Mastering the Art of Outsourcing Bookkeeping

  • Accracy
  • 9th Nov, 2023

Embarking on the entrepreneurial journey is exhilarating, but as the transactions pile up—purchases, sales, and all the intricacies of financial record-keeping—the daunting task of meticulous tracking awaits. The sheer thought of managing this intricacy might send shivers down your spine. Fear not, for there's a beacon of relief in the form of outsourcing your bookkeeping responsibilities. Imagine a world where the meticulous recording of every financial move is seamlessly handled, leaving you free to focus on growing your business.

Now, as you stand on the precipice of this financial decision, the million-dollar question looms: who will you entrust with the vital task of managing your business's financial heartbeat? Join us on this journey as we unravel the complexities, explore the benefits, and guide you through the process of selecting the perfect partner to handle your bookkeeping needs.

Mastering the Art of Outsourcing Bookkeeping
Bookkeeping

You face a crucial choice: enlist the services of local bookkeepers, opt for "virtual" bookkeepers, or consider the third alternative—hiring an in-house bookkeeper. However, the latter option comes with a substantial price difference compared to the more hands-on approach of DIY bookkeeping using tools like QuickBooks or spreadsheets.

Let's delve into the merits and demerits of outsourcing bookkeeping, steering you away from the intricacies of independent financial management and guiding you towards a more supported approach.

Why Opt for Outsourced Bookkeeping?

Embarking on a business journey doesn't entail a desire to become a bookkeeping expert. Outsourcing this task reclaims precious time, redirecting your focus to operational facets, discovering avenues for growth, or merely finding respite from the entrepreneurial stress.

Outsourced bookkeeping also provides access to critical reports and financial statements, including balance sheets, income statements, and cash flow statements. Beyond daily operations, professional bookkeeping expedites the tax filing process, equipping you with all the necessary numbers for swift IRS-compliant tax return submissions.

For further insights: Financial Statements 101

Determining the Right Time to Outsource Bookkeeping

Recognizing when to transition from DIY to professional assistance involves identifying key indicators:

  • DIY bookkeeping surpasses manageable time limits.
  • Your financial records are consistently outdated.
  • Opportunities for tax write-offs have been overlooked.
  • Challenges in managing cash flow and tracking accounts receivable and payable.
  • Hassles in making estimated tax payments have escalated.

If your circumstances align with any of the above, it's an indication that outsourcing to a professional bookkeeper is prudent. This list is not exhaustive, and your unique situation will ultimately determine the ideal time to make this shift.

For most business owners, it's advisable to make this transition sooner rather than later. Even businesses in their pre-revenue phase benefit from professional bookkeeping, ensuring consistent and invaluable recordkeeping as they navigate the journey of growth.

Types of Outsourced Bookkeeping Services

When it comes to outsourced bookkeeping services, whether you're collaborating with a local professional or someone online from a different city, there are two primary forms to consider: hiring a local bookkeeper or opting for a virtual bookkeeper.

To assist you in determining the right fit for your needs, we've dissected the pros and cons of both options.

Hiring a Local Bookkeeper

A local bookkeeper is an individual or a team located near your business. This choice is advantageous if:

  • You prefer face-to-face interactions with your bookkeeper.
  • Your business relies on physical records, and you don't utilize online banking or payment systems like Stripe.

How Local Bookkeeping Works

Outsourcing your bookkeeping locally typically involves two approaches: hiring a freelancer or partnering with a bookkeeping firm.

A freelance bookkeeper collaborates with you one-on-one, offering the flexibility of working online, in-person at your business, or a combination of both. Solo practitioners vary in skill and experience levels.

The alternative is engaging a bookkeeping firm. While firms generally charge more than freelancers, they provide certain assurances. For instance, their bookkeepers may hold professional certifications. Additionally, in case of a leave of absence for someone handling your books, another qualified professional can seamlessly take over to avoid service gaps.

Both freelance bookkeepers and firms operate externally, not as employees of your business. It's crucial to find a service that provides secure, immediate access to your financial reporting through accounting software you are comfortable using.

Security is paramount. Ensure the person handling your financial information can be trusted with sensitive details, from bank and credit card information to invoices and important documents. Always retain control over treasury functions such as handling investments, signing checks, or making online payments.

Virtual Bookkeeping

The term "virtual bookkeeping" may sound antiquated, reminiscent of a Windows 95 application, but it describes a contemporary, paper-free approach to managing your books.

Virtual bookkeeping involves having someone else handle your books online.

This method combines the strengths of bookkeeping software and traditional bookkeepers. When you enlist a virtual bookkeeping service, you benefit if:

  • You use online banking and are comfortable navigating the web.
  • Prefer a flat monthly rate as opposed to hourly billing.
  • Want online access to your financials through a mobile app.
  • Prefer communication through online or phone channels rather than face-to-face meetings.

Having professionals manage your books not only saves time but also provides peace of mind. Choosing an online service enables secure data storage in the cloud, allowing you to access your financial information from any location at any time.

Understanding the Operations of Virtual Bookkeeping

Virtual bookkeeping seamlessly links you with skilled bookkeepers through a secure online account. A premium service, such as ours, aims to reduce the touch points by only resquiring certain documents to compile tax ready financial statements

During tax season, an online bookkeeping service often provides a comprehensive year-end financial package. This package includes all the necessary financial statements your accountant requires to complete your small business tax return.

Take Accracy, for instance. Upon registration, you are matched with a team of proficient bookkeepers. They compile your data each month, transforming it into tax-ready financial statements. The Accracy platform empowers you to monitor your finances, download statements for your accountant, and communicate with your bookkeeping team.

How Accracy Supports You

Accracy, as America's leading bookkeeping service provider, streamlines your financial management. By providing your bank statements, credit cards statements, and latest trial balance, we process the transactions and update your financial reports. Need to discuss your finances? Reach out to your dedicated bookkeeping team through messages or schedule a call, all within the Accracy platform. Access our tax professionals for guidance on minimizing your tax bill.

In-House Bookkeeping Considerations

As your business evolves, expanding beyond the solutions we've discussed, you might contemplate growing your accounting department and employing an in-house bookkeeper.

Determining if your business can afford an in-house bookkeeper is crucial. According to Salary.com, their standard pay ranges from $39,568 to $50,577 annually, excluding payroll taxes and employee benefits. This may seem substantial for tasks like bank reconciliations and forecasting. Full-time, in-house bookkeepers are typically reserved for businesses with advanced needs.

For those seeking in-house support but unable to commit to a full-time hire, hiring a part-time bookkeeper with the option to increase hours as needed is a prudent alternative. Some businesses opt for a part-time bookkeeper, assigning additional administrative tasks to create a de facto full-time position.

Accountant vs. Bookkeeper Dilemma

Can your accountant handle bookkeeping tasks? In short, yes. In detail, yes, but it can be costly.

While many accountants offer bookkeeping as part of their services or assist in catching up before tax season, the caveat lies in the higher hourly rates of Certified Public Accountants (CPAs). Their charges surpass those of regular bookkeepers due to the extensive accreditation process.

Opting for a local or online bookkeeper proves to be a more economical choice, providing year-round financial support. This grants you access to crucial financial data for managing your cash flow and decision-making. For tax preparation specifically, you can turn to accounting firms and tax professionals, further reducing overall costs.

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