Size doesn’t matter. No matter the size of your business, you should keep accurate financial records to track its long-term success. And, hey, you can’t run away from it.
Unless your business is already in the financial industry (where dealing with money is a core part of the job), most small business owners admit that they don’t particularly enjoy handling the financial aspects of their business.
SCORE did research and discovered that 40% of small business owners consider bookkeeping the worst part of running a business. On average, they spend over 80 hours a year just managing their finances.
So, what is the right decision for you? Without doubt, the right decision is to hire a bookkeeper who will be working from your business premises. Isn’t it?
So how will you feel if I tell you that there is a better option? Happy right? Technology has a more efficient solution for bookkeeping through outsourcing.
If you are new to outsourcing bookkeeping services, you don’t need to be scared. I’m going to break down the benefits of outsourcing bookkeeping services and how to find the best provider.
Let’s get started with the meaning of outsourced bookkeeping before running you through the list of reasons to outsource your bookkeeping.
What is Outsourced Bookkeeping Services?
Outsourced bookkeeping involves hiring an external firm or individual bookkeeper to handle a company’s bookkeeping tasks.
Outsourcing bookkeeping services is common among small business owners who can’t afford to hire a full-time accountant to handle their books.
The bookkeeping tasks that businesses can outsource include managing accounts payable and receivable, reconciling bank statements, preparing financial reports, and maintaining general ledgers.
There are several experienced bookkeeping firms in the United States that you can hire either for a one-time project or for continuous services.
All you should do is ensure that you are hiring a firm that is affordable and can handle your needs.
When to Outsource Your Bookkeeping Services
When do you know that it’s time to outsource bookkeeping services? At what point? Keep reading to learn more.
When you first started your business, you probably thought it would be easy to keep track of all your expenses as well as your income. However, as your business has grown, so have your headaches. You think it’s funny right?
Since you are a busy entrepreneur, salesperson, and manager, you wear many hats, and the bookkeeper was never supposed to be one of them.
Sure, it was fun organizing your papers, receipts, and sales slips in a shoe box in the beginning, but that box can’t begin to contain what you have now. It’s an uncontrollable mess.
Wouldn’t it be great if you could just eliminate that entire issue entirely? Well, you can. It’s time to hand over your records to a friend. A competent friend who understands what your business needs.
An understanding, experienced bookkeeping firm dedicated to your business that will maintain your files for you.
Here are key indicators for when it might be the right time:
- Lack of Expertise in Bookkeeping and Accounting: When you lack specialized knowledge in financial management.
- Increasing Complexity of Financial Transactions: You can decide to outsource as your business transactions grow more complex.
- Insufficient Time to Manage Bookkeeping Internally: Another reason is when bookkeeping tasks are consuming too much of your time.
- Desire to Focus on Core Business Activities: To concentrate more on core operations and business growth.
- High Cost of Maintaining an In-House Team: You can consider outsourcing when the cost of hiring and training an in-house team becomes prohibitive.
- Need for Advanced Financial Reporting and Analysis: For access to sophisticated financial reports and insights.
- Challenges in Keeping Up with Tax Regulations: Lastly, you can outsource bookkeeping services When staying compliant with tax laws becomes challenging.
8 Benefits of Outsourcing Bookkeeping Services
One general benefit of outsourcing is that it should take less time than doing it yourself. Here are seven important benefits of outsourcing bookkeeping services:
1. Outsourcing reduces overhead costs
Having an in-house bookkeeping unit is an expensive option. You will have to spend money on salaries, bonuses, benefits, and rehiring and retraining new staff when the demand for bookkeeping is erratic.
That’s not all. In-house bookkeeping also incurs expenses like office space, which includes computer systems, desks, chairs, and general office equipment.
Are you also paying for recruiting and training staff, and after spending thousands of dollars, you realize that they might not be able to perform their role effectively and you have to start again?
When you outsource bookkeeping services, expenses are reduced to a fraction. Guess what? You are the big winner because you have one large payment at the end of the month. Instead of several smaller payments throughout it.
2. Access to experienced bookkeepers
When you outsource your bookkeeping, you’re also getting access to an experienced bookkeeping team.
A full bookkeeping team often includes a group of professionals who are working with technology. They can handle complex business transactions.
There will be more experience in a bookkeeping team than hiring an entire accounting staff shared among clients.
3. Increased focus on core business activities
There are chances that you will miss or waste a lot of time on some important business components when you always invest most of your time in one aspect of your business.
This is why more and more businesses use online bookkeeping services: it will give them more time to focus on business decisions that will lead to growth and success.
With online bookkeeper services, you will also find that your corporate documents are well-accounted for. So, you have to do everything possible to hire an online bookkeeper who does quality work.
After all, it’s more important than anything else.
4. Scalability and flexibility
The scale of an in-house headcount often drops significantly when a business outsources bookkeeping.
The management emphasis switches to more pressing concerns rather than bookkeeping. Businesses will benefit more when they focus on control operations planning, communication, logistics, and distribution interests.
5. It leads to improved accuracy and compliance
Most bookkeeping tasks are repetitive and consume lots of time. It’s only human for the data entry part of the task to become a little mundane after a while.
When there is a lack of engagement with the task, errors can begin to build up. This accumulation of errors can lower the quality of both the data and the reports that are produced.
And in most cases, a combination of both quality and quantity may start to suffer as a result. Reducing errors is a priority, even for small businesses, because the numbers need to be reliable to improve and effectively manage the business.
And with good, professional bookkeeping services, it is easy to eliminate the risk of losing out on errors. Most bookkeeping outsourcing companies in the United States use the best bookkeeping software to reduce these errors.
6. Frees up time for strategic planning
You will save a lot of time when you outsource your bookkeeping. Through outsourcing, you won’t have to do it yourself. Since you will hire an experienced bookkeeping firm, you won’t need to stop work and check on the person doing it.
You will just concentrate on your own job. Therefore, since you won’t worry about bookkeeping complications anymore, you will run your business activities more efficiently.
You can concentrate on billing, taxes, marketing, sales, payroll, regulatory paperwork, quality control, legal paperwork, strategic planning, hiring and training more employees, working with more clients, and adjusting other important business activities.
7. Adherence to regulations and standards
States have different rules and regulations that regulate financial reporting. Your business could face legal charges if it doesn’t adhere to financial reporting standards. It could also face penalties as well.
Reputable bookkeeping services keep up with new bookkeeping standards and practices. This helps them find ways to improve their processes, which will make their services better over time.
This benefit can help the business by avoiding the costs of setting up an internal professional-grade bookkeeping service.
Hiring a Bookkeeping Provider
Since you have decided to outsource your bookkeeping, I think you have made the right choice.
But that’s where the real work begins.
Before you hire a provider, ask questions to ensure that you are both on the same page. You should ensure that their operations align with your business’s needs and goals.
Here are some important questions to ask the bookkeeping provider:
- What software do they use?
- Are they certified in that software vendor’s program?
- How often can you expect to receive reports?
- How exactly do they charge for services, and what is included? For instance, is data entry included, or will you be paying extra for that?
- Are they willing to give you a predetermined monthly or annual payment plan for their services, or will you be charged by the hour?
- How long will it take you to get a call or email returned?
These questions are important, and you shouldn’t overlook them.
Whether your business is big or small, it takes a lot of work to manage it successfully. Hiring a bookkeeping provider can help you complete your financial tasks professionally without breaking the bank.
And when you need it most, having some time on your hands can mean that much-needed vacation with a clear conscience.
Steps to Finding the Best Outsourced Bookkeeping Provider
Here are the steps you should take to hire the best bookkeeping services:
1. Assessing Your Needs
You must first understand the depth of your bookkeeping needs. All companies require a means of managing income and expenditures through bank reconciliations, invoices, and general books, especially for purposes of tax returns and cash flow evaluations.
However, most bookkeepers stop at this general level of service, offering tips or even management of human resources, budgeting, and other items in an à la carte style.
Do your company’s needs go beyond the simple recording of data?
Have a list of the additional services you could use handy, but be discerning so as not request more than your company can truly use or limit the number of viable service providers.
2. Researching Potential Providers
When choosing a bookkeeper, it is important to screen several to satisfy your questions. Below is a list of criteria you may want to consider in any order:
- Availability for staff knowledge conflicts. You don’t want to fight for your bookkeeper’s attention.
- Flexibility for work outside the scheduled times. Your ability to do work outside the scheduled time will require the ability to work.
- Software compatibility for data transfers. Retail can come to the table with software to help you extract your data.
- Access security. Data is not placed in the wrong hands.
- Stability of the company. What happens to your data when the company leaves?
- Service record. Other clients’ experiences, as with any other company, speak for it. Please ensure that other customers are ready and willing to get references.
- Failure to end: How can they support your business?
There is no guarantee that you will find a match for all of your requirements. But one thing that I am sure of is that you are more likely to find a bookkeeper who is the best fit for your business.
3. Requesting Proposals and Quotes
Once you’ve determined what you’re looking for and where to look, it’s time to ask potential providers to submit proposals and quotes.
First, meet with the vendor and its references. Then, ask them to present an overview of how they would set up your account and how they would provide the service you’re seeking.
When evaluating their capabilities, verify that the vendor has no ties to any software or service company that could lead to a sales pitch for new software or services, and ask whether they have the resources to manage your account.
Request references and ask whether the reference names will assist with a reference call to discuss the vendor’s services.
Also, request proposals and quotes, and ask about the qualifications and experience of the employees who will provide the service.
4. Interviewing Shortlisted Providers
Prepare your shortlist of, say, five providers and plan your questions. You can either provide the providers with a list of written questions in advance, perhaps by email, or ask them the questions during a conference call or a Zoom meeting.
Be prepared to use the same questions with all providers and to note their responses for comparison afterward. Take care that you are getting helpful answers and that the billable clock has not started running yet!
Here is a suggested list of questions, not necessarily to be asked in the order given:
- What is your experience with businesses of our size and industry? To ensure they have relevant experience.
- What specific bookkeeping services do you offer? To understand the scope of their services.
- How do you handle data security and confidentiality? To assess their measures for protecting sensitive information.
- Can you provide references or case studies from similar clients? To verify their credibility and performance.
- What accounting software or tools do you use? You need this to ensure compatibility with your existing systems.
- How will you communicate with us and report financial data? You need this to clarify communication methods and reporting frequency.
- What is your pricing structure, and what does it include? To understand the cost and any additional fees.
- How do you handle discrepancies or errors in bookkeeping? To gauge their process for managing mistakes.
- What is your process for transitioning from our current bookkeeping setup? To understand the steps involved in onboarding.
- What are your policies on data backup and disaster recovery? To ensure their approach to safeguarding your data.
5. Making a Decision
The final decision as to whether or not to outsource your bookkeeping can only be made by you. The growth of the web has made finding potential outsourcing bookkeeping services providers easier and simpler.
Just use a keyword along with the word bookkeeping, and you should come up with several options. You can also go to websites like guru.com and do a search.
Before making a decision, you should prepare a brief request for a proposal and submit it to a few potential providers. Request copies of work they might have done in the past for similar clients.
Conclusion: Benefits of Outsourcing Bookkeeping Services
There is no doubt that bookkeeping is an important business function. However, just like any other business process, you must decide if you will hire a full-time bookkeeper or outsource.
I believe that this article has given you more insight about bookkeeping in your business. If you decide to outsource, we have shown you the benefits of outsourcing bookkeeping services.
As your business grows, you will have a better appreciation of the benefits of outsourcing accounting and bookkeeping services.