Comprehensive guide to outsourced bookkeeping.

Watching your business grow is thrilling – you finally see the results of your hard work.  

Unfortunately, the more your business grows, the more time your bookkeeping takes. 

You might spend hours categorizing transactions, chasing receipts, and compiling reports. Perhaps you dread filing tax returns because of your unorganized spreadsheets. Accurate bookkeeping is essential to your business, but you probably prefer to focus on improving sales.  

Did you know a simple solution can help you reclaim hours of your time? 

Outsourced bookkeeping can save you time and keep your business compliant. The service is increasingly popular with business owners because of its cost-effectiveness and flexibility.

Keep reading to learn how outsourced bookkeeping can benefit your business.

What Is Outsourced Bookkeeping?

Outsourced bookkeepers are third-party service providers who categorize transactions and reconcile account balances. Bookkeepers perform back-office tasks to organize financial data. Day-to-day responsibilities include the following: 

  • Categorize transactions such as receipts and business expenses
  • Track invoices and record revenue upon payment
  • Reconcile accounts regularly and timely
  • Prepare financial reports for lenders or investors
  • Compile tax documentation to support the return filing process

    • Bookkeepers do not typically analyze financial data for trends (accountants perform analyses), but some bookkeepers can help you pinpoint weak cash flow or high spending. 

    Why Outsource Bookkeeping? 

    Business owners outsource bookkeeping services for various reasons. The benefits of outsourced bookkeeping services include cost-effectiveness, scalability, and improved compliance.  

    Reason #1: Cost Savings and Financial Efficiency

    Hiring a full-time bookkeeper requires interviewing, training a new employee, and paying a full-time salary.

    The average annual bookkeeper salary is about $46,000. Additional compensation expenses include benefits, taxes, and office equipment. Employers also suffer productivity loss during employees’ paid time off. 

    In comparison, outsourced bookkeeping offers cost savings and financial efficiency. Bookkeeping firms only charge you for their services, sparing you the overhead costs. 

    Reason #2: Access to Expertise

    Your industry expertise supports your business. Unless you’re a bookkeeper by trade, you may lack bookkeeping mastery. You’ll benefit from partnering with bookkeeping professionals who provide accurate reconciliations.

    Outsourced bookkeeping firms employ teams of experienced professionals. Service providers tailor their solutions to your company’s facts, and you’ll partner with individuals who have industry- and location-specific experience. 

    Working with experienced outsourced bookkeepers means receiving accurate categorization and account reconciliations. 

    Reason #3: Time Management and Focus

    Outsourced bookkeepers allow you to run your business without interruption. 

    Instead of adding account reconciliations to your workload, you can meet with clients or manage your team. Do you delegate bookkeeping responsibilities to team members? Free your employees from multitasking so they can concentrate on their primary duties. 

    Outsourced bookkeeping services benefit your business by offloading your back-office work to experienced professionals. You can focus on satisfying your customers. 

    Reason #4: Scalability and Flexibility  

    As your business changes, so do your bookkeeping needs. 

    If your company doubles its sales next year, you’ll need a service provider to accommodate rapid growth. If your business is seasonal, you may need less help during off-cycles.  

    Outsourced bookkeepers can seamlessly scale their efforts to match your business requirements. Bookkeeping firms employ teams of professionals who can readily adapt to your business growth. Their flexibility ensures your business receives the appropriate attention at any stage.

    Reason #5: Smooth Compliance

    Outsourced bookkeepers reconcile your accounts year-round. 

    Timely financial statements help you prepare for seamless tax filings and payroll reports. Instead of scrambling to compile reports, you can rely on up-to-date documentation. You’ll also be prepared to respond to a payroll or IRS audit. 

    Outsourced bookkeeping supports accurate and timely business compliance. 

    Pros and Cons of Outsourced Bookkeeping

    Pros Cons
    Cost-effectiveness: Outsourced bookkeeping reduces employment costs, equipment expenses, and payroll taxes.

    Expertise: You gain access to third-party professionals and industry specialists.

    Time management: You can reclaim time and energy to focus on business growth.

    Flexibility: You can continuously refine your bookkeeping needs to adapt to your growing business.

    Compliance: Your provider organizes your data in preparation for tax returns, payroll filings, and financial reporting.
    		 Loss of direct control: You need to rely on your bookkeeper's expertise.

    Security concerns: Sharing sensitive financial data with a third party presents privacy risks.

    Potential communication challenges: Working with service providers requires clear communication to avoid misunderstandings.

    System integration: You may need to learn to use new bookkeeping software.

    Who Benefits from Outsourced Bookkeeping Services?

    How do you know if you should use outsourced bookkeeping services? 

    Think through the following criteria and consider whether the descriptions fit your situation. Outsourced bookkeeping may work well with your business if one or more items apply to your company.

  • You and your team members have minimal experience categorizing transactions or reconciling accounts. 
  • Your business processes a high volume of transactions each month
  • Your company sells numerous products or service offerings.
  • You purchase goods and services from multiple vendors or service providers. 
  • You and your employees have low bandwidth for bookkeeping responsibilities.

    • Still not sure whether outsourcing bookkeeping services is right for you? We’re happy to talk through your situation and help you decide.

    How Much Do Outsourced Bookkeeping Services Cost?

    Outsourced bookkeeping costs vary depending on each company’s facts. 

    Does your business complete hundreds of transactions each month? Perhaps you sell services to a small number of customers? 

    The more complex your operations, the more your outsourced bookkeeping services will cost. Alternatively, simple enterprises require less time-intensive bookkeeping work and fewer fees.

    Bookkeeping service providers offer varying pricing arrangements. Rates depend on your company’s complexity and the firm’s level of expertise. Pricing arrangements include hourly or flat-rate pricing: 

  • Hourly fees may range from $25-$100+ per hour. You’ll incur charges for each hour your bookkeeper assists your business.
  • Flat pricing represents a set rate each month. You’ll have full transparency about your monthly fees upfront.

    • We recommend consulting with an outsourced bookkeeping service provider for an estimated cost.

    Choosing the Right Outsourced Bookkeeping Solution for Your Business

    You understand accurate bookkeeping is vital to your small business. How do you know which outsourced bookkeeping solution is the best fit? 

    Review the benefits of each option to decide the right arrangement for your business. 

    Bookkeeping Solution Benefits of This Solution
    Full-time bookkeeping employee A full-time bookkeeper intimately understands your company’s facts.

    Your bookkeeper focuses solely on your business.
    Local outsourced bookkeeping A local service provider can attend in-person meetings at your office.

    Local bookkeepers can handle paper receipts and statements.
    Virtual outsourced bookkeeping A virtual outsourced bookkeeper can balance your books anytime, not just during business hours.

    Cloud-based systems can automatically connect to your business accounts for real-time updates.

    Your bookkeeper can consistently provide up-to-date reports when you need them.

    Virtual outsourced bookkeepers can scale their services as your business grows.

    Your business avoids overhead expenses and enjoys maximum cost-effectiveness.

    Partner with Us for Expertise with All of Your Bookkeeping Needs

    Hiring 1-800Accountant for outsourced bookkeeping allows you to run your business without pausing for paperwork. 

    We provide accurate account reconciliations and timely transaction categorization. Further, our flat pricing gives you transparency on monthly fees. Rely on our bookkeeping expertise to keep your business compliant with tax and reporting requirements. 

    Partner with 1-800Accountant to unlock your potential for business success. 

    This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.