How to Hire the Right Bookkeeper: 8 Interview Questions
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a bookkeeper can be an overwhelming process for many small business owners.
Before you begin the search, it's 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 data
enter the bills and invoices?
If you have someone to help you understand the numbers, or you have a
strong accounting and financial management background, getting a person
who is proficient in your accounting software and whose experience and
personality is a fit for your business will probably work out well. On
the other hand, if you don't have anyone making sure the numbers are correct,
the data entry bookkeeper is not a good idea. In this case, you'll want
to look for someone with full charge bookkeeping experience. That is,
the ability reconcile the balance and perform a monthly close. Typically,
bookkeepers do not have the skill-set to help you with financial management
beyond accurate financial reports.
Once you place an ad, you'll be treated to a smorgasbord of candidates.
You'll have to narrow down the pile of candidates to those who meet the
needs of your job description and then the interviewing fun will begin.
You'll want to ask questions that will ensure the bookkeeper really does
have the right skills and will fit the culture of your business. Here
are 8 questions to ask your potential bookkeeper:
1) Do you think accrual or cash basis reporting is better for
Look for an advanced bookkeeper to explain that accrual basis accounting
provides better financial reports, but cash basis is usually preferred
for taxes. We can keep the books on accrual basis for management reporting
and the tax accountant can make adjustments for cash basis taxes. A standard
bookkeeper will probably tell you what her experience has been and will
not have a preference for either.
2) What is the accounting equation (or the balance sheet equation)
or explain the balance sheet.
A good bookkeeper will explain the balance sheet has assets, liabilities
and equity. This is mandatory for anyone you expect to provide accurate
financial reports. Ideally they will tell you the equation is: Assets
= Liabilities + Equity. If they can't explain the balance sheet, then
ask them to describe an asset and liability account. You won't want someone
who doesn't know the balance sheet responsible for month end close, but
if someone else is ensuring accuracy, just knowing how assets and liabilities
are used will be fine.
3) The bank account is off $0.72. How long will you spend looking
for the problem and what steps will you take to find it?
This problem is tricky and really depends on what you would like to see
in the right bookkeeper. Some won't stop looking until they find it. Sure,
there could be numerous things causing any discrepancy so you do want
them to spend some time looking for the problem. But how much time? Is
spending 2 hours looking for $.72 the best use of time? If we look at
return on investment, that's absolutely a bad use of time. If they answer
2 hours, you'll want investigate their tolerance for non-perfect circumstances.
If you're in the creative field, an extreme perfectionist may just drive
you insane. If, however, they won't look for the error at all, their attention
to detail probably isn't strong enough and you should keep looking.
When looking for the error, the ideal candidate will say it's likely a
transposition error and they would start there first (transposition errors
are divisible by 9). They may just say they would check every line item
against the statement, which is perfectly valid.
4) In cash basis accounting, how would your record a $600 annual
The right answer for cash basis is debit insurance expense $600, credit
cash or accounts payable. All bookkeepers should get this right.
5) How would you record a $600 annual insurance premium using
The correct answer here is Debit Prepaid Insurance $600, Credit Cash or
Accounts Payable. Prod them to find out when insurance expense is recognized.
It should be $50/month with a Debit to Insurance Expense and a Credit
to Prepaid Insurance. If the candidate cannot answer this question, don't
expect them to keep your books based on an 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 U.S.?
With this question, we're looking for good critical thinking skills. It's
not okay to just guess a number with no explanation or to say they would
"google" it. You want the candidate to have a process for getting
to their guess, no matter how far off it is. There are this many gas stations
in my town, I would guess this many towns in my state....
7) Rank the following in order of importance for business success:
Sales, Teamwork, Quality, Integrity, Profitability, Service
There isn't a right or wrong answer to this question, but it will indicate
whether the candidate is aligned with your business culture and also demonstrate
critical thinking skills. Look for a justification for why they answered
the way they did. Does it line up with how you would answer the question?
For example, if they say Profitability is the most important. Why is that
the case? If they say teamwork is least important, you probably want to
dig a little deeper if teamwork is high on your priority list.
A bookkeeper would preferably list profitability lower on the list because
you want to know that they are considering the whole business, not just
their job. You would also want to see integrity high on the list. Do you
really want a bookkeeper who doesn't value integrity?
8) Tell me about a time you didn't agree with something your boss
asked you to do.
The right answer here will depend upon the personality you're seeking.
Do you want a follower who will do what you say? Are you looking for an
advisor to tell you what should be done? Perhaps a mix is the right answer
for you, someone who is confident enough to speak their mind, but is willing
to take direction.
There are tons of potential 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, checkout AIPB's bookkeeper test. Don't forget to check references
and try to talk to a CPA who has had the opportunity to see their work.
Kelly Totten, CrackerJack accounting
consultant and virtual cfo, helps creative business owners interpret
their financial data, make smart money decisions, and meet their financial
goals. Want more financial tips to help you boost your bottom line? Grab
your free ecourse, 5 Proven Strategies to Make More Profit in Your Business
Without Increasing Sales at ===> http://www.MoreProfitSameSales.com
Published - November 2010
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