA who has had the opportunity to see your work.
Copyright (c) 2010 Kelly Totten