- What is bookkeeping?
- What does a bookkeeper do?
- What does it mean to outsource bookkeeping services?
- What are the benefits of outsourcing bookkeeping services?
- When should you outsource your bookkeeping services?
- How do you outsource bookkeeping services?
- Outsourcing bookkeeping services: A smart way to run your business better
- FAQ
When should you outsource your bookkeeping services?
If you ask the average small business owner why they got into their field, they probably won't say it's because they wanted to do their own bookkeeping. But that behind-the-scenes task is an essential part of running a successful business. If you want to earn a living and reach your goals, you need to track the numbers and keep on top of your accounting.
That said, there's no reason you have to DIY. Outsourcing bookkeeping services is a smart way to get it done right the first time, while also saving your time for the things you enjoy doing.
Here's what to know about why and how to outsource bookkeeping.
What is bookkeeping?
Bookkeeping is the art of maintaining "the books" — the records of your business's day-to-day financial transactions.
While these books are mostly virtual these days, the image gets the point across. Not only is it hard to rely on your memory, but it's also important to have all your financial information easily accessible for income tax and other purposes.
What specifically gets included in bookkeeping? Basically, any time money gets moved around or changes hands, such as:
- Sales and other income
- Wages and salaries
- Payroll taxes
- Expenses
- Asset purchases
- Loan payments
- Investments
When you enter all of this transaction data into accounting software, you — or your accountant — can easily review and analyze it at a moment's notice.
What does a bookkeeper do?
A bookkeeper's job is to, well, keep the books.
They're responsible for ensuring all financial transactions are logged in the appropriate way. Other tasks bookkeepers often perform include:
- Payroll and accounts payable
- Invoicing and accounts receivable
- Non-financial record-keeping
- Preparing financial documents
In many small businesses, the owner wears a lot of hats: marketing, sales, purchasing, production, and bookkeeping among them. But bookkeeping is actually an ideal service to consider outsourcing, whether you need someone part-time or full-time.
What does it mean to outsource bookkeeping services?
Outsourcing simply means procuring from outside sources. In other words, rather than you or your staff doing the work, you're hiring someone else to do it for you.
In the case of bookkeeping, you might be hiring an individual or firm to perform your bookkeeping services so you don't have to do them yourself. You can also look for a freelance bookkeeper who is able to fit your work into their overall client schedule.
Depending on your needs, you might hire someone to work on-site or from their own home or office.
What are the benefits of outsourcing bookkeeping services?
Outsourcing your bookkeeping costs money, so it's easy to understand why someone might prefer to go the DIY route. And that's true for some businesses. But there are a number of benefits to outsourcing.
For instance:
Save time
When you're doing your own bookkeeping, you're spending precious time that could be devoted to other business tasks you excel at.
Save money
It might seem more cost-effective to do your bookkeeping yourself. But hiring a pro could save you money in the long run, as they're more likely to identify savings opportunities and tax breaks.
Avoid less-favoured tasks
If you'd rather clean your bathrooms than do your bookkeeping, that's a clear sign you should outsource it. Save your energy and willpower for tasks only you can do.
Boost quality
While some small business owners are excellent bookkeepers, the task doesn't come naturally to everyone. Outsourcing means your books will be in even better shape than if you'd done them yourself.
Get it done
If bookkeeping is a task that often falls off your plate, that's a good sign outsourcing is the better option for you. By hiring someone to focus on your bookkeeping, you're ensuring your books stay up to date.
When should you outsource your bookkeeping services?
There's no single answer to this — it depends on your particular needs and goals. But there are a few signs that it's time to outsource your bookkeeping. For instance:
- You're not getting your bookkeeping tasks done on time.
- You have a hard time understanding the financial state of your business due to incomplete or incorrect bookkeeping.
- You're missing or miscalculating tax payments, or not paying contractors and staff (or yourself!) on time.
- The time you spend bookkeeping is preventing you from getting to other important tasks.
- You dread doing your bookkeeping.
If any of these apply to you, it might be time to start interviewing professional bookkeepers.
How do you outsource bookkeeping services?
One big hurdle when it comes to outsourcing bookkeeping is trust. You're turning over your private financial information to an outsider. How do you know they'll do a good job and keep the information to themselves?
Here are a few steps to follow:
- Start by asking for referrals. Look to your network of other small business owners to find a quality bookkeeper or bookkeeping firm with a good reputation. Online reviews can also be useful.
- Interview potential bookkeepers. When you've found someone you might want to hire, interview them like you would any potential staff member. Ask about their working style, how they like to interact with clients, and the tools and software they use. Make sure they are happy to work in a way that fits you and your business.
- Clarify roles and responsibilities. Once you've hired someone, be clear on their exact role and responsibilities. It can be helpful to create a document that outlines their job description, the tasks they're expected to perform, and any relevant deadlines.
- Give them access to the information they need. Once they have access to the necessary documents, set up a regular time to check in and review the books together.
Keep in mind that outsourcing doesn't mean you're completely hands off. You're still the business owner, and you need to understand your accounts.
Outsourcing bookkeeping services: A smart way to run your business better
Running a business can be overwhelming, and it's often tempting to do everything yourself rather than taking the time to train someone else to do it. But by outsourcing services like bookkeeping, you're not just freeing up your time for other aspects of the business — you're building a team that can step up and help your business grow.
Whether you decide to outsource your bookkeeping services or not, you can easily track your financial transactions with QuickBooks Online. Sign up for a free trial today.
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