Should your business outsource your bookkeeping?

Bookkeeping can be a time-consuming headache for most business owners. The process of recording all the financial transactions can be challenging and stressful while also managing the day-to-day tasks that a business owner must handle. Sometimes business owners will neglect their books and put the tasks on the back burner instead of dealing with them until tax season. 

Luckily there are bookkeepers for business owners to depend on to manage their books and handle all the tiresome tasks regarding their financial transactions. Here is a guide to help you make your decision when determining if outsourcing a bookkeeper is better for your business. 

What do bookkeepers do?

A bookkeeper will handle all the nitty gritty day-to-day transactions for the business. Bookkeepers are responsible for keeping a record of all financial statements and transactions that are made by the business. They will perform these duties monthly for you, the business owner, to have the most updated information when making decisions and to have all the proper information for your accountant to do their job at the end of the period! 

Bookkeepers use an accounting journal or online accounting program to track each transaction the business makes and its purpose. They can also handle payroll and payroll taxes, send invoices, handle accounts payable, and keep track of overdue accounts. When combined, these tasks create one big job for the business owner. 

What is outsourced bookkeeping?

An outsourced bookkeeper is an individual or company that handles your bookkeeping tasks remotely. Often, using a bookkeeping service is crucial for the growth and health of a business. This arrangement allows in-house staff to focus on their primary responsibilities and can reduce the costs associated with maintaining an in-house bookkeeping team.

In essence, you will provide a third-party bookkeeper with access to important financial information, such as bank statements, payroll records, tax documents, and your accounting software. From there, they will generate financial reports, ensure your ledgers are up to date, and track the money flowing in and out of the company, along with other essential tasks.

How does outsourced bookkeeping work?

Outsourced bookkeeping services create a collaborative relationship between your business and a third-party provider responsible for managing your financial records. While the process may vary between small and large businesses, the fundamental steps are generally consistent 

            1. Your accountant will gain access to your financial accounts and software.

             2. Your accountant will work behind the scenes to balance your books, monitor cash flow, and generate financial reports monthly.

5 Benefits of outsourcing bookkeeping

Outsourced bookkeeping can save your company both time and money. Additionally, full-time bookkeepers are experts in their field, and able to generate more detailed reports and documents, which can alleviate some pressure during tax season.

1. Free up time

                Outsourcing bookkeeping simplifies the financial management process and is generally more efficient than traditional in-house bookkeeping. As a business owner, managing your own bookkeeping can be a time-consuming task that you likely don't have time for. By outsourcing bookkeeping, you can save valuable time, allowing you to focus on improving other aspects of your business.  

2. Save money

                Outsourcing bookkeeping can be a cost-effective solution that saves your company money. Experienced bookkeepers are often more adept at identifying overdue clients and recognizing potential cuts that can increase overall profits. Additionally, using an outsourced bookkeeper is generally more economical because you are not technically their employer; this means you won't be responsible for their insurance, benefits, or training. 

Consider this example: The average bookkeeping in the United States earns around $40,000 per year. If you choose to outsource bookkeeping at a rate of $2,500 per month, your annual expenditure would be $30,000, resulting in a saving of approximately $10,000 for your company. 

3. Reduce errors

                 Using an outsourced bookkeeping service provider can significantly reduce the common errors often made by business owners. Modern bookkeeping is typically performed through a cloud-based automated system, allowing you and other experts to access your financial records at any time. This means multiple eyes are reviewing your books, which minimizes the chances of mistakes. Additionally, outsourced bookkeepers are highly trained professionals, eliminating any adjustment period. This approach can enhance your peace of mind, knowing that your bookkeeping needs are being handled expertly.

4. Produce thorough reports

                 Professional bookkeeping offers more detailed financial reports compared to standard in-office bookkeeping. Since online bookkeeping operates through virtual platforms, business owners can access their records at any time, including cash flow statements and balance sheets. This means that every transaction is readily available at your fingertips whenever you need it.

5. Make tax season easier

                 Tax season is well-known for being a stressful time. However, keeping your bookkeeping organized throughout the year can make this period much smoother. You will receive up-to-date reports monthly during the bookkeeping process, which will help you anticipate your tax obligations. Additionally, bookkeepers can assist with tax preparation and guide you through the process of filing your tax returns.

How much do outsourced bookkeepers charge?

According to GrowthForce, outsourcing your bookkeeping can cost anywhere from $500 to $3,500 per month. The main factors influencing the cost are the number and complexity of the services required. Typically, costs will scale with the size of the business and the financial accounts involved, meaning that small businesses will generally pay less than larger enterprises for these services.

How I can help

At Davenport Bookkeeping, we are a remote bookkeeping firm that leverages technology from QuickBooks Online to process payments, prepare financial reports, and communicate virtually with clients from all over. We are passionate about empowering your business to save both time and money by helping you make informed decisions based on accurate financial information. If you're looking for a dedicated bookkeeper who is committed to your business's success while helping you save money, schedule a free consultation now.

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