Bookkeeping can be a headache for big and small business owners —so much so that 46% of business owners said it was their least favorite task. The process of recording all financial transactions is often challenging and stressful, as there are many other important day-to-day tasks for startup business owners to handle. It’s easy to put bookkeeping and other back-office tasks on the back burner.
Luckily, accounting and bookkeeping don’t have to be the business owner’s responsibility anymore. It’s becoming more and more common for businesses to outsource bookkeeping to take care of the pesky task of handling financial transaction records. To help navigate your options, we’ve put together a guide to outsourcing bookkeeping.
What do bookkeepers do?
While a certified public accountant (CPA) will provide insight and analysis of your financial data, bookkeepers will get into the nitty gritty of your day-to-day transactions. Bookkeepers are responsible for keeping record of all financial statements and transactions made by a business. They perform the preliminary functions needed in order for the accountant to do their job at the end of each period.
Bookkeepers use an accounting journal or an online accounting program to keep track of each transaction and the purpose of the transaction. Bookkeepers also handle payroll and payroll taxes, send invoices, handle accounts payable and keep track of overdue accounts. All these seemingly small tasks combined create one big job. Without a great bookkeeper, your company could be losing thousands of dollars each period.
What is outsourced bookkeeping?
An outsourced bookkeeper is a person or company that will perform your bookkeeping tasks out of office. Oftentimes, a bookkeeping service is essential for business growth and health. It leaves room for everyone in-office to be solely focused on their own tasks and can eliminate the cost of an in-house bookkeeping team.
Essentially, you’ll give a third-party bookkeeper access to important financial information like bank statements, payroll, tax documents, and your accounting software. They’ll take it from there, generating financial reports, ensuring your ledgers are up to date, and tracking money that goes both in and out of the company, among other essential tasks.
How does outsourced bookkeeping work?
Outsourced bookkeeping services are a symbiotic relationship between your business and a third party that will balance your books. Though the process might look different for small vs. big businesses, the steps will generally be the same.
- Your accountant will gain access to your financial accounts and software.
- Your accountant will work behind the scenes to balance your books, monitor cash flow, and create financial reports.
- At the end of each month, your accounting team will send over a financial report.
5 Benefits of outsourcing bookkeeping
Outsourced bookkeeping can save your company time and money. Plus, full-time bookkeepers are experts in the field that can generate more thorough reports and documents that take some pressure off your back once tax season hits.
1. Free up time
Outsourced bookkeeping streamlines the financial management process and is much more efficient than traditional in-house bookkeeping. Doing the bookkeeping yourself is a time-consuming task, time that you most likely don’t have as a business owner. When you outsource bookkeeping, you will save valuable time that can be put back into improving your business in other ways.
2. Save money
Outsourcing bookkeeping is cost-effective and will save your company money. Experienced bookkeepers are often better at finding overdue clients and cuts your company could make to increase overall profit. Plus, having an outsourced bookkeeper is more cost-efficient in the first place, since you’re not technically their employer. You won’t have to worry about their insurance, benefits, or training.
Think of it this way: The average bookkeeper in the United States makes about $38,000 per year. If you outsourced bookkeeping at a rate of $2,500 per month, you’d spend $30,000 per year, saving your company about $8,000.
3. Reduce errors
Having an outsourced bookkeeping service provider is known to reduce many common errors made by business owners. Modern bookkeeping is often done through a cloud-based automated system that allows you and other experts to view your records at any time, so there are many eyes on your books. This leaves little room for error, especially considering outsourced bookkeepers are highly trained, so there is no adjustment period needed. This can improve your peace of mind that your bookkeeping needs are being well taken care of.
4. Produce thorough reports
Professional bookkeeping provides more in-depth financial reports than typical in-office bookkeeping. Because online bookkeeping uses virtual platforms, business owners can see their records anytime, including the cash flow and balance sheet. Every single transaction is at your fingertips at any time.
5. Make tax season easier
It’s no secret that tax season can be a headache. Having all of your bookkeeping together throughout the year will make tax season much easier. Up-to-date reports will be provided monthly throughout the bookkeeping process, giving you a good idea of how much you’ll owe when tax season hits. Bookkeepers can also help with tax preparation and can help you navigate your tax returns.
How much do outsourced bookkeepers charge?
According to GrowthForce, outsourcing your bookkeeping will come with a price tag that spans anywhere from $500 to $2,500 per month. The main factors that will impact the cost are the number and complexity of services needed. That means cost will most likely scale with the size of business and financial accounts, so small businesses will pay less than enterprises for these services.
How to outsource your bookkeeping
There are a few decisions to make when outsourcing bookkeeping—most notably, local vs. virtual and freelancer vs. firm. All options have pros and cons that depend on what you’re looking for from your accounting service.
Select your format
First, local bookkeeping is usually done with pen and paper, while virtual bookkeeping takes this service into the digital realm.
- Local: You run your business with physical paper records, like to meet people face-to-face, and want to conduct bookkeeping and accounting services on physical documents.
- Virtual: You are comfortable using technology to process payments and financial reports, can communicate virtually, and want to conduct bookkeeping and accounting services via online platforms.
Select your workforce
Second, freelancers are usually contracted workers who are hired to help balance your books, while firms are dedicated accounting companies that solely focus on that goal.
- Freelancer: A freelancer will work one-on-one with your company but will not be employed on your roster or work for an accounting firm.
- Firm: An accounting firm is an agency devoted to financial services that will assign a team of its employees to work on your business account.
Which route is best for you?
- If you have a lot of complex financial documents and will require frequent work and communication, an agency may better suit your needs.
- If you have a few simple accounting to-dos, a freelancer can get that job done.
Firms and freelancers can be local or virtual, though most bookkeeping firms will opt for a virtual system over a physical one.
Once you’ve determined which route you want to take, interview candidates for agencies or freelancers to find the right fit. Pick someone you trust with sensitive financial information and who can accommodate your needs.
How QuickBooks Live can help
QuickBooks Live Bookkeeping offers an online bookkeeping service that connects small businesses with trusted, QuickBooks-certified virtual bookkeepers, so you can spend more time focusing on your business, not your books. So if you’re in need of a bookkeeper that’s dedicated to helping you and your business succeed, schedule a free bookkeeping consultation and learn if QuickBooks Live Bookkeeping is right for your business.
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