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Freelance Bookkeeper Questions - Insurance and Liability  


 Natasha Parry
(@Natasha Parry)
Joined: 2 months ago
Posts: 1
Topic starter  

Hi- I am starting a new bookkeeping business and wondering about a few things in terms of my liability. What are the best practices for depositing A/R checks  into a client's bank account on behalf of the client and paying vendor bills on behalf of a client. These areas seem to have considerable liability, but I have a client requesting that I do both. I also wonder if I were to agree to it, if I would need to have some legal agreements in place, or if it would affect my insurance in any way. Any experience or recommendations would be greatly appreciated.


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 Dennis+Fazio
(@Dennis Fazio)
Joined: 7 months ago
Posts: 10
Topic starter  

Paying bills isn't too hard. If your bookkeeping software allows storing invoices and other documents in the transactions and has an online bill pay service, this makes it easy. All payments must be authorized by someone with authority to do so. This can be done with an email message that can be stored in the transaction. You can then pay the bills from the bookkeeping program via ACH, Credit Card, or mailed check. The written authorization provides you protection for all payments. The client can be provided with a monthly transaction report for review.  If you do physical checks, they'd have to be sent to the client for signature.

Deposits are trickier since this involves handling checks or cash. If another person maintains a separate receipts log of all incoming cash and checks, this would provide you with independent documentation. Someone in authority at the client can perform monthly audits to match the receipt log to the deposit record in the books.

If you have it arranged so that you are just a step in a process and not a decision maker, and that it is well understood that the client is responsible for providing accurate authorization of all transactions, full documentation, and frequent review, your liability is reduced.

You'd have to determine whether you need errors and omissions and liability insurance, which can be pricey depending on your business volume, by discussing with a knowledgeable insurance agent.


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