How To Outsource Your Bookkeeping

One of the most time-consuming aspects of running a business is keeping a detailed record of, well, everything. Expenditures, payroll, tax documents, bank statements—as long as there’s money involved, you need to keep track of it. 

Thankfully, there are industry experts called bookkeepers that do this exact thing for a living. Their job is to maintain, track, and record a business’s financial statements and transactions.  

Bookkeepers are a must for any growing company. Without them, you’ll have to do all the record-keeping yourself—and that takes a lot of precious time that could’ve been spent managing your business. 

But if the thought of hiring yet another in-house employee stresses you out, you’ll be glad to know that you can easily outsource a bookkeeper and skip the hassle of recruiting, training, and employing a full-time bookkeeper. 

In this article, we’ll talk about how to outsource your bookkeeping and find the perfect bookkeeper for your business. We'll cover everything from the benefits of outsourcing to expected costs and types of services available. 

What Is Outsource Bookkeeping?

Outsourcing bookkeeping is the process of hiring a third-party individual or company to do the bookkeeping for you. 

You’ll give them access to your company’s financial information, including payroll, bank statements, tax documents, and invoices, and they’ll take it from there. They’ll look into the nitty-gritty of your company’s day-to-day transactions and summarize the information into detailed weekly or monthly reports. 

Usually, outsourced bookkeepers use a dedicated online accounting program to keep track of each transaction. Business owners often have access to the same accounting program so they can monitor their financial health and collaborate with their bookkeepers on financial matters.

Why Should You Outsource Bookkeeping? 

Outsourcing bookkeeping can be a double-edged sword. 

While it frees up valuable time so you can focus on the core aspects of your business, it also gives third parties access to your company’s financial records. This can pose a significant risk if these records were used for malicious purposes.

That’s why hiring a reputable bookkeeping company like DialedInBookkeeping is so important. We'll guide you through the process of hiring the right bookkeeper to avoid the potential disadvantages of outsourcing in the later sections of the article. 

For now, let’s discuss the many reasons why you should outsource bookkeeping.

Benefits Of Outsourcing Bookkeeping

Here are the top reasons why you should outsource a bookkeeper: 

Save on Payroll and Operating Costs 

When you hire an in-house bookkeeper, you’ll have to deal with the usual costs of hiring. 

Beyond salaries and benefits, you'll incur costs for recruitment, training, insurance, and potential bonuses. Hiring an experienced bookkeeper can expedite the onboarding process, but since their salaries are typically higher to compensate for their expertise, it can be more costly.

Rather than putting your payroll funds into these costs, you can instead hire external employee(s) that you’ll only have to pay hourly or monthly. You won’t have to worry about insurance, sick leaves, or benefits because you’re technically not their employer. 

Let’s put it this way: In the US, the annual average salary of a bookkeeper is approximately $63,000, according to GlassDoor.  

If you outsource a bookkeeper every month for $2,500, you’ll only spend $30,000 per year for their services. This saves you around $33,000, plus $5,000 to $10,000 annually from overhead costs of office space, utilities, and equipment.

Moreover, since you’re not tied to a contract, you can cancel the bookkeeper’s services at any time. You won’t have to deal with legalities or fees relating to terminating an employee’s contract early. 

Save Time 

Record keeping takes time—time you most likely don’t have enough of as a business owner. It’s a tedious, time-consuming task that requires focus and attention, regardless of the size of your business. 

Outsourcing a bookkeeper saves you that time and effort, resulting in significant cost savings in the long run. You can redirect the time saved to improve your customer service, evaluate your business processes, or streamline the company’s internal operations.  

Reduce Errors 

Another compelling reason to outsource bookkeeping is to reduce many common errors business owners usually make. 

Gone are the days of recording on pen and paper; modern bookkeeping is often done through a sophisticated cloud-based automated system that allows you to view your records anytime, anyplace, on your laptop or mobile phone. 

With a cloud-based system, experts that have been granted permission can access your records at any time. This means more people have eyes on your records, significantly reducing room for errors. 

Outsourced bookkeepers are highly trained specialists, so they'll be able to quickly spot errors and do corrections as necessary. They’ll also be able to inform you of any unusual financial activity as they appear.

Produce Detailed Reports 

Professional bookkeeping services produce more in-depth reports than in-house bookkeepers. Since they work with thousands of clients from different industries, they know about the most important transactions to include in the report. 

Online bookkeeping also uses virtual platforms, allowing you to view your records anytime without needing a formal request from your bookkeeper or accountant. 

You can view the financial status of your business in real time instead of waiting till the end of the day or week to see it.  

Tax Assistance 

We all know how stressful tax season can be, especially for business owners. The good news is that outsourcing bookkeeping can help you with tax, too. 

Monthly reports make tax season a lot easier to navigate since you have all the necessary documents at your fingertips. When tax season arrives, outsourced bookkeepers can efficiently assist with tax returns and identify potential tax deductions, maximizing your savings.

Access to Expertise 

In-house bookkeeping relies on the skills of one or several individuals, which can be limited. 

Outsourced bookkeeping services, however, have a team of certified accountants, tax consultants, and financial analysts. 

You’re essentially hiring multiple people of varying specialized skill sets at a fraction of the cost.

Scalability 

As your business grows, you’ll inevitably need to hire more bookkeepers. 

If you’re hiring in-house bookkeepers, you’ll not only have to spend money for recruitment but also training, which can take up to one to two months per employee. Not to mention the ongoing costs associated with hiring a new employee, like payroll taxes, benefits, and insurances. 

Expanding office space can also be a problem, especially if you’re a small business with limited funds. You’ll not only have to pay for a space increase, but also software, computers, and additional furniture for extra employees.

You don’t have to worry about all that when hiring an outsource bookkeeper. If you’re already working with a company that offers bookkeeping services, you can simply request for an expansion or upgrade of your existing package. Everything will be up and running within a matter of days, and the only thing you’ll need to worry about is the slight increase in cost. 

Types Of Outsourced Bookkeeping Services

Outsourced bookkeeping services do more than just record your company’s spending and cash flow. With finance upkeep becoming digitized, professional bookkeepers can handle a variety of tasks that streamline your company’s operations. 

Here are the primary types of outsourced bookkeeping services:

Accounts Payable (AP) 

Bookkeepers handle accounts payable by receiving, processing, and approving invoices, ensuring they align with purchase orders and reports. They then schedule payments, prepare checks or electronic transfers, and record transactions in accounting software. 

This means you won’t have to worry about late payment fees because your bookkeeper will keep track of due dates and send your reminders accordingly. 

Accounts Receivable (AR)

Unlike account payables, which represent the money a company owes to its suppliers, accounts receivable represent the money owed to a company by its customers. 

Bookkeepers handle this side of the transaction by tracking the invoices sent to customers after the company’s goods or services are delivered. 

They track payments received, record them in accounting software, and follow up on overdue invoices. They’d reach out to clients past due on their payments and take care of collections if needed. 

Payroll Processing

Bookkeepers ensure your employees are paid the correct amount on time. They calculate employee wages based on their monthly salary/hours worked, withholding taxes and deductions, and create paychecks or direct deposits. 

They’re also responsible for keeping and maintaining employee records, including tax information and payment preferences. This eliminates the need for employees to contact HR or management about payroll-related inquiries, errors, or changes.

Bank Reconciliation

Bookkeepers compare a company’s bank statements to its accounting records, ensuring they match the balance shown in the company’s accounting system. This process is called bank reconciliation and it’s one of the many services outsourced bookkeepers offer. 

By regularly reconciling bank accounts, bookkeepers can detect potential fraud or errors and maintain the integrity of the company’s financial statements. 

Financial Reporting 

Bookkeepers summarize a company’s financial performance through various weekly/monthly reports. Common financial statements prepared by bookkeepers or with their data include:

• Balance sheet: A summary of your business’s financial balances, including company assets, liabilities, and shareholder equity. 
• Cash flow statement: Shows the company’s revenues, expenses, and net income over a specific period.
• Profit and loss statement: Compares your business revenue compared to the cost of business operations. 

Clean Existing Books 

Bookkeepers can help clean and organize existing financial records. They review past transactions, correct errors, and categorize your financial data in the right location. 

Reviewing past financial statements is crucial for any growing business because it can help identify recurring issues, optimize spending, and correct errors like overpayments, underpayments, or duplicate payments to incorrect vendors.

How Does Outsourced Bookkeeping Work?

Outsourcing bookkeeping involves hiring a professional freelancer or firm to manage your company's financial records. 

A freelancer works independently and offers personalized service, while a firm provides a team of bookkeepers and may offer additional services like tax preparation or financial consulting.

The process of outsourcing a bookkeeper works much like hiring any third-party service. 

You’ll discuss the terms of the service, including the costs, the frequency of reporting, the types of financial reports needed, and the software or platforms used.

Once you've agreed to the terms, the bookkeeper will request access to your financial information, such as bank statements, credit card transactions, and invoices. 

They’ll input this data into accounting software and begin managing your financial records.

As for payments, it depends on the professional you’ve hired. 

Freelancers often work with either hourly rates or project-based rates for specific projects like year-end closing or tax preparation. 

Firms, on the other hand, often agree on a fixed monthly fee. This monthly fee varies based on the complexity of your financial operations, the services included, and the level of customization required.

Outsourced Bookkeeping Rates

Rates for outsourcing a bookkeeper differ from freelancer to freelancer and company to company. Usually, a freelancer’s hourly rate is between $25 to $30. So if you’ve hired them to work, say, 15 hours a week, you’re looking at a monthly expenditure of $1,500 to $1,800. 

Hiring a freelancer means working directly with an individual, which has its pros and cons. On the positive side, they can gain an in-depth understanding of your financial situation over time. The drawback is that as a single person, their expertise may be restricted to certain areas, limiting the range of services they can offer.

Because of this, we always recommend hiring a company or firm for bookkeeping services. Hiring a firm gives you access to a well-rounded team of experts who handle varying aspects of financial management. And since multiple people handle an area of expertise, you won't have to wait for one person to finish before another task can begin. 

Firms are also significantly more budget-friendly than hiring a freelancer. Let’s take DialedInBookkeeping as an example. 

DialedInBookkeeping has three main packages: Core for $300, Pro for $500, and Business for $1,600 per month. Here’s a breakdown of the available services of each: 

Core

• Four 30-minute sessions with your dedicated account director to review financial statements and system setup  
• Comprehensive organization of your financial records 
• Weekly management of financial transactions 
• Regular email updates on financial activity 
• Monthly analysis of financial performance 
• Monthly balancing of all financial accounts 
• Annual preparation of 1099 forms 
• Text and email support

Pro 

• Real-time insights combining CRM and accounting data 
• Monthly video reviews of your financial performance
• Dedicated phone assistance 
• + All services included in the Core Package 

Business 

• Real-time comparison of financial performance against budget
• Tailored financial reports to meet specific business needs 
• Custom automation and management of financial data 
• + All services included in the Pro Package 

Reputable online outsourcing bookkeeping services likewise offer certain guarantees that freelancers may not, such as accuracy, confidentiality, and timely delivery of financial reports. 

DialedInBookkeeping goes above and beyond with not only a 50% discount on your first three months but also a 125% refund if you're dissatisfied with our service.

How To Find The Right Bookkeeping Services For You 

Before hiring a bookkeeping service, consider these factors:  

Reputation 

Take the time to review the reputation of the company, firm, or freelancer you’re hiring. Look through reviews, testimonials, and case studies. 

Prioritize providers with a proven track record of professionalism, reliability, and client satisfaction. It’s also best that you choose a company that has been in operation for several years because this indicates reliability and stability.

Technology 

Inquire about the tools and software the bookkeepers use to record your financial information. Search for services that utilize advanced accounting software, automation, and cloud-based solutions that offer real-time financial insights. 

Services Offered 

Look beyond the basics of bookkeeping and consider the additional services the company offers, such as payroll management, financial statement preparation, tax aid, and financial advisory. Evaluate these additional services and how beneficial they may be to your business. 

Ease of Communication 

You don’t want to spend hours waiting for a response from your bookkeeper. 

Communication might be a little difficult with a freelancer, especially if said freelancer is balancing multiple clients. 

This is another reason why we prefer hiring companies or firms, because they offer a dedicated customer service line that can immediately connect you to the team responsible for your books. 

Pricing and Scalability 

Discuss the pricing structure and scalability of the bookkeeping service. Their pricing must be in line with your budget and proportional to the services they offer. 

Consider factors such as hourly rates vs. fixed monthly fees, service packages, and any additional charges or costs that may arise during the contract. 

You also want to hire a bookkeeping service that can accommodate your business growth. 

You certainly don't want the hassle of finding another service provider when your business expands. 

A reputable bookkeeping service will be able to scale its services to meet growing business needs without disrupting your financial operations.

Industry Experience 

Search for a bookkeeping service that employs various experts of multiple fields on their team. 

Look for firms with experience in your specific industry, and assess their qualifications and certifications. 

Credible bookkeeping services would readily provide you with the necessary information about their team’s expertise and industry experience.

‍