Tax season has a way of exposing problems that may have gone unnoticed during the rest of the year.
A reconciliation that was never completed correctly. Payroll liabilities that don't match. Transactions posted to the wrong accounts. These may seem like small bookkeeping mistakes, but when your accounting firm is preparing financials and meeting client deadlines, they can become much bigger problems.
I've seen how frustrating it can be when a firm hires a bookkeeper expecting them to handle certain responsibilities, only to discover they need more training or supervision than anticipated.
Sometimes they have plenty of experience, just not in the areas your firm needs them to be proficient in.
And tax season is not when you want to discover that difference.
Why These Problems Become More Costly During Tax Season
During a typical month, your team may have more flexibility to review someone's work, answer questions, or correct mistakes before they affect a deadline.
Tax season changes that.
Your accountants are preparing returns, requesting information from clients, reviewing financial statements, and trying to keep everything moving. The last thing they need is additional hours correcting bookkeeping errors that should have been caught earlier.
When a bookkeeper isn't prepared for the responsibilities of their position, someone else on your team has to step in.
That might mean a senior accountant fixing reconciliations instead of preparing returns. It could mean a manager reviewing transactions that should have been recorded correctly the first time.
And sometimes, it means discovering that the financial information you've been relying on isn't as accurate as you thought.
This is why I believe accounting firms need to be thoughtful about what they expect from their bookkeepers before tax season begins.
I've talked before about how hiring under pressure can lead firms to overlook important questions about a candidate's abilities. If you've ever needed to fill a position quickly, I wrote more about that in Why the "We Need Someone Now" Hire Can Cost Your Firm More Later.
It's not enough to have someone available to do the work. You need someone who can do it correctly, at the level your firm expects.
Four Areas That Deserve a Closer Look
After more than 30 years working in bookkeeping, I've learned that some weaknesses are easier to overlook than others.
A candidate may be comfortable navigating QuickBooks Online and familiar with everyday transactions. But that doesn't necessarily mean they understand the accounting behind those transactions or recognize when something is wrong.
Here are four areas I think accounting firms should pay close attention to.
1. Bank Reconciliations and Identifying Errors
Most bookkeepers will tell you they know how to reconcile a bank account, but there's a difference between getting a reconciliation to balance and understanding whether the transactions have been recorded correctly.
A bookkeeper might identify a missing transaction but overlook an expense posted to the wrong account. They may correct an amount without recognizing another problem with the original entry.
During tax season, those mistakes can affect the accuracy of the financial statements your accountants are using.
I want to know whether someone can investigate discrepancies and recognize when an entry needs to be corrected, not just get the ending balance to match.
2. Payroll Entries and Liabilities
Payroll is one of the areas where I frequently see knowledge gaps.
Someone may have experience processing payroll or reviewing reports without knowing how to record the accounting entries properly.
Can they distinguish employee withholdings from employer payroll taxes? Do they understand how payroll liabilities should be recorded? Can they identify incorrectly categorized wages or taxes?
These details matter when your firm is reviewing year-end payroll balances.
A bookkeeper doesn't need to know everything about payroll to be a good hire. But if payroll accounting is part of the position, you need to know they can handle it.
3. Expense Categorization and Account Classifications
Not every transaction belongs in an expense account.
A bookkeeper needs to understand the difference between assets, liabilities, equity, income, and expenses, and how those classifications affect financial reporting.
For example, a loan principal payment shouldn't be treated as an ordinary business expense. An owner's personal withdrawal shouldn't be categorized as an operating expense.
These are fundamental accounting concepts, but knowing the definitions and applying them correctly are two different things.
When transactions are misclassified throughout the year, someone eventually has to correct them. That cleanup becomes particularly frustrating when your accountants are already working under tax season deadlines.
4. Adjusting Entries and Month-End Review
This is where the distinction between junior and senior bookkeeping responsibilities becomes especially important.
A junior bookkeeper may be responsible for entering transactions, managing bank feeds, processing bills and payments, and completing basic reconciliations.
A senior bookkeeper should generally be able to take that work further.
Depending on the position, they may need to identify complex posting errors, reconcile loans, record accruals, account for prepaid expenses, and prepare adjusting journal entries.
If you're hiring someone to independently manage month-end closing responsibilities, you need to know whether they can handle that level of work.
Someone can be a capable junior bookkeeper and still need experience before taking on a senior-level role.
That's not necessarily a problem. The problem comes when your expectations and their abilities don't match.
How to Find Out What a Candidate Can Actually Do
One of the most important things you can do before tax season is get specific about the work your bookkeeper will be expected to handle.
Are they primarily entering transactions and reconciling accounts? Or will they be reviewing other people's work, making adjusting entries, and ensuring financial statements are accurate?
Those responsibilities require different levels of experience.
Once you know what the position involves, take a closer look at how you're evaluating candidates.
Ask questions that require candidates to explain their process.
Instead of asking whether someone knows how to reconcile an account, ask what they would do if a reconciliation didn't balance.
If payroll is part of the position, ask how they would record payroll taxes and liabilities.
If you're hiring a senior bookkeeper, ask how they approach reviewing a set of books before month-end close.
Their answers can tell you a great deal about their knowledge and experience.
But I also believe it's important to see someone perform the actual work.
A practical assessment can reveal things that may not come up during an interview, including how someone approaches unfamiliar transactions, recognizes errors, and follows instructions.
That's why I developed BookkeepingIQ's live-proctored bookkeeping assessments. I wanted employers to see a candidate's abilities in action before making a hiring decision, rather than discovering their limitations once they're responsible for client work.
You may discover that a candidate is excellent at navigating QuickBooks but needs training in accounting fundamentals. Or that someone understands accounting but struggles to complete tasks efficiently.
Both findings are valuable when deciding whether that person is the right fit for your firm.
The Best Time to Address These Issues Is Before Tax Season
November is a good time to review your bookkeeping team and the responsibilities they'll be handling over the next several months.
If you're planning to hire, make sure your evaluation process reflects the actual work the position requires.
If you've recently hired someone, consider whether they need additional training before workloads increase.
And if you already have a team in place, think about where your senior accountants are spending time correcting work that should be handled at the Junior bookkeeping level.
The goal isn't to find someone who knows absolutely everything. It's to understand what they can do independently, where they need support, and whether they're prepared for the responsibilities you're giving them.
I've always believed that understanding someone's strengths and weaknesses ahead of time gives you a much better opportunity to set them up for success.
Tax season will bring enough unexpected challenges. Your bookkeeper's ability to do the job shouldn't be one of them.
If you're preparing your team for tax season or have questions about evaluating bookkeepers, I'd love to hear from you. Connect with me on LinkedIn and let's talk about what you're seeing in your own hiring process.