Is Your Bookkeeper Doing a Good Job? 5 Things to Ask For

You pay someone to do your books, and you have no real way to know if they are doing them well. You do not have to learn bookkeeping to find out. There are five things you can ask for, and a good bookkeeper can send all five in a day or two. Most of the time the answers come back fine, and you can stop wondering.

1. Last month's reconciliation reports

Ask for the reconciliation report for every bank account and every credit card, for last month. This is the report that shows the books were checked against the statement and the two matched.

A good answer is one report per account, dated last month, with a difference of zero. A weak answer is a report for checking and nothing for the credit cards, or "we don't really do those."

2. What is sitting in Uncategorized

Ask what is in Uncategorized Income, Uncategorized Expense and Ask My Accountant right now. Those are the buckets for transactions nobody has decided on yet.

A good answer is a short list from this month, with questions for you. A weak answer is a big number that goes back a long way and has never been mentioned.

3. The balance sheet, not just the P&L

If the only report you ever get is a profit and loss, ask for the balance sheet too. Then ask one question about it: what is in Undeposited Funds, or the clearing account? Newer QuickBooks files call it Payments to deposit.

That account is a waiting room for payments on their way to the bank, so it should be small. A good bookkeeper can tell you in one sentence what is in there and why.

4. What the payroll and sales tax balances are made of

On the same balance sheet, find payroll liabilities and sales tax payable. Ask what each balance is made of.

A good answer sounds like "that is last month's sales tax, and it clears when the payment goes out." A weak answer is a shrug. This is not a question about your taxes. It is a question about a number in your books, and your bookkeeper should be able to explain it.

5. How sales get into the books

Ask how sales are recorded. Are they coming from your POS or payment processor reports, with fees, tips and sales tax split out? Or is each bank deposit coded straight to Sales?

A good bookkeeper can answer in two sentences. If deposits are the only source, card fees, tips and sales tax are hidden inside one sales number.

The email to send

Copy this, change the name, and send it.

Hi [name],

Could you send me these when you get a chance?

1. Last month's reconciliation report for each bank and credit card account
2. What's currently in Uncategorized and Ask My Accountant
3. The balance sheet as of last month-end
4. A quick note on what makes up the payroll liability and sales tax payable balances
5. A sentence or two on how our sales get recorded

Also, is there anything you need from me?

Thanks

Pay attention to two things: what comes back, and how. Quick and clear is a good sign.

What a good answer looks like

Before you blame your bookkeeper

Slow answers do not always mean your bookkeeper is the problem. Sometimes they are waiting on you: statements, receipts, or answers to questions they sent weeks ago. That is why the email ends with "is there anything you need from me?"

If all five come back clean, your bookkeeper is doing the job. Keep them.

Want a second opinion?

If the answers leave you with more questions, we do a free 30-minute books review. You share your screen, we look at the same five things, and you get a one-page written summary of what is in your books. Nothing gets changed, and the summary does not tell you what to do about your bookkeeper.

Still deciding whether you need one at all? Start with when to hire a bookkeeper or the small business bookkeeping guide.

Common questions

How often should a bookkeeper reconcile my accounts?

Every month, for every bank account and every credit card, once the statement for that month is available. A reconciliation report is the record that it was done.

Should my bookkeeper send a balance sheet or just a profit and loss?

Both. The profit and loss shows income and expenses. The balance sheet shows what is sitting in accounts like Undeposited Funds, payroll liabilities and sales tax payable, which is where you can see whether the profit and loss can be trusted.

What is Undeposited Funds?

A holding account in QuickBooks for payments you have received that have not been matched to a bank deposit yet. Newer QuickBooks Online files call it Payments to deposit. It should stay small.

Is it rude to ask my bookkeeper for these?

No. These are standard month-end records. A bookkeeper who is doing the work already has them and can send them without much effort.