Outsource Bookkeeping: 6 Benefits, Types & Process

Keeping track of financial data for a business takes time, effort, and money. But when you play your cards right, you can save on all 3 factors big time. You can hire a freelance bookkeeper for different CFO services to give you peace of mind. Here’s everything you need to know about outsourced bookkeeping to help you get started and streamline your day-to-day operations.

In this article, we’ll cover:

What Is Outsourced Bookkeeping?

Why Outsource Your Bookkeeping?

When Should I Outsource My Bookkeeping?

Automate Bookkeeping With FreshBooks

Types of Outsourced Bookkeeping Services

How to Outsource Bookkeeping

Key Takeaways

Frequently Asked Questions

What Is Outsourced Bookkeeping?

A strong bookkeeping system is of vital importance for any company or organization. Bookkeeping is far more than tracking day-to-day transactions. It’s also about budgeting, payroll, financial data, and tax filing.

It’s crucial to keep all this data up to date in the long term. However, doing so can be a tiring and time-consuming process. Many business owners hire full-time in-house bookkeepers, but this isn’t the most cost-effective solution.

Enter outsourced bookkeeping services.

When you use an external party, the process doesn’t include hiring, supervising, and onboarding expenses.

There are 3 types of organizations that handle these types of services.

Independent Bookkeepers

You can find independent bookkeepers on freelance websites and similar sources. Freelance bookkeepers can be expensive, and yet the quality can drastically vary from one individual to another.

General Accounting Firms or CPA

CPAs and similar organizations follow the best practices in the industry. They adhere to most standard procedures to remain high-quality service providers.

Offshore Bookkeeping Organizations

Offshore bookkeeper companies are located in India and other countries, where it costs less to hire such service providers. This allows offshore bookkeepers to offer more affordable fees for bookkeeping.

Why Outsource Your Bookkeeping?

• More privacy. When you outsource bookkeeping to a trusted firm or individual, you can rest assured that your financial statements and information are safe.
• Scalable. When you’re a small business owner, you have many expenses to think about. Hiring outsourced bookkeepers saves you a good portion of the budget you can use to grow your business in other directions.
• Management and training. Chances are, you aren’t in a position to train your in-house staff to perform bookkeeping services for you. When you work with a knowledgeable bookkeeper, they can handle all tax preparation, rules, and reporting methods independently.
• Added confidence. You can feel confident about your business continuity and not worry about losing expertise if an employee decides to leave the company.
• Having accurate records. You’ll know your records are well-documented, accurate, and prepared for potential audits.
• Outsourced bookkeeping saves you valuable time, effort, and money.

When Should I Outsource My Bookkeeping?

Here are some of the most common reasons business owners outsource their bookkeeping.

• Your books are rarely up to date.
• DIY bookkeeping takes much more time than you’d like.
• You miss out on tax services and write-offs.
• It’s hard to stay on top of cash flows.
• You have difficulties tracking your accounts payable and receivable and other financial statements.
• Coming up with estimated tax payments is too big of an issue.
• You need more accurate financial statements.
• You could use extra help with your inventory management.
• You’re running a start-up and want to keep costs down.
• Your company needs strategic planning and high-quality financial specialists to support that growth.
• A full-time employee working in another role spends too much time solving your bookkeeping needs.
• A temporary shutdown causes you to lay off in-house bookkeeping staff, but you want to keep the accounting process going.

The above reasons aren’t the only signs that you should outsource your bookkeeping. In general, the sooner you start with outsourced bookkeeping, the faster you’ll see its benefits.

Automate Bookkeeping With FreshBooks

FreshBooks is an accounting software for small businesses, freelancers, self-employed professionals, and businesses with employees.

Some accounting services offered by FreshBooks include:

• Professional Invoicing
• Expense Tracking
• Time Tracking
• Project support to keep the team on the same page
• Automated online payment options for easy billing
• Accurate financial statements all year long
• Reporting for daily business finance tracking and during tax time
• Double-entry accounting tools for profitability, health, cash flow, and other aspects
• Mobile accounting app for tracking finances on the go

FreshBooks comes with 2 basic plans to meet the needs of different business types and sizes. Whether you’re a small or growing business, you can benefit from FreshBooks’ top features without breaking the bank.

As an addition, you get access to lower credit card transaction fees, pre-authorized debit transaction fees, and many other benefits.

Types of Outsourced Bookkeeping Services

Earlier in the article, we discussed different ways to outsource bookkeeping. Here’s a more detailed overview of the 2 main ways outsourced bookkeeping works.

Hire a Local Bookkeeper

You can hire local bookkeepers or a bookkeeping team located near your company. The main benefits of such an approach include meeting with the bookkeeper face to face, using physical records, and relying less on online payment and banking systems.

For a local bookkeeper, you can go for firms or freelancers. Freelance bookkeepers collaborate one-on-one when it comes to bookkeeping and accounting needs. They can work online, at your business, or both.

When you go for a bookkeeping firm, you get some additional assurances not provided by solo bookkeepers. For example, a bookkeeping firm may hire professional bookkeepers with certifications. And if your current bookkeeper needs to take a leave of absence, the firm can replace them with another bookkeeper to fill the gaps.

What to Look for in Local Bookkeepers

When hunting for bookkeeping firms, go for those who give immediate and secure access to financial reports. They should operate their business in accounting software with which you are familiar.

You need to trust your bookkeeping service provider. They will deal with your financial information, bank accounts, credit cards, invoices, and other important documents.

Virtual Bookkeeping

A virtual bookkeeping service refers to paper-free book handling. Having a virtual bookkeeper means that someone else does the books on your behalf online.

You can consider virtual bookkeeping a combination of the best in bookkeeping software and traditional bookkeeping. Virtual bookkeepers manage your books and software with the primary goal of monitoring your finances.

Virtual bookkeepers are good if you:

• Would rather pay flat fees for bookkeeping services than an hourly rate.
• Are used to operating on the web and using online banking.
• Prefer having a mobile app for accessing your financial information.
• Would rather meet with the bookkeeper online instead of in-person.

How Virtual Bookkeeping Works

You can get in touch with professional bookkeepers for virtual bookkeeping through an online account. The virtual bookkeeper downloads your expenses through your online banking records and merchant processor, so there’s no need to send any receipt envelopes.

When it’s time to pay taxes, an online bookkeeping service can offer you a year-end financial package. This will include all the financial statements the accountant needs to file the small business tax return.

How to Outsource Bookkeeping

Ready to outsource your bookkeeping? Here’s a step-by-step guide.

Step 1 – Prepare the Business for Outsourcing

Make sure your small business is ready to have its bookkeeping outsourced. You can start by assessing how outsourcing will help meet your business objectives. Pay attention to the most important points and document every step of the way.

Step 2 – Go Through All the Options Carefully

It’s not always easy to find an outsourced bookkeeping service that works. Examine your choices and look for a company that uses a bookkeeping software you’re familiar with, has positive user reviews, and has worked in the field for some time now.

All outsourcing companies have unique qualities but differ in many ways. It’s best to create a pros and cons list of companies when outsourcing bookkeeping so you’ll know you’ve made the best choice.

Step 3 – Interview the Bookkeeper

When you find a suitable bookkeeping solution, ensure you interview the person before hiring them. Most business owners seal the deal immediately and often miss some important details, only to notice the disadvantages when it’s too late.

Step 4 – Get the Process in Order

Communicate with your account manager to set up integrations and connect the bookkeeping software, financial accounts, bank statements, balance sheets, and other elements you’ll need to share with your local, virtual, or in-house bookkeeper.

Step 5 – Let the Bookkeeper Do the Bookkeeping

Once the system is up and running, it’s essential to allow the new bookkeeper to do their job. Don’t worry about financial reporting, payroll taxes, accounting tasks, or offline vs. online bookkeeping. You have made your choice, and now it’s time to enjoy having a dedicated account manager and bookkeeper do the job for you.

Key Takeaways

Business finances don’t have to be so overwhelming to deal with. When you outsource your bookkeeping, you take a lot of weight off your shoulders. You can hire a freelance bookkeeper, a local bookkeeper, or an accounting firm to handle your bookkeeping needs.

Thanks to the numerous options out there, you can find the solution that works best for your specific needs and preferences. Whether you have a small, growing, or large business, you can find a dedicated bookkeeper for all types of companies.

Cloud-based accounting software like FreshBooks is a comprehensive program that offers robust, trustworthy, and cost-effective financial services. If you’re tired of doing your own bookkeeping, you should consider this option.

Frequently Asked Questions

How much does it cost to outsource bookkeeping?

The typical cost for outsourcing bookkeeping, accounting, and similar services ranges from $500 to $5,000 per month. This price range is for small business owners. There is a massive price difference based on complexity, transaction volume, and many other factors.

What does an outsourced bookkeeper do?

An outsourced bookkeeper tracks your day-to-day business operations and takes care of essential financial statements and reports. This includes documents like balance sheets, cash flow statements, income statements, and monthly expenses. They also help the tax filing process. The services are the same whether you hire a local in-house bookkeeper or a freelance bookkeeper.

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