Regardless of whether your business needs a single bookkeeper or a team, take care to ensure that you avoid these five pitfalls to avoid an expensive and frustrating change down the road.
- Not owning your accounting software license
Don’t let your accounting provider buy software for you as you may not be able to easily get your account or your data if you decide to change service providers at a later time. Platforms that offer bundled proprietary software and accounting services pose the same problem. Own your account, control your data.
- Choosing an uncommon software solution
Choose an ubiquitous solution, such as QuickBooks Online. Avoid relatively unknown or narrowly distributed systems as, again, you may incur significant switching costs later.
- Offshoring your team
Accounting, in growing businesses, is about problem solving, not data entry. Unless your company is a solidly middle-market or larger value company, your accounting team should understand your cultural context and easily accomodate your time zone. Ensure your provider is onshore and has the necessary expertise to efficiently conduct the accounting for your business.
- Hiring outside your management expertise
If you don’t have the accounting or finance background to answer questions your staff accountant or bookkeeper brings to you, then you’re incurring management debt that can be avoided by hiring a fractional team that includes controller oversight.
- Creating a single point of failure
The Association of Certified Fraud Examiners has noted that a lack of internal controls, such as having a single bookkeeper making payments and reconciling accounts, contributes to a third of all recent fraud cases. With many types of fraud up to 4x more likely to happen in small companies, avoid becoming a statistic by hiring a fractional accounting team that understands and implements appropriate controls for your business.
Setting up your QBO file properly early on warrants the same consideration as constructing a foundation to support the building on top of it. Errors at this stage can be costly to fix later on and can undermine the growth of your company. Companies can avoid this management debt by getting the appropriate guidance for this foundational work as early as possible.