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Bookkeeping 101: What to Tackle First

Bookkeeping provides the information you need to make decisions that can literally make-or-break your business. Examine the real costs of not doing it with our financial guide, “The Costs of Not Doing Your Bookkeeping.”

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About This Episode

Is bookkeeping really that important? The short answer: Yes!

 

The long answer? Well, you’ll just have to listen to this special episode in which guest host Amy Appleton, BELAY’s Director of Marketing, sits down to talk with Jen Barden, BELAY’s Director of Finance.

 

They’ll share specifics on what business owners should tackle first when approaching new processes or utilizing people to help them with their finances. You’ll learn the importance of having a bookkeeper on your team who is knowledgeable, proactive, reliable, and capable of keeping you informed of your financial records. 

1. Communication is key.

When it comes to bookkeeping, you have to stay on top of communicating with the people who handle your financials. Touch base weekly and also make sure you are getting feedback on your financial reports every month.

2. Ask questions of your bookkeeper.

You can’t just set it and forget it just because the bills are getting paid and you’re making a paycheck. You have someone helping you with the finances, but you also have to stay involved and know what’s going on. Use those reports to make decisions and assess the overall trajectory of your company.

3. Having your finances in order will take a huge burden off your shoulder when a crisis hits.

Think back to the pandemic of 2020, when so many businesses were applying for PPP loans. With everything already prepared, that’s a painless process. But if you’re doing everything on your own or not really keeping up, then that process will become a nightmare. Having a dedicated bookkeeper allows you to do what you do best without worrying about what might happen when a financial emergency pops up.

 

What is your current bookkeeping process?
Do you have a dedicated bookkeeper? If so, what has that relationship been like?
What are some of the financial hurdles that a bookkeeper has helped (or could help) you overcome?
What are some of the differences between an accountant and a bookkeeper – a topic that Jen talked about in this week’s episode.

Jen Barden on Instagram and  LinkedIn.

Tricia Sciortino on Instagram and LinkedIn.

Lisa Zeeveld on Instagram and LinkedIn

BELAY’s virtual assistant

(02:10) Jen answers the question: “What is one thing that would surprise people about you as a finance person?”

(03:29) Jen talks about herself and her background in finance. 

(06:02) What is the difference between an accountant and a bookkeeper?

(08:08) What kind of advice would Jen give to the stressed-out business owner doing their own bookkeeping?

(09:47) What is the most commonly run report that people want to look at?

(12:44) What do you say to business owners who are concerned about someone having access to all their financial information?

(15:05) How do you establish trust with a bookkeeper who isn’t on site with you?

(17:04) Outside of communication, what practical advice would you give someone who is working with a bookkeeper for the first time?

(17:52) What resources or software should first-time users look for to help with best practices, how to read reports, and so on?

(20:15) After 25 years of finance experience, what is a lesson you learned the hard way – and how did that experience help you get to where you are today?

(24:26) This week’s one next step: Download “The Cost of Not Doing Your Bookkeeping.”

Jen Barden:

Bookkeepers should be communicating weekly with their clients. And I know that clients often get a bookkeeper and they think, “Okay, I don’t have to worry about this anymore.” But really they should be keeping in touch. They should be going over reports on a monthly basis, making sure that they’re reviewing everything that the bookkeeper does.

Speaker 2:

Welcome to One Next Step, the most practical business podcast in the world, helping you get more done, grow your business, and lead your team with confidence, with tips and tools you didn’t get in business school. Here are your hosts, Tricia Sciortino and Lisa Zeeveld.

Tricia Sciortino:

Welcome to One Next Step. The practical business podcast that helps you run your business so it stops running you. I’m Tricia.

Lisa Zeeveld:

And I’m LZ. Today, we have something extra-special lined up for our listeners. Our Director of Marketing, Amy Appleton, sat down with our Director of Finance, Jen Barden. Amy and Jen talk about bookkeeping, specifically what business owners should tackle first when approaching new processes or utilizing people to help them with their finances.

Tricia Sciortino:

I would have loved to be part of this conversation. Amy and Jen are both leaders here at BELAY and have so much expertise and experience. I’m so grateful they could jump in and bring value to you on the podcast today.

Lisa Zeeveld:

I know, me too, T. How dare they have a conversation without us. I ‘ve had the great honor of working closely with Jen. She’s Jen is a powerhouse with 25 years of experience in finance. She’s been here at BELAY for 7 years, and truthfully I can’t even imagine my life without her and I can’t wait for our listeners to hear their conversation, so here it is.

Amy Appleton:

Hey, welcome to the One Next Step podcast. This is Amy Appleton, and I am very excited today to be joined by Jen Barden, who is our Director of Finance. Hey, Jen.

Jen Barden:

Hi Amy. How are you today?

Amy Appleton:

I am doing great, So I am really excited to get the opportunity to talk to you today about all things bookkeeping. But before we get started with all of that, I would love to know what is one thing that would surprise people about you since you are a finance person?

Jen Barden:

Well, I think the stereotypical finance person, accountant, is sort of rigid, boring, very serious, not too exciting. A lot of people when they meet me and I tell them I’m in finance, they are surprised, it doesn’t always fit what their stereotype is. So for me, I’m a pretty creative person. You can’t be too creative with financials, but I get my creativity out through art and arts and crafts, decorating, baking, things like that. So I’m definitely not the boring accountant type.

Amy Appleton:

I can 100% attest that you are not your typical finance person. Hey, what’s your favorite thing to bake?

Jen Barden:

Well, it used to be cookies because I thought I was a great cookie decorator until I met someone who’s one of those professional cookie decorators, like each thing is a work of art. So at this point it’s really just desserts and things that my family likes, their favorites.

Amy Appleton:

Oh my gosh. Delicious. Well, we’re going to segue right into talking about dollars and cents. So really to get our conversation started today, tell us a little bit about yourself and your background in finance.

Jen Barden:

Well, I’ve always loved numbers and math and those were subjects that were strong for me in school when I was before college. I knew when I went to college, I was going to do something related to numbers and math, so I majored in accounting. My first job, I worked as a bookkeeper while I was in school, and then my first real job when I got out of school was to be a property accounting manager for a large real estate developer. They built huge, think your big UPS or FedEx buildings, and then we would sell them to REITs who would retain the properties for their investments, and we would often manage the property.

Jen Barden:

On the financial side, we had property accounting accountants, andI managed a team of them and did that for about five years and then decided to stay home with my babies for a little bit. After I’d been home about three years, we had a friend starting a business and he reached out to me to see if I wanted to do his bookkeeping. It was perfect timing because I was looking for something that wasn’t demanding, but to keep my skills up and keep my mind active. I started working for him, and as my kids grew, his business grew, and it worked out perfect. I did that for about 10 years, 10, 12 years. I worked for several clients and just had my own little business, and I actually reached out to an ad that BELAY had for a bookkeeper because I was thinking of taking another client on and I met with the owners and it turns out they were outsourcing all of their finance to a CPA and they wanted to bring it in house. They asked if I wanted to come work for them full time.

Jen Barden:

That’s how I came to BELAY and kind of closed up shop on my own stuff, and here I’ve been for the last seven years.

Amy Appleton:

So you have a wealth of knowledge across different industries and then actually running your own business as a bookkeeper and then moving into now, which is basically small business, medium-sized business, bookkeeping. I know you lead a large team here at BELAY in our finance department as well. So I’m going to make an assumption that most of our listeners are small business owners that know just enough about bookkeeping and their business, literally, just to be dangerous. So can you give me some examples of the difference between a bookkeeper and an accountant?

Jen Barden:

Yes. And there’s a huge difference. So a bookkeeper is really the backbone of a business’s finances. So they keep the records straight. They make sure the income and expenses are recorded correctly. Anyone can connect and download transactions from their bank. However, making sure that they are recorded properly, following proper accounting procedures is critical to a business’s financial success. So this is where a bookkeeper becomes a partner in the business and really makes sure the records are kept accurately.

Jen Barden:

An accountant is much more subjective. They provide business owners with financial insights based on the information they get from the bookkeeper. An accountant would be someone that would advise on tax strategy, help set up long-term financial goals for the business, and analyze the profitability and strength of a business’s financial position. So they serve two unique and important roles for any business really.

Amy Appleton:

Yeah, I never guess I even realized the kind of stark difference between the two of them, because I know if you don’t know much sometimes we’ll use them interchangeably, bookkeeper and accountant mean the same thing to non-finance people.

Jen Barden:

Right.

Amy Appleton:

So it sounds like there is a vast difference between their functionality in an organization.

Jen Barden:

Absolutely. And a lot of bookkeepers are CPAs. They end up doing people’s books during slow times, or they work for a CPA firm that has some clients that they handle all their books all year round. So a lot of book keepers know a wide range of things. It’s just the true definition, an accountant is going to be much more strategic in the business. And there are bookkeepers who just don’t keep up with all of the licensing requirements of being a CPA. And so they don’t know all the changing tax laws and things, but they can definitely make sure everything is recorded properly in your books so that you’re ready for the CPA.

Amy Appleton:

Well, great. Well, what kind of advice would you give to that stressed out, overwhelmed business owner who is maybe doing their books? I mean what part of the books would you tell them to tackle first?

Jen Barden:

Well, I guess first and foremost, I would want to make sure that they are using some sort of financial accounting software, either QuickBooks or Xero, FreshBooks, whatever they’re comfortable with, they need to get their books into an application and out of Excel or paper. And I say that, you’re laughing, but I have met many small business owners who are running what they think, and may be, very successful profitable businesses, but everything is in an Excel spreadsheet. They generate invoices that way. I mean, there’s just no tracking. There’s no way to run reports on an easy, frequent, basis. And so getting all your financials into an accounting software is critical.

Jen Barden:

After doing that, really getting your bank accounts and things synced up to the software is important. And like I mentioned before, anybody can set that up and make it sync to the software, but then getting a bookkeeper who can come in and make sure once all those transactions are in the software that they’re recorded properly is crucial. So next after that, you know, really partner with an experienced bookkeeper that can help you begin to properly account for all transactions. And you’ll be able to start running reports. You can begin to make more educated financial decisions. Really, you need to get to the point where you can review your financial reports monthly.

Jen Barden:

So that’s key.

Amy Appleton:

From you being a small business bookkeeper previously, and all of your clients, what was the most commonly run report that people wanted to look at?

Jen Barden:

Definitely income statement, often called a profit and loss also. That is where all your revenue and expenses are tracked and you should be running that on a monthly, quarterly, and annual basis. A lot of people avoid or don’t give importance to running the balance sheet, your balance sheet’s super important, and they should be running that each month as part of their financials as well. And then finally, statement of cashflow is a super important just to see your cash coming in and out, where it’s going. Agings if you have clients that you run invoices for and they carry a balance, running your aging on a frequent basis, almost weekly, a lot of small businesses need to, to make sure they have a handle on that as well, and they’re collecting on their receivables.

Amy Appleton:

So that sounds like a hefty amount of important reporting that people, once they’re in like a online accounting system that they’re able to then hopefully easily, more easily run, then say your person that’s in your Excel spreadsheet or has a ledger that they’re trying to record everything in.

Jen Barden:

Absolutely. Yes, and a bookkeeper, they run those reports, they memorize them for you. And so it’s super quick once they’ve reconciled your bank statements and made sure everything’s recorded, that they can get you those reports monthly. And then you have an opportunity to start focusing on what the numbers really are rather than getting all the transactions recorded.

Amy Appleton:

That’s great. It’s like a set it and forget it.

Jen Barden:

Exactly.

Amy Appleton:

Set it and forget it.

Jen Barden:

Exactly.

Amy Appleton:

Have someone else run those reports for you.

Tricia Sciortino:

You are working too many hours and it’s bleeding over into your evenings and weekends. You are missing valuable family time, and honestly, life is zipping by you. Sound familiar. Let’s get uncomfortably honest here. How long has it been since you were fully present and felt peace? It’s probably too long. You know how I know? Because I’ve been there.

Lisa Zeeveld:

But as with any struggle or obstacle in life, the first step is admitting you have a problem. You may not have everything under control. You know who can help you get everything under control? A BELAY virtual assistant. Stop spending countless hours every week on tasks that someone else could do for you. Contact us today to discover how you can reclaim your schedule, focus on what matters, and achieve the growth you and your business deserve. Get started by visiting belaysolutions.com/services/assistance today.

Amy Appleton:

So working with financials is a sensitive topic, and obviously it’s great to have an extra set of eyes on your books, but I can imagine it can also be scary to have another person privy to the inside financials and operations of your business. What types of controls have you seen put in place in order to recognize that or to make the business owner feel better about having someone else in their books?

Jen Barden:

Yeah. So internal financial controls are super important. You’ve got to have them in place. First and foremost I think it’s best that you remember, as a small business owner, that you need to maintain access to all of your financial information, softwares, bank accounts, etc. Although you might give your bookkeeper view only access to those, to your bank account, I’ve seen people before just hand everything over and they want to kind of wash their hands of it and you can’t do that. You need to still stay involved and you need to be able to log in and the person that’s working for you needs to know that you’re doing that, that you’re checking behind.

Jen Barden:

And then another thing I would say is some sort of bill pay application. At BELAY, we use bill.com, which is a great application that helps us. We code the invoices, record them for payment, release them for payment, but there’s an approval process that we have set up. We have our clients that we serve for bookkeeping, we ask them and require them actually to use an application like that that has an approval process. That way we make sure no bills are being paid without someone at the business approving them first.

Jen Barden:

The other thing is communication is key. Bookkeepers should be communicating weekly with their clients. And I know that clients often, they get a bookkeeper and they think, “Okay, I don’t have to worry about this anymore.” But really they should be keeping in touch. They should be going over reports on a monthly basis, making sure that they’re reviewing everything that the bookkeeper does. Everybody makes mistakes. And also that’s just another control to make sure everything’s done properly.

Jen Barden:

Some things, like I said, you might want to review weekly, but they should at least be meeting monthly to go over financials.

Amy Appleton:

And then I’m assuming that when a bookkeeper is not actually physically in an office space with the business owner, say they’re using a service of some sort or just outsourcing their bookkeeping in general to someone offsite, is there a way to establish that trust? Is there anything else to consider if your bookkeeper is not onsite with you?

Jen Barden:

Yeah. I mean, I honestly think where there’s a will, there’s a way, so I don’t really think there’s any more risk at having a remote bookkeeper than there is having someone sitting down the hall from me, especially with all the technology that we use nowadays. So I think just building that rapport with your bookkeeper, where they know that you still have an interest and you’re involved, you might be relying on them for things you don’t understand, but that you are going to ask questions and that you’re going to own your financials. You can’t totally just wash your hands of it.

Jen Barden:

So I think that’s super important. And like I said, just keeping communication lines open and I would suggest learning to take and partner with your CPA also, so that the three of you can work together.

Amy Appleton:

So it sounds like there’s really, honestly, not much difference than if they were just around the corner or through an office door. You’re going to do those exact same things with your bookkeeper just regardless of location of the bookkeeper.

Jen Barden:

Pretty much, yep. We don’t get to get creative when it comes to bookkeeping. I mean, there’s processes to follow and some people, that’s what they love about bookkeeping. It’s very routine and kind of same thing day in and day out. Other people don’t get excited about that.

Amy Appleton:

Is there anything else other than communication, because I know you’ve obviously talked and we know that over communication and communication is really key, really about any successful business, teamwork, relationship. Other than communication, is there a practical piece of advice that you would give someone who is working with a bookkeeper for the first time?

Jen Barden:

Yeah, I would just tell them that although the bookkeeper knows how to record transactions and reconcile them and run the financial reports that they need to stay involved in their business, ask questions, use the reports and information. The whole point of the reports isn’t for them to just get loaded into a Dropbox folder and be forgotten about. You really are going to get the best out of your bookkeeper if you review the reports and you use those to make decisions. So I think that sometimes people think that their bills are being paid, I’m getting a paycheck every two weeks, that everything is going great. But if you’re not really looking at those reports, you’re not going to have a good handle on things.

Amy Appleton:

And then for people that are kind of diving into those numbers for their business for the first time, are there resources or software or any recommendations where people could go looking to kind of understand best practices, or I know you mentioned at the beginning talking about how, from a CPA perspective, that they’re more on top of looking at the changing laws and tax laws and those type of things, but on those kind of lower levels of best practices for bookkeeping, how to read their reports, those types of things are there some resources where people can go to get that information?

Jen Barden:

Well, I mean the best resource is to have a bookkeeper that’s experienced, that knows how to record things, but you really do also need a CPA who can review and partner with your bookkeeper. CPAs are more likely to stay up to date with changing tax codes, taking courses for continuing education. They network with other financial professionals. Partnering with a skilled bookkeeper is essential because they often will be able to be the one that can communicate with your CPA, when you don’t understand some of the questions that the CPA might be asking, they’re going to understand that. And so they can kind of be the go-between. I think a lot of bookkeepers take continuing education classes, there are certifications they can get as well, and that’s a great resource. For a business leader I know there are a lot of resources out there that kind of talk to you about everybody has different philosophies on how your balance sheet should look and different margins for different types of industries for profitability, but really just sitting down with you bookkeeper once a month, and going through those reports is probably going to help educate you the most.

Amy Appleton:

Well, it sounds like a both-and, then.

Jen Barden:

Yes.

Amy Appleton:

Where you really, you need a both-and. You need the bookkeeper, who’s going to be able to kind of do the day to day and understand the recording and how to enter all the information into your online and the reconciliation and those types of reporting things. But then also having a CPA coming alongside to understand the more complex things like you said, the tax laws, anything new that’s up and coming. So it is a both- and.

Jen Barden:

Absolutely.

Amy Appleton:

So I am super curious. What is a lesson that you learned kind of the hard way, being 25 years of finance experience, share with our listeners, and I’m sure they would love to know, what’s a lesson that you learned the hard way, and then how did that experience help get you where you are today or establish some sort of new habit that you have?

Jen Barden:

I’ve learned a lot. One thing I will say about working with small business owners that I’ve learned over the years is you need to understand that their business often is very intertwined with their personal life, and their business is their life. They’ve poured their heart and soul into it. It’s very hard, especially when you have to deliver the not great news to a business owner, if their financials aren’t looking great, things aren’t going well. But I think just recognizing that they’ve poured everything into that business, and so it’s a little different than going and working for a big corporation.

Jen Barden:

Personally, one of the things I’ve learned is just not to over-commit. That’s one of the things. Under promise and over deliver, because you never know when you’re getting into financials. If you’re a bookkeeper and you’re reconciling things one month, everything might just go smoothly and there’s no problems, and the next month things don’t reconcile and balance correctly. So building bandwidth into your schedule so that you have time if things don’t go as expected, and plenty of time, if you have to reach out to your clients to ask questions. A lot of times, if you can’t reach them during the month, and you’re just kind of recording things in a holding account until you can speak with them, you need to build that type of time into your schedule so you can meet with them. But just finding that balance too, just not over-committing is a huge thing.

Amy Appleton:

I think that is so great. And I think it ties back to exactly what you’re talking about with setting up communication, and over communicating, and knowing that as a small business owner, you making the commitment to over communicate and communicate regularly with your bookkeeper actually could in the end save both you and, honestly, your bookkeeper time, because if there are questions that need to be answered, you don’t want to have to wait till the end of the month or til there’s some sort of pressing issue where all of a sudden they need questions answered from you immediately.

Jen Barden:

Absolutely.

Amy Appleton:

And you didn’t really put that time in your schedule as the business owner either.

Jen Barden:

Absolutely. And you’ll find if you keep up with your books on a regular basis by using a bookkeeper, it makes things so much smoother. I think of all the people, even last year applying for like the PPP loan, who they just did not have a handle on their financials.

Amy Appleton:

Right.

Jen Barden:

They didn’t know what their payroll costs were or any of those things, so to pull that information together to get the PPP loan was a lot of work, when for people who are using a bookkeeper and they’re organized, they’ve got a payroll service, it’s a matter of just running some reports and they could easily apply for that. So keeping your financials up to date helps you with other things as well. You never know when you’re going to need to go to a bank and get a line of credit or something like that. And that’s the first thing they’re going to ask for. So staying ahead of the game.

Amy Appleton:

Yeah, it sounds like, I think, right there, you’re staying ahead of the game when your finances and your books are completely in order. So Jen, I want to thank you for really dropping the amazing knowledge about bookkeeping for us today. Thank you so much for your time and your insight. And I know that there will be a lot of people who are looking at their books and making sure. It’s one of the most important things that a business owner can do is have their finances in order. So thank you so much for being with us today.

Jen Barden:

Thank you for having me on. I enjoyed it and I’m just looking forward to more clients to be served by the bookkeepers of BELAY. Have a great afternoon.

Amy Appleton:

You too.

Lisa Zeeveld:

Man, what a great conversation. And as always, we have a download for you so you can take your One Next Step. This week’s download is The Cost of Not Doing Your Bookkeeping. When it comes to numbers the results are binary. It’s right or it’s wrong. It’s black or in this case red. This resource will help you see what you might be missing out on if you’re struggling with your bookkeeping

Tricia Sciortino:

Text the phrase ‘ONE NEXT STEP’ to 31996 or visit One Next Step Podcast [dot] com and and you’ll get access to today’s resource to help you keep moving forward. Until next time own your journey. It’s your life and your business. It’s up to you to create the life and organization you want. Join us next week for more practical tips and actionable tools to advance your business one step at a time.

Lisa Zeeveld:

Start by making today count.

Tricia Sciortino:

Guys, we have a great podcast you have got to listen to coming up next week. Joel Manby is on the podcast. I could not be more excited, it is one of my favorites so far. If you don’t know who Joel is, he is the former CEO for brands like SeaWorld, Busch Gardens, Harlem Globetrotters, Dolly Parton’s Dollywood theme park, and Saab USA. With us, he’ll be discussing ‘How to Prioritize People and Profit.’ Here’s a preview of our conversation…”.

Joel Manby:

When our company was put before 25 million people on that show, we were the highest rank episode versus the only thing that beat us that week was American Idol back when it was number one. So a lot of people saw it and we were just inundated. We don’t trust our leadership. We don’t believe in our leadership. And it was then that I realized millions of people in America felt this way and that’s what led me to write the book that you mentioned called Love Works.

Speaker 2:

Thanks for listening to One Next Step. Be sure to on Apple Podcasts, or follow us on Spotify. Then join us next time for more practical business tips and tools to help you get more done, grow your business, and lead your team with confidence. For more episodes, show notes, and helpful resources, visit onenextsteppodcast.com

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