Bookkeeping may sound like a yawner when compared to the excitement of sales, the creativity of marketing and the thrill of harnessing new technology. But this time-honored activity remains one of the most crucial of all business tasks. Giving it the attention it deserves will contribute to your continued success.

Hiring a professional bookkeeper to handle your books can do far more for your business than simply plug in ledger entries. A bookkeeper who maintains accurate records can:

1. Help you attract investors.
2. Give you a clear picture of your financial situation.
3. Help you compare your budget vs. actual expenditures.
4. Help you avoid cash-flow problems.
5. Facilitate tax preparation and reduce the likelihood of an audit.

Action Steps
The best contacts and resources to help you get it done

Can you do it yourself?

If you're just launching a business or running a part-time venture, you may be able to handle bookkeeping duties yourself. If so, take the task seriously and get some basic training.

I recommend: Sign up for an online training course from Accounting for Non-Accountants and review these bookkeeping tips from OnlineOrganizing.com to avoid common bookkeeping errors.

Know the types of bookkeepers

Compare differences between a full-charge bookkeeper, certified bookkeeper, general bookkeeper, assistant bookkeeper or freelance bookkeeper. Certified bookkeepers have passed a national exam and have at least two years' experience. On the other end of the spectrum, an assistant bookkeeper has up to one year of experience performing basic bookkeeping functions.

I recommend: See bookkeeper job descriptions from the American Institute of Professional Bookkeepers to help decide which one is right for your business.

Evaluate your needs

Determining which tasks you need your bookkeeper to handle will help you narrow the field. Among other responsibilities, a bookkeeper may be charged with recording all transactions in the general ledger, accounts payable, accounts receivable, bill payment, payroll, filing payroll tax returns, tax services and bank reconciliation.

I recommend: Find a list of common bookkeeping duties at CareerPlanner.com.

Hire a professional

Hiring the right bookkeeper can help your business in many ways.

I recommend: The American Institute of Professional Bookkeepers allows you to place job postings or search for a bookkeeper online and offers a free bookkeeper's hiring test that you can download. You can also search for a bookkeeper at BookkeepingHelp.com.

Choose an automated system

No matter which kind of bookkeeping professional you hire, you'll need to set up a bookkeeping system. Most small businesses use accounting software or Web-based programs to facilitate bookkeeping.

I recommend: For accounting software, try QuickBooks or Peachtree. Big E-Z Bookkeeping is a basic program suitable for the smallest of businesses that don't need all the bells and whistles of a full-service accounting program. Try ABC Bookkeeping Corp. for a Web-based bookkeeping system. For a manual system, go to OfficeWorld.com for ledgers and AllBusiness.com for templates of common bookkeeping forms.

Use double-entry bookkeeping

It's generally accepted that a bookkeeper should use the double-entry bookkeeping method. This means that for every transaction listed, there needs to be a credit and a debit listed in order for your ledgers to balance.

I recommend: See how double-entry bookkeeping works at BookkeeperList.com.

Use bookkeeping to help with tax prep

Having a bookkeeper who maintains accurate records can be a real boon at tax time. With proper record-keeping, preparing and filing your taxes will be less of a chore and an audit will be less likely.

I recommend: Review this checklist from BookeeperList.com to make sure you're bookkeeping is in shape to facilitate your taxes.

Avoid bookkeeper fraud

Anytime you place one person in charge of your financial books and check register, there's a potential for fraud. Implement a system of checks and balances to avoid fraud, such as having your bookkeeper write checks but having someone else sign them. Ask for frequent reports and take the time to analyze them.

I recommend: Familiarize yourself with the 13 Red Flags to Bookkeeper Fraud from the Business Resource Network.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you run an e-commerce venture, consider a Web-based accounting system that lets your online transactions flow directly into your accounting system.
• •  When first hiring a bookkeeper, consider hiring an independent contractor on a part-time basis rather than hiring a full-time employee.
• •  Insist that your bookkeeper update your books on a daily basis.