You’ve started a business, made some purchases, and logged sales; now comes the task of documenting everything. We don’t blame you if you cringe at the prospect of keeping track of all your transactions, but if you outsource bookkeeping, you won’t have to.
Now comes the million-dollar question: who will you hire to do it for you?
You have two choices: hire local bookkeepers or “virtual” bookkeepers. A third option is hiring an in-house bookkeeper for you, but the cost is significantly higher than DIY bookkeeping.
Let’s explore the benefits and drawbacks of outsourcing bookkeeping so you can stop doing it yourself with Quickbooks or spreadsheets and hire someone else to do it for you.
why should I delegate my bookkeeping?
Nobody starts a business in order to do their own bookkeeping. Outsourced bookkeeping gives you back valuable time to focus on running your business, identifying new growth opportunities, or simply relaxing from the stresses of entrepreneurship.
You also get access to the necessary reports and financial statements that every business owner should be aware of when it comes to outsourced bookkeeping: balance sheets, income statements, and cash flow statements.
Aside from day-to-day operations, handling your bookkeeping by a professional speeds up the tax filing process. You’ll have all the information you need to quickly complete the forms and generate IRS-compliant reports for your Tax return.
further reading: how to choose the right bookkeeping software for your business
when should I delegate my bookkeeping?
Typically, there are a few indicators that it’s time to abandon DIY and hire a professional.
If you are considering outsourcing your bookkeeping, consider the following:
- Do-it-yourself bookkeeping consumes more time than you can afford
- Your books are always out of date.
- You’ve missed out on tax breaks.
- You’re having trouble keeping up with your cash flow.
- You’re having trouble keeping track of your accounts receivable and payable.
- Making estimated tax payments has become a significant annoyance.
Is your situation not represented above? This is by no means an exhaustive list. There are numerous indicators that you should hire a bookkeeper, and only you will know when it is time to outsource your bookkeeping.
It is preferable for most business owners to do it sooner rather than later. Even pre-revenue businesses require bookkeeping, and maintaining consistent records is critical as your business grows.
outsourced bookkeeping services types
Outsourced bookkeeping services come in two varieties: hiring a local bookkeeper or a virtual bookkeeper, depending on whether you’re working with someone you know down the street or someone in another city.
We’ve broken down the pros and cons to help you decide which is best for you.
explore more: 6 reasons why you need to keep your bookkeeping up-to-date
hiring a nearby bookkeeper
A local bookkeeper is a person or team of bookkeepers who work in your area. This is an excellent option if:
- You value meeting your bookkeeper in person.
- You keep physical records and do not use online banking or payment systems like Stripe to run your business.
how does local bookkeeping operate?
In general, there are two options for hiring a local bookkeeper: a freelancer or a firm.
A freelance bookkeeper works one-on-one with you to complete your books. Freelance bookkeepers can work online, at your location, or both. Solo practitioners’ skill and experience levels vary.
The second option is to hire a bookkeeping company. Firms will typically charge a higher fee than a freelance bookkeeper. They can, however, usually provide some “assurances” that solo bookkeepers cannot. Their bookkeepers, for example, may be professionally certified.
In addition, if the person in charge of your books needs to take a leave of absence, another bookkeeper can take over, so you don’t have to worry about service gaps.
A freelance bookkeeper or a firm will work independently of your company; they are not employees. Try to find one that provides you with secure, immediate access to your financial reporting in accounting software that you are familiar with.
Another critical feature is security. Ensure that the person you hire can be trusted with your company’s financial information, including everything from bank and credit card information to invoices and important documents. And never delegate treasury functions to a bookkeeper: when it comes to handling investments, signing checks, or making online payments or wire transfers, you should be the sole signing authority.
virtual type of bookkeeping
“Virtual bookkeeping” may sound a little dated—like a Windows 95 application—but it refers to a popular, paperless method of handling your books.
Virtual bookkeeping refers to having someone else do your books for you online.
Virtual bookkeeping combines the best aspects of traditional bookkeeping and bookkeeping software. When you use a virtual bookkeeping service for startups, you get bookkeepers to manage your books as well as software to track your finances. It’s an excellent choice if you:
- Use online banking and are familiar with the internet
- Prefer a monthly flat rate over hourly billing
- Would you like to have online access to your finances via a mobile app?
- Would rather talk on the phone or online than in person
Having your books done by professionals will save you time and give you peace of mind. Working with an online service also allows you to securely store your data in the cloud and access your financial information from anywhere, at any time.
what is virtual bookkeeping?
Through a secure online account, virtual bookkeeping connects you with honest bookkeepers. A high-quality service will automatically download your expenses from online banking and your merchant processor, eliminating the need to send envelopes of receipts.
When it comes to tax season, an online bookkeeping service may also provide you with a year-end financial package that includes all of the financial statements required by your accountant to file your small business tax return.
When you sign up with Countick, for example, you’re assigned a team of professional bookkeepers who collect your data and turn it into monthly tax-ready financial statements. Then, using our platform, you can keep track of your finances, download financial statements for your accountant, and communicate with your bookkeeping team.
how Countick can assist
Countick, America’s top-rated bookkeeping service provider, can provide you with the assistance you require. We connect to your bank accounts, credit cards, and merchant providers to automatically import transactions and update your financial reports. If you need to discuss your finances, you can message your personal bookkeeping team or schedule a phone call through the Countick platform. You will also have access to our in-house tax professionals, who can advise you on reducing your tax bill.
internal bookkeeping
When your company’s needs outgrow the solutions we’ve discussed, it’s time to expand your accounting department and hire an in-house bookkeeper.
It is your responsibility to determine whether your company can afford an in-house bookkeeper. Salary.com says their annual salary ranges between $39,568 and $50,577 before Payroll Taxes and employee benefits. If you only need someone to perform bank reconciliations and forecasting, that can add up quickly. Full-time, in-house bookkeepers are best suited for businesses with complex needs.
If you require in-house assistance but cannot afford to hire a full-time bookkeeper, consider hiring one part-time and increasing their hours as needed. Some companies hire a bookkeeper part-time but give them extra administrative tasks to make the job full-time.
local bookkeeping Vs. virtual bookkeeping Vs. in-house bookkeeping
In conclusion, here are your options when outsourcing your business bookkeeping.
bookkeeping service
Local accountant
excellent match if…
- Your company generates less than $1 million in revenue and employs fewer than 5 people.
- You rely on physical records to run your business or want to meet your bookkeeper in person.
- You’re ready to pay bills that may vary from month to month (due to hourly billing)
benefits
Local bookkeepers are proficient with paper-based recordkeeping.
Freelancers may be able to work in a variety of ways (visiting your office or communicating online)
further read: the importance of accurate bookkeeping for tax filing
bookkeeping service
Bookkeeper on the internet
excellent match if…
- Your company generates less than $1 million in revenue and employs fewer than 5 people.
- You do your banking online.
- You’d rather pay a monthly flat fee than an hourly bill.
- You require mobile access to your financials.
benefits
- allows you to operate a paperless office.
- Immediate online communication
- You get human bookkeepers as well as financial management software.
- You get a team to do your books—no service interruptions if your bookkeeper is ill or away.
bookkeeping service
Internal bookkeeper
excellent match if…
Your company generates more than $1 million in revenue and employs more than 30 people.
benefits
- A more efficient way to keep the books for a larger company.
- You receive direct responses from the bookkeeper.
- Choose a bookkeeping system that gives accurate financial statements, books ready for taxes, and a safe way to store and access your company’s financial records and data.
- I pay an accountant, so why can’t they do it for me?
- In a nutshell? Yes. Long response? Yes, but it can be costly.
- Many accountants provide bookkeeping as part of their accounting services or will help you catch up before tax season. The catch is that a CPA typically charges a higher hourly rate than a bookkeeper. Because of the time and effort required to become accredited, they typically charge a higher hourly rate than a bookkeeper.
Hiring a local or online bookkeeper is less expensive, and they can help you with your finances all year. This means you can access crucial financial information to help you manage your cash flow and make decisions. Then you can use accounting firms and tax professionals only for tax preparation, lowering overall costs.
