What is the difference between a bookkeeper and an accountant?

The basic differences between a bookkeeper and an accountant are skill sets and rates. A bookkeeper charges less, but may have limited skills. Many bookkeepers have taken only high school courses and have held data entry positions. An accountant usually has a 4 year degree and, if certified, must participate in continuing education. An accountant's rates, however, can be triple that of a bookkeeper.

Take advantage of the rate differential by using a bookkeeper with a higher skill set to maintain your financial records. This will minimize the amount of time and money you spend on a tax accountant. Look for a bookkeeper that has a college degree in accounting and related experience, as well as pertinent certifications. Ask for the resume. When you talk to references, ask what the accountant has said about the bookkeeper.

If you use QuickBooks, hire a bookkeeper that is a Certified QuickBooks ProAdvisor. At a minimum, you know that person has passed the tests for particular versions of QuickBooks. Even better, hire a ProAdvisor that has passed the Advanced Certification test, which includes questions about accounting and payroll.

If you are not sure how competent your current bookkeeper is, ask your accountant. You can also find a bookkeeper that offers a free initial consultation to review your books and give an opinion. Having a good bookkeeper saves money in the long term by ensuring that your financial records are in order.

The Value of Non Billable Hours

I have spent most of today on non-billable work. Now it could be viewed as wasted time since I didn't get paid for anything I did. However, focused non-billable work can reap future earnings. All small business owners must perform some administrative work, such as bookkeeping, making appointments, ordering materials. These tasks are more apt to save future time rather than earn future dollars, so it's important to complete them as efficiently as possible.

My time today was spent in marketing tasks. I created a Holiday Card to send to my current clients (I prefer to put my own touch on such contacts rather than purchasing stock cards); I created a Marketing letter to send to potential customers; I reviewed my Facebook advertising performance; I'm updating my blog; I answered an e-mail from an unknown contact that may turn into a potential referral source. This type of non-billable work is crucial. You must always keep in contact with current and potential customers, through varied sources.

My next focus for non-billable time is education. I will be taking the certification for the 2011 edition of QuickBooks and reading some networking materials. The certification will provide a direct result of allowing me to become an Advanced Certified QuickBooks ProAdvisor. Continual learning of industry specific and general business subjects can only make your business stronger.

And yes, I will also be putting in some billable hours. Gotta keep the money coming in!

Is it a vendor or an employee?

As you are reviewing your vendors for 1099 data, review each subcontractor closely to ensure you are classifying them correctly. There is much scrutiny from both the Federal and State level on the difference between a subcontractor and an employee.

Here is a good resource from the IRS: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

And from the State of Maine:
http://www.maine.gov/labor/misclass/employer_brochure_single.pdf

The biggest "tell" for an independent contractor is if this person does the same type of work for multiple businesses. I, as an accountant/bookkeeper, have multiple clients and am correctly classified as an independent contractor. However, if I had only one or two clients, I would have more difficulty proving this requirement.

If the situation looks gray, err on the side of employment. It may cost you more in employment taxes, but may cost you much less in the long run.

Year End is getting close!

Are you ready for the end of the year tasks? A quick checklist:

Reconcile all bank statements, including credit card statements. This will help ensure that all expense and revenue is recorded.

Review your vendors. Have you paid anyone for a service? Make sure you have their Tax ID for preparing the 1099.

Do you have employees? Even if you use a payroll service, it is important to review the W-2's and make sure they reconcile to the quarterly 941's.

Keep all tax related documents for your accountant. Start a file specifically for these items.

SBA ARC Loan lenders

Unfortunately, the list of lenders participating in the SBA ARC loan slim. My best recommendation at this point for any business looking for financing is to contact Coastal Enterprises (www.ceimaine.org) to explore the various options.

Important News for Small Business

Finally, some "bail-out" for small business.

The Small Business Administration has launched a new, interest-free loan program, as part of the Recovery Act. The America's Recovery Capital, ARC, loans will be available June 15. This program is incredible and every small business should utilize it. I think this is so important that I've committed to telling everyone, instead of my usual elevator speech about my business.

If your business has:

1. ANY debt
2. Been in business for at least two years
3. Has shown a profit for at least one year in the past three years

You can get up to $35,000 that can be used to pay off lines of credit, credit cards, notes payable to others, mortgages, capital leases.

This program will help your cash flow by:

1. Upfront money to pay down debt
2. NO Interest
3. No payments for 12 months
4. A repayment schedule of 5 years

This program is so new that most banks aren't aware of it yet. Banks should be receiving information by June 8. To see if your bank is an approved SBA lender, go to www.sba.gov and click on Local Resources. Choose your area and that page should have a lender's list. If your bank is on the list call your banker NOW.

I can help any business in Southern Maine pull together the documents needed to accompany the applications. (There's my plug for me!!)

Introduction to The Back Office Expert.

So who is Stacy Ayotte, The Back Office Expert, and why should anyone care?

I am a seasoned Finance professional who has worked for over 20 years as Chief Financial Officer and Accounting Manager for medium and large companies. I opened my own accounting practice in order to help small business manage their financial data. Now I've decided to really spread the wealth and offer free advice to anyone who wants to listen.

In future posts, I will discuss:

Ways to manage your financial and accounting data

Why you should manage your financial data

How your small (or not so small) business can view your data to get insightful, important information on how your company operates and profits (or not)

What you need to consider when thinking about starting a small business

What you need to consider when hiring employees

and even more......