9 Considerations for Outsourced Bookkeeping

Bookkeeping is a necessary part of every business, both big and small. It’s no surprise messy or inaccurate books can be a recipe for disaster in your business. However, many business owners fall into the trap of inadequate bookkeeping either due to a perceived elevated cost or because they want to handle it themselves.

This is where outsourced bookkeeping comes in. Being able to outsource this area of your business can give you several advantages that go beyond saving money. In this article, you’ll find 9 considerations of why outsourcing your bookkeeping might be the right move for your business.

1. It’s cost-effective

One of the main reasons why any business considers outsourcing any part of their operation is the opportunity to find a solution that helps them save money without compromising the quality of the service.

Outsourced bookkeeping definitely fits this description, since U.S. based accounting firms that offer this service are equipped to handle the needs of their clients.

Keep in mind, cost is not the number one priority in this conversation. For many, outsourcing brings to mind shipping work overseas for minimal cost. The goal is to pay for high quality, professional services, while maintaining a reasonable budget.

In this regard, outsourcing makes a lot of sense. Typically with an outsourced service you can scale services up or down so you get the right service for your business.

2. Impact for tax season

The mistake many businesses make when it comes to accounting is equating it with taxes. Filing your taxes is a mandatory function of every financial system, but is really just the ending point of a year’s worth of accounting.

When you neglect bookkeeping for an entire year, then try to file taxes you run into a lot of problems.

  1. Messy, costly cleanup
  2. Time-consuming conversations revisiting historical transactions
  3. Lose any opportunity to plan proactively for taxes
  4. Potentially miss deductions due to sloppy books
  5. Penalties and interest from missed or deferred tax payments

When you have a team handling your bookkeeping, you set yourself up for success at tax time. Handing a clean set of books to a CPA makes tax time smooth, and even purposeful.

Having a team of professionals handle this for you will certainly take considerable weight off your shoulders.

3. Focus on what matters

Knowing that there’s an area of your business that’s being competently handled is simply priceless. This makes outsourced bookkeeping the perfect way to free-up some of your mental bandwidth.

Neglecting bookkeeping creates more mental pressure as the inevitable cleanup looms over your head.

Trusting a team to handle the day-to-day creates tremendous peace of mind while you can confidently focus on your strengths in business.

Not to mention, you didn’t start a business to manage a financial department. Your time and energy is best spent developing new business, new strategies, and the culture of your team.

By outsourcing your financial work, you can stay on top of it, without diverting your focus.

4. Implement a monthly financial rhythm

For many businesses that don’t have a dedicated professional looking after their businesses’ accounting, bookkeeping is something that’s done on an as-needed basis. This is not optimal, as having updated books provides you with a series of tactical advantages when it comes to decision making.

Building a successful business is often as simple as doing the right things consistently.

With a marketing plan, you’ll want to have specific activities working every single month. Your financial system is the same. Create a rhythm of closing the books, reviewing the reports and repeat.

5. Rely on a trusted team

Having an expert look after your business’s financials is good. Having a team of financial experts looking after your business’s financials is better.

The biggest advantage of working with an accounting firm is the in-house expertise along with diverse skill sets that they bring to the table. This allows smaller businesses that can’t hire in-house expertise to have access to the same resources bigger businesses have.

6. Present to investors and lenders with confidence

Looking for investors and other types of funding options is part of the business plan for many early-stage businesses. And a necessary aspect of this process is to have your books ready for when they ask for them.

Having updated books is part of the criteria investors will use to evaluate whether they want to support your business or not.

7. Understand cash flow projections

You can’t look into the future but you can prepare for it. Clean books help you put together accurate projections of what will be the state of your cash flow.

The benefits:

  • Having reliable data is critical to making informed decisions and prepare for different scenarios
  • Updated books let you use technology solutions that can make preparing projections quick and easy.

8. Know your financial health at any time

Having updated books is the best way to be able to gauge the financial health of your business. Since this is a time-consuming process, many businesses don’t look into their finances periodically.

A solid financial system gives you a data-driven measure of your business. Without hard data, you’re left with running your business on a gut feel.

Working with an outsourced bookkeeping firm allows you to keep tabs on your finances effortlessly.

9. Harness the power of financial technology

Today’s accounting software landscape is incredibly varied and you can find apps for just about every need. Whether it’s automating your payroll or generating automatic reports, technology makes everything significantly easier. However, for all this tech to work, it needs reliable data. And that data comes from your books.

Entrepreneurs today have the benefit of a robust financial app ecosystem which allows speed and depth in financial reporting. Xero and Quickbooks Online are in most cases the hubs of these ecosystems, syncing with banks, credit cards, payroll software such asGusto, and a multitude of apps.

When you work with an outsourced partner who understands these integrations, and knows the technology, you’ll benefit greatly in efficiency and financial insight.

In conclusion

Outsourcing can give your business several strategic advantages. When it comes to outsourcing your bookkeeping there are plenty of upsides and very minimal disadvantages to going this route.

If you’re considering working with an outsourced firm you can always take a look at our services and set up a call. We’re excited to discuss the aspects of bookkeeping that matter the most to you — so you can make sure you get the services that fit your needs the best.

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