- Good bookkeeping shows up as reconciled accounts, reports on a predictable schedule and few year-end corrections from your CPA.
- The fastest check: the bank balance on your balance sheet should match your bank statement for the same date.
- Piles of uncategorized transactions, old unreconciled items and silence when you ask questions are warning signs.
- If you find problems, ask first, then decide between a fix, a cleanup or a change of bookkeeper.
How do I know if my current bookkeeper is doing a good job?
Your bookkeeper is doing a good job if every bank and card account is reconciled each month, financial statements arrive on a predictable schedule, the balances match your statements, few transactions sit in uncategorized accounts, and your CPA makes few corrections at year end. SmartGrowth Bookkeeping recommends a short monthly self-check in QuickBooks or Xero, which any owner can run without accounting training.
Good bookkeeping is mostly invisible. You notice it when the reports are there when you need them, the numbers make sense, and tax season is uneventful. You notice bad bookkeeping when a lender, a tax notice or your CPA finds what you did not.
- Timeliness. Books are current through last month, not last quarter.
- Accuracy. Bank, card and loan balances match the statements.
- Completeness. Every account the business uses is in the books.
- Clarity. You receive reports you can read, and your questions get clear answers.
- Clean handoffs. Your CPA receives books that need little rework.
Owner access to your own file is what makes these checks possible. If you cannot log in to your books, that is the first thing to fix.
A short review you can do yourself
Pick a recent month that should be finished, and work through these checks with last month's bank and credit card statements beside you:
- Compare the bank balance. Run a balance sheet as of the last day of the month. The cash balance for each account should match the statement, or differ only by checks and deposits still in transit.
- Open the reconciliation reports. QuickBooks and Xero both keep a record of each reconciliation. Every account should show a completed reconciliation for every month.
- Look for holding accounts. Check balances in accounts like "Uncategorized Income," "Uncategorized Expense," "Ask My Accountant" or "Suspense." A small amount in the current month is normal. Large or old balances are not.
- Scan the profit and loss. Compare the last several months side by side. Big swings in a category with no business reason often mean a miscategorization.
- Check what customers owe. Run the accounts receivable aging. Very old invoices may already be paid and never matched, or truly uncollected.
- Check loans and credit cards. Balances on the balance sheet should match the lender and card statements.
- Compare payroll. Wages and payroll taxes in the books should agree with your payroll provider's reports.
- Check sales tax. If you collect Texas sales tax, the amount owed in the books should line up with what you file and pay.
Timing differences, such as a check written on the last day of the month, are normal and show up on the reconciliation report. What matters is that each difference is explained.
Red flags
- Reports arrive late, irregularly or only when you ask for them.
- Accounts have not been reconciled for months, or reconciliations were forced to balance with adjustments.
- Large balances in uncategorized or suspense accounts that never seem to clear.
- Your CPA makes many adjusting entries each year, or charges for cleanup before preparing the return.
- Owner draws recorded as expenses, or loan payments recorded entirely as expenses.
- Questions go unanswered, or answers are vague.
- You do not have owner access to your own accounting file.
Green flags
- You receive the same set of financial statements every month, on a schedule you can plan around.
- Your bookkeeper sends a short list of questions about unclear transactions instead of guessing.
- Notes explain unusual items, such as a large one-time purchase or a refund.
- Your CPA's year-end questions are few and get answered directly by the bookkeeper.
- When something changes in your business, the bookkeeper adjusts the setup without being asked twice.
If you are not sure which reports you should be getting, see the list of monthly financial reports a small business should expect.
Questions to ask your bookkeeper directly
Sometimes the quickest check is simply to ask. A bookkeeper who is on top of your books can answer these without hesitation:
- Through which month is every account reconciled right now?
- What is sitting in uncategorized or suspense accounts, and why?
- Which transactions are you waiting on me to explain?
- Did anything unusual happen in the books this month?
- What did my CPA change at the end of last year, and has it been recorded?
- Are there any accounts the business uses that are not connected to the books?
Clear, specific answers are a good sign. Vague answers, or answers that change each time you ask, are worth following up on.
What to do if you find problems
Start with a conversation. Share what you found and ask for an explanation. Sometimes there is a good reason, such as a bank feed that disconnected or documents you have not sent yet.
If the explanation does not hold up, you have three options:
| Option | When it makes sense |
|---|---|
| Ask your current bookkeeper to fix it | The problems are recent and limited, and communication is otherwise good |
| Bring in a cleanup | Errors go back months or years, or affect prior tax returns |
| Change bookkeepers | Problems keep coming back, or you cannot get straight answers |
Errors in prior years are usually fixable. A bookkeeping cleanup corrects the history, and your CPA decides whether any filed return needs attention.
Changing bookkeepers without losing anything
Because your QuickBooks or Xero file is in your name, changing bookkeepers is mostly an access change. You remove the old bookkeeper's user, invite the new one, and make sure you have any working papers, receipts and notes they kept outside the software.
The new bookkeeper usually reviews the most recent reconciliations first to find a reliable starting point. The how it works page explains what that handover looks like at SmartGrowth.
How SmartGrowth can help
If your review turned up more questions than answers, SmartGrowth Bookkeeping can talk it through on a free call. Trained bookkeepers work in QuickBooks and Xero, reconcile every account each month and deliver a profit and loss, balance sheet and cash flow statement you can read.
You keep ownership of the file throughout, so you can run this same self-check on SmartGrowth's work any time. Here is what ongoing monthly bookkeeping includes.
More questions
How often should I review my bookkeeper's work?
A quick monthly look at the reports and a deeper review once a quarter suits most small businesses. The deeper review is when you open the reconciliation reports and the aging reports, not just the profit and loss.
Is it rude to question my bookkeeper?
No. A good bookkeeper welcomes questions because they help catch errors and show that you read the reports. Asking why a number changed is part of a healthy working relationship.
Can my CPA tell me if my books are in good shape?
Yes. Your CPA sees the books at year end and can tell you how much they needed to adjust. Ask directly whether the books were usable as received and what should improve next year.
What if I do not have access to my own accounting file?
Ask for owner access right away. Your business should own its QuickBooks or Xero subscription, with the bookkeeper as an invited user. If the file sits in someone else's account, plan a transfer before anything else.
My books look fine but my CPA still charges for cleanup. Why?
Common reasons include unreconciled accounts, owner draws recorded as expenses, missing equipment or loan details, and payroll that does not match the provider's reports. Ask your CPA for a list of what they had to fix, and share it with your bookkeeper.