Outsource Bookkeeping: Your Small Business’s Financial Lifeline

Many small business proprietors exhibit reluctance when it comes to outsourcing their bookkeeping processes. This hesitation typically stems from two primary concerns: a lack of understanding regarding the initial steps involved, and apprehensions about the potential costs associated with outsourcing. For those entrepreneurs grappling with these reservations, it is important to acknowledge the validity of these concerns. However, a closer examination of the practice of outsourcing bookkeeping services reveals compelling reasons for its adoption, ultimately validating it as a sound investment. By delving into this piece, you will garner insights that underscore the indispensability of outsourced bookkeeping while dispelling reservations associated with its implementation.

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What is Outsourced Bookkeeping?

Outsourced bookkeeping, a strategic practice, entails entrusting the critical responsibility of meticulously recording the financial transactions and activities of a company to a reputable external service provider. In this strategic alliance, an organization collaborates with an esteemed external bookkeeping service provider, who, in turn, extends the courtesy of presenting highly qualified candidates for your consideration. Picture this scenario: as a shrewd proprietor of a small enterprise, you have opted for the prudent route of outsourcing your bookkeeping functions. It’s crucial to emphasize that the final decision of hiring the external bookkeeping personnel, diligently recommended by the third-party service provider, ultimately rests with you.

One of the most palpable advantages of this judicious outsourcing endeavor is the access it grants you to a cadre of experienced, exceptionally well-trained bookkeepers. These professionals are meticulously selected to impeccably manage the day-to-day intricacies of bookkeeping, a task that would otherwise consume a substantial portion of your valuable time. The reclaimed hours and enhanced operational efficiency resulting from this outsourcing strategy are invaluable. As you entrust the meticulous financial record-keeping to your external team of experts, you can redirect your undivided attention to the core facets of your business operations. This newfound focus is a catalyst for productivity, growth, and innovation, enabling you to scale your small business to new heights, with the assurance that your financial records are maintained with utmost precision and professionalism.

What Does Outsourced Bookkeeping Do for Your Small Business?

When opting to outsource bookkeeping services for your small business, the subcontracted bookkeepers assume the critical responsibility of daily financial management. They proficiently oversee the meticulous entry of data into accounting software or ledgers. Their primary duties center around the maintenance of your business’s comprehensive financial transaction records, encompassing transaction tracking and the generation of essential financial reports.

Moreover, these adept professionals are well-versed in performing a range of supplementary tasks when you entrust them with bookkeeping services, which include:

• They undertake the creation and timely dispatch of invoices to your valued customers.
• Meticulously maintaining vendor records for effective management of accounts payable.
• Diligently overseeing client records to ensure efficient accounts receivable management.
• Proficiently pursuing the collection of outstanding accounts receivable to enhance cash flow.
• They skillfully handle the coding, data entry, and payment processing for your business’s bills.
• They conduct thorough reconciliations of credit card and bank accounts, ensuring accuracy and financial integrity.
• Bookkeepers offer valuable support to your Controller or Chief Financial Officer (CFO) by conducting comprehensive account analysis.
• They prepare client source documents to facilitate audit processes, ensuring that your financial records are audit-ready.
• Proficiently compile workpapers to support audit requirements and assist in the seamless execution of month-end closing procedures.
• They adeptly scan and attach relevant documents, ensuring comprehensive audit and tax support is readily available.

Engaging skilled and experienced bookkeepers for your business not only guarantees accuracy and compliance but also allows you to focus on core operations, thereby fostering the growth and success of your enterprise.

Why Should You Outsource Your Bookkeeping?

Outsourcing bookkeeping services is a strategic decision that offers significant advantages for small businesses. Managing this essential financial function in-house can often prove to be a labor-intensive and challenging aspect of running a business. Research indicates that approximately 40% of small companies identify tax preparation and bookkeeping as the most arduous aspects of business operations. Furthermore, companies typically expend around 41 hours annually on tax preparation, resulting in lost productivity and increased costs. In pursuit of accurate financial records, businesses also allocate substantial financial resources, averaging over $82,000 per year for a full-time accountant.

However, the prospect of reducing these expenses and streamlining operations is readily achievable through outsourcing. By engaging professional bookkeeping services, small businesses can substantially cut costs to a manageable range of $1,000 to $5,000 per month, equivalent to $12,000 to $60,000 annually. Leveraging a service provider that harnesses cloud-based accounting software further optimizes the cost-efficiency equation. Cloud-based accounting software facilitates the synchronization of bookkeeping data and introduces automation into the process, significantly decreasing the time allocated to manual data entry. This operational efficiency not only reduces the financial outlay but also enhances overall business productivity.

Benefits of Outsourcing Bookkeeping

Managing a small business entails juggling numerous critical tasks, leaving little room for in-house bookkeeping. Delegating this essential function to a third-party provider can free up your time and resources, allowing you to focus on serving your customers and propelling your business forward.

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Leveraging Advanced Resources

In the ever-evolving landscape of business, staying ahead of your competitors requires access to cutting-edge accounting technologies. By outsourcing your bookkeeping, you gain access to the latest tools and resources. Additionally, your external service provider assumes the responsibility of infrastructure maintenance, ensuring that your financial operations remain up-to-date and efficient.

Efficient Time Management

For small businesses with relatively low transaction volumes, employing full-time staff solely for bookkeeping may not be cost-effective. When you outsource your bookkeeping needs, you benefit from the flexibility to allocate precisely the amount of time required for your business. As your company grows or experiences peak seasons, your external provider adapts seamlessly to meet your evolving demands.

Cost Savings Without Compromising Quality

Cost management is paramount to the success of small businesses. However, cost-cutting should not come at the expense of quality. Outsourcing your bookkeeping can yield cost savings in various areas, including employee compensation, payroll taxes, paid vacations, insurance, and health benefits. Additionally, you eliminate the expenses associated with staff turnover and ongoing employee training.

Access to a Diverse Team

As your business expands, your bookkeeping needs may evolve, necessitating various specialized roles, such as clerks, CFOs, controllers, and more. Your service provider provides you with access to a dedicated team of experts. They recommend and provide the best professionals as needed, ensuring that your business’s financial functions are in capable hands. Whether you require data entry services, forecasting and budgeting, financial reporting, or internal controls, your dedicated team is just a phone call away.

Expertise Without Compromise

Outsourcing your bookkeeping does not mean compromising on quality. You can access expert bookkeepers who are wholly dedicated to the task, continually updated on industry trends, and possess a wealth of experience in assisting businesses like yours. This ensures that your financial matters are handled with the utmost professionalism and expertise.

What to Consider Before Outsourcing Bookkeeping?

In order to fully appreciate the advantages of outsourced bookkeeping for your small business, it is imperative to meticulously consider several key factors before embarking on this strategic decision. These factors serve as essential cornerstones to ensure a successful transition towards external bookkeeping services.

Define Your Objectives: It is paramount to establish a clear and comprehensive set of objectives when delegating the bookkeeping function to an external team. By doing so, you not only articulate your specific goals but also provide a definitive sense of direction for your team, aligning their efforts with the overarching mission of your business.

Choose Your Partner Wisely: Selecting the right service provider is a pivotal decision. Your chosen partner must align seamlessly with your company’s culture, values, and operational needs. It is imperative to collaborate exclusively with a service provider that complements your business in both expertise and ethos.

Technological Compatibility and Time Zones: The technological infrastructure and time zone considerations are paramount. Ensure that your global team has the necessary technology and software tools that integrate smoothly with your existing systems. Additionally, harmonizing time zones is crucial to facilitate efficient communication and workflow coordination.

Designate an Internal Liaison: Designating a capable representative from your organization to oversee the external bookkeeping team is a prudent step. This individual should not only be adaptable and open to change but also possess a profound understanding of back-office outsourcing dynamics. Exceptional communication skills are a must, as this liaison will play a pivotal role in facilitating effective collaboration. Furthermore, their readiness to conduct regular team meetings and ensure constant availability is indispensable.

Factors That Make up the Costs of Bookkeeping Outsourcing

When contemplating the outsourcing of your bookkeeping services, it is imperative to recognize that the associated costs are contingent on a multitude of factors, ensuring a comprehensive evaluation of your unique business needs. The following variables should be considered in determining the financial implications of this decision:

Company Lifecycle and Size: The developmental stage and scale of your enterprise play a pivotal role in ascertaining the appropriate bookkeeping services.

Monthly Transaction Volume: The number of financial transactions processed monthly serves as a crucial determinant, influencing the complexity and workload of your bookkeeping requirements.

Employee Count: The size of your workforce affects the extent of payroll management and related financial responsibilities.

Payroll Processing Procedures: The method by which payroll is administered within your organization can impact bookkeeping intricacies and associated costs.

Credit Cards, Expense Accounts, and Bills: The quantity of credit cards, expense accounts, and outstanding bills necessitating management can significantly affect bookkeeping demands.

Balance Sheet Reconciliation: The number of balance sheets to reconcile is an essential factor in assessing the bookkeeping scope and expenses.

Invoicing Requirements: The volume of invoices your business generates and sends plays a substantial role in determining bookkeeping needs.

Beyond these quantitative aspects, the cost of outsourced bookkeeping is further influenced by the establishment and oversight of policies, procedures, systems, and reporting specifications. It is imperative to align these elements effectively to optimize the efficiency and cost-effectiveness of the outsourced bookkeeping service.

Basic Bookkeeping Vs Full-Service Accounting

In the initial stages of a small business, primary emphasis is often placed on regulatory compliance – encompassing tasks such as invoice processing, bill payment, payroll accuracy validation, and adherence to federal and state regulations. As your company matures, it invariably reaches a juncture where the focus shifts towards generating precise and timely financial reports. At this juncture, advanced bookkeeping, managerial accounting, cash-based and accrual-based accounting become indispensable for making well-informed business decisions.

Hence, the primary consideration when contemplating outsourced bookkeeping for your small business revolves around the choice between basic bookkeeping (compliance-focused) and transitioning to full-service accounting. These two approaches necessitate distinct levels of expertise and exertion, with the costs associated with full-service accounting naturally being higher. Careful evaluation of your evolving business needs will help you determine the most appropriate level of service to meet your financial objectives.

The Bottom Line

Embracing outsourced bookkeeping offers small businesses significant advantages. It not only provides access to expert advice and peace of mind but also leads to cost savings that can positively impact your bottom line. Moreover, the ability to generate daily reports gives you a competitive edge by facilitating well-informed decision-making. Collaborating with a dependable service provider that consistently delivers precise and timely reports becomes instrumental in driving your small business towards growth and expansion.

When you’re ready to streamline your bookkeeping tasks, please don’t hesitate to get in touch with us. At Remote Books Online, we efficiently manage all the behind-the-scenes functions to ensure the seamless operation of your company. Partnering with us guarantees that your financial records remain accurate and up to date, empowering your business for sustained success.