It’s normal for entrepreneurs to take on numerous responsibilities that fall outside their job description. If you have a limited number of staff, there are many tasks that will fall to you to keep your business running. If you try to do too much, though, you’ll notice that your productivity starts to suffer.
After all, it’s difficult to focus if you’re constantly switching tasks. In addition, there’s a greater risk you’ll make mistakes.
The problem with bookkeeping, in particular, is that it requires complete accuracy. Plus, unless numbers are your passion, managing finances may well become so tedious that you start questioning why you ever started your business in the first place. Whereas you could hire a part-time bookkeeper, there are multiple reasons why you should outsource bookkeeping.
How Does Outsourced Bookkeeping Work?
Outsourcing your bookkeeping is no different from outsourcing any other task.
To start, you should vet your options to find someone you can trust. Once you’ve made your choice, you’ll need to provide the bookkeeper with all your financial information. It’s a good idea to use a cloud-based accounting tool, as this will keep your data secure. If you have any financial documents on paper, you’ll need to digitize them.
You’ll also need to send the bookkeeper your bank and credit card statements. Contact your bank and card issuer to find out if it’s possible to add the bookkeeper as a read-only user. In addition, the bookkeeper will need access to the account you use for sales tax, payroll (if you use a third-party service), and the tax information for subcontractors.
Next, you’ll need to set the contract terms with your bookkeeper. You may want the bookkeeper to work for every day or only a couple times a week. You should also decide how often you want cash flow updates (weekly or monthly is typical) and discuss how you expect the bookkeeper to present all your financial information.
Finally, you need to agree on communication. Determine how often you want to check in with the bookkeeper, how to deal with problems or queries that crop up, and who will be the bookkeeper’s point of contact at your business. You should also decide what means of communication you’ll use: a messaging app, phone calls, video conferencing, or something else.
Usually, it won’t be up to you to figure this out on your own. Bookkeepers tend to offer readymade plans to help you get started faster, although you can always customize these plans to better suit your business.
11 Reasons to Outsource Bookkeeping
Why outsource bookkeeping at all? Is it worth the cost? Would it be better to just hire someone? For almost every startup, outsourcing is going to be the best option.
1. Dedicate More Time to Core Business Activities
Every additional task you add to your calendar takes up time you could be using for the activities that only you can do. For instance, you could be developing products, fine tuning your services, or nurturing leads. It’s no better if you delegate bookkeeping to one of your employees. You hired all of your workers for their specific expertise — and they should be using all their time providing critical support to your business.
2. Improve Your Focus
With bookkeeping off your schedule, you’ll be better able to focus. This makes it more likely that you’ll be able to sit down to a single task for several hours without interruptions.
3. Reduce Stress
Spending several hours each week to bookkeeping will eventually become stressful. You’ll feel frustrated that you’re unable to spend more time on the activities that matter to you, especially if you need to prioritize financial tasks just to make sure that invoicing, payroll, and paying bills happens on time.
4. Spend Less
For most small businesses, hiring a part-time employee just for bookkeeping is an unnecessary expense. Plus, hiring another member of staff will incur additional costs like benefits and payroll, perhaps even office space and training. By outsourcing, you simply pay the contract worker for the hours you need, nothing more.
In fact, you’ll likely find you save more money by outsourcing a bookkeeper than continuing to do the job yourself. The extra time you have will end up leading to greater returns for your business.
5. Prevent Errors
Although bookkeeping is a straightforward task, it does require some knowledge. You may make a mistake or miss something important if you’ve never done bookkeeping before — especially if you’re rushing to fit it in between your other work.
Having up-to-date, accurate financial information is critical for decision making. It can even help you decide when to pursue growth opportunities. A professional bookkeeper will ensure that all your financial information is entered into the system on time and in the correct order.
6. Avoid Small Business Fraud
The opportunity for small business fraud increases when you don’t have good oversight of your finances. Many entrepreneurs are unaware of just how important it is to have separation of duties and other internal controls. For instance, if one of your employees writes checks, a different employee should reconcile bank statements. This will avoid billing and payroll fraud, check tampering, and skimming. And these are just the start — there are numerous ways employees can steal from your business.
A bookkeeper can set up systems to avoid fraud in your company. Such strategies will make it more difficult for employees to steal money and, if they do, the bookkeeper will notice quickly and easily figure out who is the culprit.
7. Keep Your Finances Confidential
Maintaining confidentiality around financial records is critical. Outsourcing allows you to pick from a wide pool of candidates to find someone who has been vouched for by other small business owners. In fact, many entrepreneurs feel more comfortable contracting a professional who is unconnected to the company than a bookkeeper in their local community.
8. Allow Your Business to Grow
Most entrepreneurs start their business with the idea that they’ll eventually hire a larger team and expand their operations. As your business grows, it will become ever more difficult to carry out the bookkeeping yourself. When you outsource work, however, you can simply change the contract as you go, asking the bookkeeper to take on a few more hours per week.
9. Receive Expert Advice
A professional bookkeeper may be able to provide you with additional support and advice. You’ll learn how to best manage the finances at your company and be better prepared for the future.
10. Always Have Someone to Manage Your Books
If you hire an in-house bookkeeper, you’ll be in trouble whenever the employee takes a sick day or goes on vacation — or quits without notice. Outsourcing makes it much easier to switch to a different bookkeeper at a moment’s notice, particularly when you contract through an agency.
11. Access the Latest Tools
Professional bookkeepers have all the latest tech and tools to perform bookkeeping effectively and efficiently. Most are also committed to keeping up with their education. You can rest assured that you’ll be receiving the best possible service.
Should You Outsource Bookkeeping from Overseas?
Outsourcing bookkeeping from overseas can provide you with a service that is just as high quality as contracting a worker from within the country. In fact, there are several additional benefits to outsourcing from abroad.
Benefit from the Time Difference
If you want to communicate with your bookkeeper during business hours, you may like to choose someone who is located near you. However, it can be beneficial to contract someone who is in a time zone several hours ahead. That way, the bookkeeper will take care of everything during the night and you’ll start work the next day with all your financial tasks already complete. This means you’ll always be working with the most up-to-date records possible.
For many entrepreneurs, the lower cost of outsourcing bookkeeping services from overseas is a major selling point. When money is already tight, this could even be a necessity.
In some cultures, employees are less likely to quit their jobs every time a new opportunity pops up. This can help you develop a long-lasting relationship with the same bookkeeper.
Of course, you will need to take some measures to be safe when outsourcing from overseas. One option is to use a virtual assistant agency that can provide you with someone who specializes in bookkeeping. This will mean you know you’re receiving support from a trustworthy individual. It will also make coordinating with the bookkeeper easier, as you can expect the agency to take care of all the small details and ensure that everything runs smoothly.
Bookkeeping is one of the most essential tasks for any small business. Neglecting or making mistakes with bookkeeping could be the downfall of your business. Since it’s an activity that takes a limited amount of time, many entrepreneurs think it’s something they can do themselves. However, it’s much better to leave bookkeeping to a professional, outsourcing just the hours you need.