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How to Outsource Bookkeeping
Why Should You Outsource Your Bookkeeping?
The decision to outsource your bookkeeping comes down to efficiency, expertise, and economic benefits. It provides access to a team of experts dedicated to ensuring your financial records are meticulously maintained without the need for in-house recruitment. This can significantly reduce errors and provide insights to improve financial management.
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What Do You Need To Outsource Bookkeeping?
When outsourcing your bookkeeping, preparing and providing the necessary documents and access is crucial for ensuring accurate and efficient financial management. Here’s a comprehensive list of things you might need to provide your outsourced bookkeeper to get started:
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Access to Financial Accounts: Grant access to your business bank accounts, credit cards, and other financial accounts. This may involve setting up view-only access or securely providing login credentials.
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Previous Financial Statements: Share your most recent balance sheet, income statement, and cash flow statement to give your bookkeeper a snapshot of your business’s financial health.
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Accounting Software Details: If you use accounting software (like QuickBooks or Xero), provide access or share login details. Consult with your newly outsourced bookkeeper to make sure you’re using the appropriate QuickBooks product for your business. Specify any customizations or specific workflows your business uses.
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Tax Returns and Documents: Provide copies of recent business tax returns and related documents. This helps your bookkeeper understand your tax liabilities and compliance status.
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Invoices and Receipts: Hand over all invoices issued and received, along with receipts for expenses. These are critical for accurately recording income and expenditures.
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Payroll Records: If your business has employees, provide payroll details, including salaries, wages, bonuses, deductions, and tax withholdings.
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Loan and Lease Agreements: Provide details of any business loans or lease agreements, including payment schedules, interest rates, and principal amounts.
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Business Entity and Registration Documents: Share your business registration documents, licenses, and any legal documents that define the structure and nature of your business.
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List of Accounts Payable and Receivable: Provide detailed lists of all accounts payable (money you owe) and receivable (money owed to you) to track your liabilities and assets effectively.
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Expense Reports: Submit reports or records of business-related expenses, which might include travel expenses, office supplies, and any other operational costs.
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Bank Statements: Offer access to or copies of bank statements for all business accounts to help reconcile transactions accurately.
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Budgets and Financial Projections: If available, provide your current budget and any financial projections. This information can assist in planning and forecasting.
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Access to Communication Tools: Ensure your bookkeeper has access to email, messaging apps, or project management tools you use for smooth communication.
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Contact Information: Provide contact details for someone in your organization who can answer questions or provide additional information as needed.
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Specific Industry-Related Documents: Depending on your industry, there may be additional documents required, such as insurance policies, regulatory compliance reports, or contractor agreements.​​
How Does Outsourced Bookkeeping Work?
Once you select a service provider, the transition begins. This typically involves sharing access to your financial records, either through cloud-based accounting software or secure document exchange. The outsourced team will then take over the routine tasks of updating ledgers, reconciling accounts, and generating financial reports, often providing insights and recommendations along the way.
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How Much Does Outsourcing My Bookkeeping Cost?
The cost of outsourcing your bookkeeping varies widely based on the type of service, the complexity of your financial needs, and the expertise of the provider. Below, we outline different types of outsourced bookkeeping services and the price range you can expect for each:
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Virtual Bookkeeping Services: Typically, businesses can expect to pay between $200 and $800 per month for these services. Prices vary depending on the volume of transactions and the level of service required.
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Certified Public Accountants (CPAs) and Accounting Firms: For bookkeeping services combined with higher-level financial oversight and planning, costs can range from $500 to several thousand dollars a month, reflecting the broader scope of expertise and services.
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Freelance Bookkeepers: Freelancers may charge anywhere from $30 to $60 per hour, depending on their experience and the complexity of the work. Monthly retainer models are also common, ranging from $200 to $600 based on the agreed-upon services.
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Local Bookkeeping Services: These services may charge similarly to freelance bookkeepers, with hourly rates between $30 and $100 or monthly packages that vary based on the services provided and the size of your business.
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Bookkeeping Agencies or Outsourcing Firms: Pricing for these firms can start from $500 per month and go up significantly based on the complexity of your needs and the level of support required. Larger businesses with more transactions or those needing specialized industry knowledge may see higher costs.
Each type of service offers different benefits, from the personalized touch of a local bookkeeper to the comprehensive financial management of a CPA firm. It’s important to consider not just the cost but also the value and return on investment each service can bring to your business.
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Does Outsourced Bookkeeping Make Sense for My Business?
Outsourcing bookkeeping could be beneficial if:
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Experiencing Growth: Your business is growing, increasing the volume and complexity of financial transactions. Outsourcing can offer the sophisticated management and reporting needed.
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Facing Complex Financial Regulations: Operating in a regulated industry (e.g., healthcare, finance, international trade) requires staying updated on laws. Specialized bookkeeping services can ensure compliance and minimize legal risks, especially for more complex corporate structures.
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Seeking Improved Financial Analysis: If obtaining clear financial insights is challenging with your current setup, outsourced services using advanced software can provide detailed reports and analysis for better decision-making.
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Considerations for Outsourcing:
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Current Challenges: Evaluate if bookkeeping tasks are taking too much time from core activities or if errors are frequent due to lack of expertise.
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Future Goals: Consider if outsourcing supports your plans for scaling operations, entering new markets, or diversifying products.
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Costs vs. Benefits: Compare the cost of an in-house team to outsourcing fees, considering potential savings from reduced errors and more efficient financial management.
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Flexibility and Scalability: Determine if the outsourced solution can adapt to your changing needs, allowing for scalability as required.
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I Already Have an Accountant, Why Don’t I just Use Them?
Accountants, bookkeepers, and tax advisors serve complementary but distinct roles. While accountants provide strategic financial advice, tax planning, and compliance services, bookkeepers handle the day-to-day financial recording and reporting. In many cases, outsourcing bookkeeping can enhance your accountant’s ability to offer valuable insights by ensuring the data they rely on is accurate and up-to-date.