How to Outsource Your Bookkeeping: A Comprehensive Guide for Small Business

Did you know? Small businesses that outsource their bookkeeping save an average of 10 hours per week! That’s 10 hours you could spend developing new products, connecting with clients, or even taking a well-deserved break.

In this comprehensive guide, we’ll explain everything you need to know about outsourcing your bookkeeping. We’ve covered the benefits, potential drawbacks, and how to find the perfect bookkeeping partner for your business objectives.

Ready to reclaim your time and sanity? Let’s dive in!

What is Bookkeeping?

Bookkeeping is the process of recording all your business finances and transactions. Think of it as meticulously tracking the money entering and leaving your business. This includes everything from sales and expenses to payroll and taxes.

Why is this so important for a small business like yours? Accurate bookkeeping helps you make informed decisions, secure funding, and pay correct taxes. Without it, you’re essentially flying blind!

Types of Bookkeeping

There are a couple of main methods to consider:

• Single-entry bookkeeping: This is like keeping a simple check register. It’s suitable for very small businesses with straightforward transactions.
• Double-entry bookkeeping: This method is more common and involves recording each transaction twice – as a debit and a credit. It provides a more complete and accurate view of your finances.

Signs You Need to Outsource Bookkeeping

Now, you might wonder if outsourcing your bookkeeping is right for your business. Let’s explore some telltale signs that it might be time to hand over the reins to a professional:

1) Overwhelmed

Do you constantly feel stressed or anxious about managing your finances? Are you spending countless hours buried in receipts, deciphering invoices, and struggling to reconcile bank accounts and statements? 

Your time is a valuable asset, and it could be better spent focusing on core business activities like developing new products, marketing your services, or building relationships with clients. Outsourcing your bookkeeping can free you from the burden of financial admin, allowing you to focus on what you do best.

2) Falling Behind

In the fast-paced business world, it’s easy to fall behind on tasks, especially those that aren’t your core competency. Are you struggling to keep up with day-to-day operations and transactions, reconcile bank and other financial accounts on time, or generate timely financial reports? 

Falling behind can lead to costly errors, missed opportunities, and compliance issues. A professional bookkeeper can ensure your financial records are always accurate and up-to-date, giving you peace of mind and a clear picture of your financial health.

3) Lack of Expertise

Bookkeeping might seem straightforward, but it requires specialized knowledge of accounting principles and best practices. Are you confident in accurately categorizing expenses, tracking income, and generating compliant financial reports? 

If not, admitting that you need expert assistance is perfectly okay. A qualified bookkeeper can ensure your financial records are accurate and compliant and provide valuable insights into your business performance.

4) Growth

Congratulations on your business expansion! But with growth comes increased financial complexity. Are you finding it challenging to manage the growing volume of transactions, track inventory, or generate comprehensive financial reports?

Outsourcing your own bookkeeping can provide the scalability and expertise you need to navigate this exciting phase of your business journey.

5) Errors

Even small errors in your bookkeeping can have significant consequences. Have you noticed inconsistencies in your financial records, discrepancies in your bank reconciliation, or faced compliance issues during tax season? 

These can be red flags that signal the need for professional bookkeepers support. A qualified bookkeeper can identify and rectify errors, ensuring your financial records are accurate and compliant.

How to Outsource Your Bookkeeping: A Step-by-Step Guide

This step-by-step guide will empower you to make informed decisions and find the perfect bookkeeping partner for your business. Let’s dive in!

Step 1: Assess Your Needs

Before searching for a dedicated bookkeeper, take some time to understand your specific requirements. This includes:

• Software used: Do you have a preferred outsourced accounting software? Make sure the virtual bookkeeper is proficient in it.
• Transaction volume: How many transactions do you process each month? This will influence the cost and time involved.
• Reporting needs: What kind of financial reports do you need? Be clear about your expectations.
• Industry-specific needs: Does your industry have any unique accounting requirements?

By clearly defining your needs, you’ll be better equipped to find the right bookkeeping solutions for your business whether it is for account receivables or payables.

Step 2: Find a Qualified Outsourced Bookkeeper

Now that you understand your needs well, it’s time to find the right outsourced bookkeepers. You have two primary options: freelancers or bookkeeping firms.

Freelancers vs. Firms

Bookkeeper Type	Pros	Cons
Freelancers	Often more cost-effective, especially for small businesses with simpler needs. Direct communication and a more personal relationship.	Finding a reliable freelancer or outsourced bookkeeping firm can take time. Might have limited availability.
Firms	Offer a wider range of in house bookkeeper services and expertise. More robust systems and backup personnel.	Can be a pricier option as they often go as an accounting team. An accounting firm might not always have the same level of personal attention.

Where to Look

• Online bookkeeping service platforms: Websites like Upwork and Fiverr offer a vast pool of freelance bookkeepers.
• Referrals: Ask fellow business owners for recommendations.
• Local bookkeeper directories: Check your business directories or online search engines to hire local bookkeepers.

Key Qualifications

• Experience with your industry: Industry-specific knowledge can be invaluable.
• Software proficiency: Ensure they’re comfortable with your preferred accounting software.
• Accounting certifications: Look for international and local bookkeeping certifications, such as Certified Public Bookkeeper (CPB) or Certified Bookkeeper (CB).
• Strong communication skills: You want someone who can clearly explain financial information.

Take your time to interview potential candidates and check their references. Finding the right bookkeeper is an investment in your business’s financial health, so choose wisely!

Step 3: Request Proposals and Compare

Once you’ve identified a few potential bookkeepers, it’s time to request proposals and compare their offerings. This will help you make an informed decision. Here are some essential questions to ask:

Essential Questions to Ask:

• Pricing: How do they structure their fees (hourly, monthly bookkeeping, project-based)? Get a clear understanding of their pricing model and what’s included.
• Services included: What specific virtual bookkeeping service do they offer? Do they handle accounts payable, accounts receivable, bank statements reconciliation, financial reporting, tax preparation, and estimated tax payments?
• Experience and qualifications: What experience do they have with businesses similar to yours? Do they have any relevant certifications?
• Software: What accounting software do they use? Are they comfortable working with your preferred software?
• Communication methods: How will they communicate with you (email, phone, video calls)? How often can you expect updates?
• Security measures: What measures are in place to protect your financial data?
• Client references: Can they provide references from other clients?

Don’t hesitate to ask for clarification on anything that’s unclear. Remember, you’re entrusting them with your financial information, so it’s crucial to feel comfortable and confident in their abilities.

Step 4: Onboarding and Communication

Congratulations on choosing a freelance bookkeeper or a bookkeeping team! Let’s ensure a smooth start with clear onboarding and communication. From the get-go, be upfront about your expectations. This includes how often you want financial reports, preferred communication channels, expected query response times, and any crucial reporting or tax filing deadlines. 

Open communication is key to avoiding misunderstandings and keeping everyone aligned. Your bookkeeper will need access to your financial data to succeed. This might include granting access to your accounting software, providing bank and financial statements, establishing a system for sharing receipts and invoices, and ensuring they have the necessary payroll taxes and small business tax return information if they manage that for you. 

By setting clear expectations and providing the necessary access, you’re setting your bookkeeper up to manage your finances efficiently and accurately successfully.

Step 5: Ongoing Management

Outsourcing your bookkeeping and accounting needs isn’t a “set it and forget it” task. Ongoing management ensures you get the most out of the relationship and stay on top of your financial health.

Regular Reviews

Make it a habit to review the financial reports your bookkeeper provides regularly. This includes:

• Income statements: Understand your revenue and expenses.
• Balance sheets: Get a snapshot of your assets, liabilities, and equity.
• Cash flow statements: Track the cash movement in and out of your business.

Don’t just glance at the numbers; analyze them. Are there any trends or red flags? Do you have questions about specific transactions? Regular reviews help you identify potential issues early on and make informed business owner decisions.

Communication is Key

Maintain open communication with your bookkeeper. Schedule regular check-in calls or meetings to discuss your finances, ask questions, and address concerns. This ongoing dialogue ensures you’re both on the same page and working together to achieve your financial goals.

By actively participating in the process and staying informed, you’ll maximize the benefits of outsourcing your bookkeeping and maintain a healthy financial foundation for your business.

Choosing the Right Bookkeeping Software

While your bookkeeper will handle the day-to-day management of your financial records, selecting the right software is a crucial step. Think of it as the foundation upon which your financial data is built.

Here’s the comparison between cloud-based and desktop software organized in a table:

Feature	Cloud-Based Software	Desktop Software
Software Type	Cloud-based	Desktop
Flexibility and Accessibility	High (Access from anywhere with internet)	Limited (Access only on installed computers)
Cost	Recurring subscription fee	One-time purchase
Internet Requirement	Required	Not required
Collaboration	Easy	Difficult
Updates and Backups	Automatic	Manual (User’s responsibility)

Popular Options

Here are a couple of popular bookkeeping software options to consider:

QuickBooks Online

This is often the go-to choice for many businesses, and for good reason. It boasts a user-friendly interface that makes bookkeeping tasks less daunting. It’s a comprehensive solution for managing your finances with extensive features like invoicing, expense tracking, and financial reporting. Plus, it offers a variety of plans to suit different business needs and budgets.

FreshBooks

FreshBooks is worth considering if you’re looking for a solid alternative to QuickBooks Online. It excels in accounts receivable features, making it easy to create and send professional invoices, track payments, and manage client relationships. It also offers time tracking, project management, and expense tracking capabilities, making it a versatile tool for businesses of all sizes.

HoneyBook

This platform is a dream for freelancers and solopreneurs. It goes beyond basic bookkeeping by offering features tailored to their specific needs. Think streamlined invoicing, creating and sending proposals, and even managing contracts all in one place. It’s designed to help you stay organized and efficient while keeping your finances in check.

Xero

Xero is an excellent option for those seeking a balance of features and affordability. This cloud-based software is known for its intuitive interface and robust reporting capabilities. It simplifies bank reconciliation, tracks expenses, and provides insightful financial reports to help you understand your business’s performance.

Oracle Netsuite

When your business reaches an enterprise level, you need a solution that can handle the complexities of your finances. Oracle Netsuite is a comprehensive suite that offers advanced features for financial management, inventory management, and more. It’s designed to streamline operations, improve insights, and drive growth for larger businesses.

Remember to take advantage of free trials to test out a few options before deciding!

Integration with Other Systems

When choosing software, consider how well it integrates with your other business tools. This streamlines your workflow and reduces manual data entry. Look for integrations with:

• Banking: Automatic bank feeds simplify reconciliation.
• Payment processors: Seamlessly track online payments.
• CRM software: Connect your customer relationship management system for a holistic view of your business.
• E-commerce platforms: Integrate with your online store for efficient sales and inventory tracking.

Choosing the right bookkeeping software can significantly impact your efficiency and financial management. Before making a decision, evaluate your needs and explore different options.

Cost of Outsourcing Bookkeeping

Now, let’s talk about the financial side of outsourcing your bookkeeping. Understanding the costs involved will help you budget effectively and find a solution that aligns with your financial resources.

Pricing Models:

Bookkeepers typically use one of these pricing models:

Here’s the table outlining different pricing models used by bookkeepers, along with descriptions and estimated costs:

Pricing Model	Description	Estimated Costs
Hourly Rates	You pay an hourly rate for the time spent on your bookkeeping tasks. Offers flexibility but can be unpredictable.	$25 – $100 per hour
Fixed Monthly Fees	You pay a set monthly fee for a defined scope of services. Provides predictability and simplifies budgeting.	$200 – $1,000 per month
Value-Based Pricing	The price is based on the value the bookkeeper provides, such as improved efficiency, reduced errors, or time savings. Focuses on outcomes rather than just time spent.	Varies greatly based on outcomes and agreement

Finding Your Ideal Bookkeeper Online

In today’s digital world, you can find and hire a skilled bookkeeper without ever leaving your office. Here are some online platforms for virtual bookkeeping services to explore:

Upwork

This platform boasts a massive pool of freelance talent, including bookkeepers with various experience levels and specialties. You can post a job with specific requirements, review proposals from interested bookkeepers, and conduct interviews through the platform. Upwork offers payment protection and dispute resolution services for added peace of mind.

Fiverr

Known for its quick and affordable services, Fiverr is an excellent option for finding bookkeepers for smaller tasks or one-time projects. You can browse through different “gigs” freelancfers offer, compare pricing, and read reviews from previous clients. Fiverr also offers a Pro service for businesses seeking higher-quality freelancers with verified skills and experience.

LinkedIn

While primarily known for professional networking, LinkedIn is also a valuable resource for finding freelance bookkeepers. You can search for professionals with relevant experience and skills, view their profiles and recommendations, and connect with them directly. LinkedIn can be beneficial for finding bookkeepers with industry-specific expertise.

Remember to carefully review profiles, check references, and ask relevant questions before hiring a bookkeeper online. Clear communication and well-defined expectations are crucial for a successful working relationship.

Final Thoughts on Outsourcing Bookkeeping & Accounting Services

Outsourcing your bookkeeping is more than just a smart financial move – it’s a strategic decision that can propel your business forward. By leveraging outsourced bookkeeping services, you’re not just saving time and money; you’re gaining a competitive edge in an increasingly complex business landscape.

Remember, the key to successful outsourcing lies in choosing the right partner, clearly defining your needs, and maintaining open communication. With the right approach, you can transform your financial management from a burden to a powerful tool for business growth.

Don’t let bookkeeping hold you back any longer. Stop with the DIY bookkeeping and take action today and explore how outsourcing can revolutionize your financial processes. Whether you want to scale your business, improve accuracy, or simply reclaim your time, outsourced bookkeeping work is your ticket to financial clarity and business success.

Ready to take the plunge? Assess your current bookkeeping needs and research potential outsourcing partners. Your future self (and your bottom line) will thank you!