Good bookkeepers can seem like wizards or sorcerers. They take chaos and conjure a complete set of books, seemingly out of thin air. And on many occasions, they can be as useful as any master of the mystical arts.
But bookkeepers shouldn’t be imbued with omnipotence because there are definitely things they cannot, either for professional or practical reasons, do for you.
Interpret Your Books
The first thing that a lot of bookkeepers are asked to do is to interpret a client’s books. You might be tempted to ask your bookkeeper questions like:
Will we be profitable next year?
How fast is our business growing?
Should I take out extra malpractice insurance?
But the answers to these questions all require the interpretation of financial data. And that’s what an accountant is for. Accountants train long and hard to be able to intelligently answer these questions for you, and it’s unfair to expect your bookkeeper to be able to step outside their wheelhouse.
Of course, bookkeepers have a wealth of knowledge about your firm and that knowledge can definitely be put to good use. Just don’t expect them to do the job of an accountant.
“Cook” Your Books
Not a lot of bookkeepers are asked to do this but it bears mentioning anyway. No ethical bookkeeper will assist you in “cooking the books.” Normally, this consists of keeping one set of books for your own use and a second set of (falsified) books for other people to see.
The information that bookkeepers are given is what will determine what your books look like. Good bookkeepers will not misclassify expenses, journal liabilities as assets, or do anything else that doesn’t accurately reflect the state of your finances.
“Fix” Your Books
For some people, getting a good look at their books can come as a bit of a shock. The information found within might not be as positive as they might like. This is not your bookkeeper’s fault. Nor is it your accountant’s.
Further, your bookkeeper cannot “fix” a bad financial situation. If you’re spending more money than you’re taking in, or encounter a severe cash flow problem, there’s likely nothing that the bookkeeper can do about that. They can’t, “move some money around.”
Well-kept books are like a mirror. They reflect the financial reality of your firm. If you’re unhappy with the reflection, you better do something about your reality.
Final Thoughts
On second thought, and contrary to what we said at the beginning of this article, bookkeepers are wizards. They can reveal tremendously valuable truths about the strength of your firm with just some basic financial information. But, like Gandalf, there are limits to what they can do. They can’t interpret your finances. They can’t create a new set of books to trick other people. And they can’t conjure up an entirely new financial reality for you to enjoy. If you accept those basic limitations, you’ll likely remain satisfied with what a good bookkeeper can do for you.