It’s always a little scary when you start working with a new client. You never know what they’re going to bring in and what their books are going to look like. 

That’s not to say that clients you’ve had for years will have books that are in better shape, but at least you know what to expect. It’s the unknown that’s scary. 

Will they walk in with a shoebox full of receipts? It’s surprising how often this happens in a mostly paperless world. 

Will they bring you a combination of personal and business expenses while asking you to figure it out? This scenario requires a lot of guesswork and back and forth. 

Will they have books that look perfect, but have hidden flaws that are harder to spot? These clients can be the trickiest.

There are several tips you can provide to your clients to help them (and therefore yourself) create better books.

1. Create separate business accounts

This one may seem obvious, but it’s often overlooked by newly formed small businesses. Asking clients to set up business accounts that are only used for business income and expenses makes the books much clearer. 

New businesses often think that they can operate out of existing personal accounts since that’s where they have funds available prior to earning business income. Unfortunately, sorting out personal and business expenses is usually a nightmare later.

Having separate business bank accounts and credit cards that are only used for business expenses avoids guessing at the end of the year.

2. If there’s a question about how to record something, ask it now

Maybe the client doesn’t want to bother you with constant questions, but the reality is that most businesses have expenses that are fairly straightforward and repeat regularly. If a client reaches out to you before recording the first payment, they’ll know how to properly classify all future payments. 

Vehicle expenses are often confusing to clients, especially when it comes to car payments.  Lease payments go to the P&L. A purchased vehicle needs to be added to fixed assets, the loan recorded, and the depreciation recorded. 

While a seasoned accountant can easily make these entries, a client can record these items incorrectly, and cleaning up the entries later often takes longer than spending a couple of minutes to set them on the right path at the beginning.

3. Don’t overlook reconciliation

Even if everything is imported directly from the client’s financial institutions, there are sometimes errors in the import or the accounting file. By performing regular reconciliations, you can ensure that the transactions have been entered into the bank correctly and there weren’t any errors — whether the errors were caused by computers or humans.

Having clients that can successfully complete their own reconciliations will mean that you have cleaner books to work with once you receive them.

4. Once a period is closed, do not go back and change it

Clients often think that going back and changing last year’s books makes them more accurate, and they’re not entirely wrong. But when making some very minor adjustments to the books may make sense to them, it means that you’ll be starting from the wrong point when you’re working on the current period.  

Unless there are some significant changes to the income or expenses (which should not have happened if all expenses are being paid through business accounts and the accounts have been reconciled), the prior periods should not be changed without consulting their CPA or bookkeeper. 

Significant changes may require amending tax returns or updating financial statements and should not be undertaken lightly. 

5. Go paperless

All financial institutions provide PDF versions of statements. By asking for PDF statements, your client will not risk lost mail or missing statements. 

The information is available through their online login and can be retrieved for several years. In the event of an audit, having all the statements saved online ensures that your client will have the backup documentation needed to prove their accounting is accurate and complete.

6. Don’t forget about cash payments

Review the proper way for your clients to record cash receipts. All cash should be deposited into the bank account prior to being spent or transferred to the owner(s). 

Failing to record cash payments can land your client in hot water with the IRS or other taxing authorities. If any cash is spent prior to being deposited, receipts and documents should be carefully maintained to verify the necessity and legitimacy of those expenses.

7. Understand your type of business

The rules are different for corporations versus S-corporations or partnerships. Clients need to understand when taking money out of the business is potentially causing a taxable event.  Some clients get confused and believe they are limited to the salary they are taking and never take a distribution.  

Ensuring that your client understands the different types of transfers to the owner(s) increases the likelihood that the transactions will be classified correctly.

8. Pick the right accounting software

If having historical data is important to you, this is very important. Most accounting software options don’t play nicely with each other and it’s often difficult (if not impossible) to switch accounting platforms further down the road. 

Prior to picking software, the client should consider what their current needs are and their budget, but they should also consider their future needs and goals. Most software packages offer various levels of services that can be ratcheted up as their business expands and their reporting needs grow.  

9. Understand the difference between cash and accrual accounting

One is more straightforward while the other might provide better insight. Which one is right for your client will depend on the nature of the business, government regulations, and the size of the business. 

Making sure that the client understands the difference can be helpful when providing guidance on which one is appropriate for the client’s business.

10. Automate processes whenever possible

Most accounting and bookkeeping software allows for various levels of automation. Some will connect directly with the client’s bank to import transactions while some software allows recurring transactions to minimize repetitive tasks. 

While the time saved by each of this small automation may not be much on their own, the time adds up quickly. Automation can also minimize the number of errors by removing the human element from the equations.

11. Have some understanding of how depreciation works

The rules for depreciation (on a tax basis) change annually, so it’s hard to keep up with the current regulations. 

But having clients that have a basic understanding of the definition of a fixed asset and how depreciation affects their bottom line will help them record the transactions correctly and leave you with less to clean up when you’re closing the books.

12. Leave a buffer in the bank

Even the best bookkeepers occasionally make errors in the books or are unaware of certain transactions that have not affected the bank account yet. Clients should keep a buffer in their bank accounts and not rely solely on the accounting software to tell them what their balance is. 

For example, if they wrote a check or signed a new direct deposit agreement, the transaction may not be entered into the software if no one told the bookkeeper about the transaction.

13. Remember tax deadlines

No one enjoys unexpected large expenses. Taxes often fall under the “large” header, but should never be unexpected. 

Ensure that your clients are well-aware of upcoming deadlines and recurring payments that may impact the business cash flow. Tax payments may include personal income taxes, sales tax, property tax, or other business taxes. 

14. Grant accountant access to your accountant

Allowing your accountant or bookkeeper to have access to your accounting software and bank accounts means that they can monitor your books on a regular basis. Most financial institutions allow separate, view-only access for your accountant or bookkeeper. Most accounting software allows you to grant access to your accountant without paying for another user.  

Additionally, this means that when your accountant is ready to work on your books, they don’t have to hunt you down for statements and information. You can spend your time running your business knowing that your books will be in good order.

15. Outsource bookkeeping

If the books have become too unwieldy for your client to maintain, you should suggest that they outsource the bookkeeping. If your firm does not offer bookkeeping services, you should have referrals for another bookkeeping business ready.  

Business owners, especially new business owners have their plates full juggling operations responsibilities, prospecting, and potentially transitioning from being employees to being employers. By finding someone else who can handle the accounting, the client’s time is freed up for them to focus on their own business.

Next steps

While your client is getting their bookkeeping under control, you should consider implementing a workflow designed for accountants and bookkeepers. Your workflow should include regular check-ins so that you are monitoring the state of your client’s books and can step in if needed.  

There are numerous systems for creating workflows — from simple spreadsheets to comprehensive online systems. Jetpack Workflow has 32 free workflow templates to get you started but also has a workflow management system for a fully integrated workflow experience.

Every once in a while, in a corner of my office or in a rarely used file cabinet, I’ll find a pad of ledger paper. Those green and white lined, extra-large sheets of paper have been out of style for decades but served their purpose well for decades before that.

After dusting off the pad and moving it aside, I’ll find the file I was looking for. Organizational systems have come a long way since ledger paper was in vogue, and it’s rare that I need to hunt down a paper file these days. But, while digital files have made life much easier, how do you make sure that your digital files and projects aren’t falling through the cracks?

It takes a solid plan and system to ensure that projects are getting done, clients are happy, and I’m working as efficiently as possible. This is why implementing a bookkeeping workflow for my team has allowed me to monitor projects, allocate work to my team, and free up time I would have spent tracking down files.

What is a Bookkeeping Workflow?

A bookkeeping workflow is a set of predefined tasks for your teams related to projects. Each project is broken up into various steps that can be assigned to a team member or multiple team members. Depending on which system is used, team members are automatically notified that they have been assigned a task or have an upcoming deadline.

Workflows allow managers to see who is currently working on a project, which steps are involved in the project, how the project is progressing, how much time has been spent on the project, and when the project is projected to be complete.

A bookkeeping workflow often includes options for repetitive tasks such as monthly or quarterly bookkeeping that are recreated automatically once the prior month is complete.

Even though a bookkeeping or accounting project will start off with a standard workflow, the workflow for each project can be tailored based on the client’s specific needs. The workflows can be detailed or broad depending on the complexity of the project and the level of detail that the manager or team member prefers.

There are various options for workflows from simple Excel spreadsheets to fully integrated workflow systems such as Jetpack Workflow. Each system has different strengths and weaknesses. The right workflow for your team will depend on the number of projects, the size of the projects, and the number of team members involved.

The key to a successful workflow is making sure that the entire team is on board with using the workflow system and that the system isn’t so complex that it falls out of favor after awhile.

Why You Need a Bookkeeping Workflow

Most of us became bookkeepers and accountants because we love the work. We enjoy ensuring that the bank is reconciled (who hasn’t delighted in reaching $0 variance when completing a tough reconciliation?). We are happy to see that the payments between accounts are recorded correctly. And, at the end of the day, we like presenting financial statements that have been carefully prepared.

It’s the work we enjoy. The planning — not as much.

As accountants, we are constantly juggling multiple projects, client requests, and deadlines. Though we tend to thrive under pressure, having a system is key to avoiding dropping anything.

To-do lists are great and have their place, but in a field like accounting where repetition and regular tasks are key, it’s important to ensure that you’re not overlooking a project that the client is counting on you to finish.

Because so much accounting work is done online whether through importing statements into QuickBooks online or logging into a client’s bank account to retrieve a statement, there aren’t always automatic reminders that a task is due.

This is why a workflow is crucial. Having automatic reminders set for upcoming tasks allows you to free up your mental capacity for the work itself.

If you oversee a team of accountants and bookkeepers, having a workflow system means that you can monitor project progress online without having to task your team members for updates. Fewer interruptions lead to more efficient work and add to your bottom line.

3 Common Workflow Buckets During the Bookkeeping Workflow

Prior to starting any project, it’s important to determine which steps are involved and which team members will be participating in the project. This is where a workflow comes in handy and can help you keep organized as well as eliminate inefficiencies.

There are three main buckets of tasks that occur in each bookkeeping project (though each accounting team defines their buckets a little differently.)

Bucket 1: Request and Receive

For anyone who has taken an accounting class, you know that the biggest difference between the textbook cases and the actual accounting experience is that in class, you’re given all the necessary information upfront.

This first bucket consists of determining which pieces of information or documents are needed, requesting them from the client (or from several institutions), and reviewing all documentation, transactions, and invoices completely. Document collection often takes several requests and follow-ups before it’s complete.

Bucket 2: Process and Fulfill

Once all the documentation has been received, it’s time to start processing the accounting information. This part of the process involves data entry, reconciliation, and numerous journal entries.

It’s common to find that there is additional information needed that wasn’t apparent at the start of the projects. You may spot payments on a loan and need to go back and ask for loan statements, or the client purchased a new fixed asset that requires additional information to be properly categorized. There are any number of reasons that you end up circling back to the client before finishing the accounting work on the project.

At the end of this stage, the project is sent to the client for review and feedback.

Bucket 3: File and Follow-up

Once all the information has been processed and you’ve received all the necessary clarification from the client, you can complete your final review to ensure the project is complete to your standards. Then the project is filed away (digitally or on paper) along with backup documentation.

You now have the option to schedule the next iteration of the project if it’s a recurring task or to reach out to your client to see if they need other services.

Resources to Help You Design a Workflow

There are numerous options for building a bookkeeping workflow from scratch. You can set up a project list in Google Sheets or Excel. You could use a task list.

But Jetpack Workflow has done a lot of the heavy lifting for you and built a workflow solution designed for the accounting industry. Depending on whether you need templates to get you started or a software solution to oversee a dispersed team, Jetpack can get you started.

Free Workflow Templates

Want to skip making your own workflows for your team? Download our 32 free workflow templates today, and organize your bookkeeping workflow templates all in one place, without starting from scratch.

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Workflow Management Software

Though templates are a great start to getting organized, for teams that need a more robust solution, new technology like a workflow management software is a great tool.

Managers love that they can see real-time updates and progress reports for multiple projects and distribute work evenly to their teams. Team members love that they know what the expectations are for projects and can visually prioritize their most important tasks.

Jetpack Workflow offers a free 14-day trial because they’re confident that within two weeks you’ll be convinced, and you’ll see how simple it is to streamline your practice management.

“We can’t live without it. It tracks everything we need in a way that nothing ever slips by… I am 100% positive Jetpack has helped grow my business (25% growth last year and looking even better this year).” – Wendy Wray