Bookkeeping Checklist: What questions we ask when reviewing your books

Whenever we take on the bookkeeping function for a new company by way of our Core Finance offering, we dig into current practices to determine what needs fixing vs. maintenance. We call this review phase “looking under the hood” and it’s part of our discovery process with every new client.

We use the process to determine whether or not a client would be a good fit for us. We like working with tech-oriented companies, mission-driven non-profits, and professional service firms. However, we’ll occasionally be blown away by a visionary leader whose business is outside those areas, but who we really want to work with.

Here’s what we’re looking for when we go “under the hood”: 

1. Is there a Bookkeeping System in place?

We start by seeing what sort of accounting system the company is currently using. Most companies use cloud-based systems like Xero, Feshbooks, Sage, QuickBooks for their bookkeeping. Some companies that are just starting out use spreadsheets. If a company is using QuickBooks, we are looking to determine the version. Many orgs use QB Desktop or Online, so we’ll note what tier (plan) they are on and whether they are on a cash or accrual basis. We will also take a look at their chart of accounts to make sure nothing seems strange or out of place. If a non-bookkeeper or very junior bookkeeper has been doing the company’s books, we’ll make sure that there’s not overuse or misuse of various accounts.

2. Are Ancillary Systems being used?

Next, we check to see what sort of ancillary systems, software, or apps the company is using in addition to their bookkeeping and accounting system. Some of these systems might be “plugged into” their existing payroll or bookkeeping system, and others might be used outside of payroll and bookkeeping. Systems could include expense management, time tracking, payroll, payment or bill pay, equity management, sales and use tax, sales compensation, and the like.

3. What Types of Transactions are logged?

We will then do a deeper dive on the company’s transactions. We are looking to understand the volume of the transactions, the complexity of the transactions, and whether the bulk of the transactions are recurring or one-off. We’re also looking to see how transactions are being classified and categorized. Lastly, we’ll see if there are any special categorization needs like location, department, restricted vs. unrestricted funds, etc. This consists of the bulk of the review, as it gives us insight into how much bookkeeping the client will need on a monthly basis.

4. What Banking and Account Setups are in place?

Next on the bookkeeping checklist, we always see what sort of banking setup and payment systems the client is using. Different banks have different types of rules, access, procedures, notifications, system syncing and reporting. We’re also looking at how many accounts a company has and is using (savings, checking, credit card, PayPal, Stripe, etc.). More accounts leads to more complexity, and we tend to think that some banks are better than others. Ask us and we’ll be honest.

5. What are the Reporting Requirements

Often times we will check to see what reporting the client wants or needs. If they’re not sure, we’ll help them figure this out. We’ll try to see if there are existing reports that need to be changed or adjusted, if any new reports need to be created, or if we need to modify the frequency of reports. While our Core Finance offering provides for monthly financial statements, some clients may need additional reporting to satisfy third parties like funders, donors, lenders, investors, or boards.

6. Additional Finance & Accounting Items

We’ll often dive a little bit of a deeper dive on the accounting and finance side as well. This might include understanding who the company is using to file their taxes, whether there’s anything to note around seasonality (eg. does the company have periods where revenue and expenses are higher or lower than usual) and whether the company is on a fiscal year that differs from the calendar year. We’ll also try and understand entity formation, location, and expansion needs during this time.

7. Review of Historical Bookkeeping

Finally, we’ll do a basic review of a company’s historical bookkeeping to look for accuracy and completeness. We may also check to see if taxes have been filed, payments remitted, proper documentation is in place, etc. We’ll also want to know who the organization has been using to file their taxes, whether they’ve ever gotten a knock on the door from the IRS or a state revenue agency, and/or whether there are any other oddball tax or accounting issues or scenarios.

If you are in need of upping your bookkeeping game and want to figure out how you can integrate your finance and accounting function with your HR operations (but you’re a small business and don’t have a ton of time to do this) reach out to Suitless to see how we can help you.

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