Outsourcing bookkeeping has multiple business benefits. Seeking assistance from trained experts gives you time to focus on higher-impact business activities while ensuring essential financial management tasks, such as expense tracking, accounts payable and receivable management, bank reconciliation, and financial report generation, are executed efficiently and accurately. In this article, we’ll teach you how to outsource bookkeeping for your business.
What Does Outsourced Bookkeeping Mean?
Outsourced bookkeeping means contracting external entities, such as freelancers, firms, or in-house employees, to handle bookkeeping tasks. Activities companies would typically assign to an outsourced bookkeeper include:
- General ledger maintenance
- Expense tracking
- Bank reconciliation
- Monthly financial reports
- Accounts receivable and accounts payable management
- Payroll
- Tax preparation
Outsourced bookkeeping helps business owners place their focus on day-to-day business operations. They might also provide expertise on specific bookkeeping activities, such as tax compliance and benefits.
Why Outsource Your Bookkeeping?
While handling your own bookkeeping might seem cheaper at first glance, the benefits of outsourced bookkeeping prove that investment is worth the cost. Below are a few significant benefits of outsourcing bookkeeping.
Increases operational efficiency
Without outsourced bookkeeping services, the business owner is responsible for financial management. The significant time investment required for bookkeeping takes time and energy from day-to-day business operations. Your obligations slow you down and prevent you from pursuing activities that could bolster business growth.
Outsourcing bookkeeping transfers the manual load of financial management to dedicated professionals. This frees up the rest of your day for higher-impact business activities, such as client outreach, customer service, and business strategy.
Reduces errors
Business owners tend to have a lot on their plate. The demands of day-to-day business operations might prevent you from prioritizing accurate bookkeeping. Additionally, not all business owners have bookkeeping training. With your attention divided, energy depleted, and expertise insufficient, you become more prone to mistakes.
Outsourced bookkeepers will have no additional responsibilities beyond bookkeeping. Additionally, their familiarity with the practice reduces their likelihood of committing errors. They will also have enough experience to resolve any issues with haste and ease.
Increases financial reporting accuracy
Since outsourced bookkeepers help you maintain accurate records, they also help you generate accurate reports. These include balance sheets, income, cash flow, and profit and loss statements. The accuracy gives you a clear picture of your company’s financial health.
Accurate financial reporting gives you the necessary information to craft smarter business strategies. You can use the evidence bookkeepers collect to make choices that drive business growth at limited cost or risk.
Helps with tax preparation
Staying on top of tax rules can be confusing. It involves understanding what documents to submit, remembering when and where to submit them, and tracking expenses that could count as tax write-offs. Because tax preparation is so tedious, you might struggle to make time for it before tax season.
As bookkeeping professionals manage your financial records, they monitor all possible tax deductibles, helping you maximize all potential tax benefits come tax season. They also help prepare all tax-related records, ensuring accurate and compliant filing.
Types of Outsourced Bookkeeping Services
You have multiple options for outsourced bookkeeping services. Below, we describe each type to help you determine which best meets your business needs.
| Pros | Cons | Cost | |
| In-House Bookkeeping | Intimate knowledge of your company’s financial workingsAlways availableUsually available for in-person work | Expensive | $18 to $42 per hour ($2,800 to $6,720 per month) |
| Freelance Bookkeeper | More affordable than in-house bookkeeping services | Limited to certain specializationsHandles multiple clients | $18 to $42 per hour |
| Bookkeeping Firm | Wide variety of specializations available | More expensive than individual freelancersHandles multiple clients | $150 to $1,500 per month |
| Virtual Bookkeeping | Most affordable outsourced bookkeeping option | Handles multiple clientsUnavailable for in-person work | $150 to $1000 per month |
In-house Bookkeepers
In-house bookkeepers work directly for your company and receive wages under your payroll. Because you are typically their only employee, they provide undivided attention to your financial management needs and can develop an intimate understanding of your company’s inner workings.
If you run a large business with complex bookkeeping needs, in-house bookkeeping might be your best option. Businesses with large transaction volumes, for example, require weekly bank reconciliations. They would benefit from having a bookkeeper readily available at any time.
However, hiring an in-house bookkeeper won’t be the best use of your money if you only need bookkeeping services a few times a month. You will be required to provide monthly compensation on top of other costly employee benefits.
Freelance Bookkeepers
Instead of putting professional bookkeepers directly on your payroll, you can contract a freelancer on a per-project basis or for an agreed-upon number of hours. Because you only pay for what you need, collaborating with a freelancer is typically cheaper than employing an in-house bookkeeper. Freelance bookkeepers might charge flat fees, hourly rates, or value-based prices.
The problem with freelance bookkeeping is that it gives you less control over the work being performed. Freelancers will typically have multiple other clients, which reduces the likelihood that they’ll understand your business with the same depth as an in-house bookkeeper. It also means your business is not guaranteed to take priority should you need services on short notice.
Bookkeeping Firms
Hiring a bookkeeping firm is similar to hiring a freelance bookkeeper, except with more flexibility. While firms might charge higher fees than individual freelancers, they provide access to a broader range of specializations, maximizing shared knowledge to support your business goals.
The wider talent pool means bookkeeping firms have a greater capacity to accommodate whatever volume of work you require. Even if bookkeeping firms handle multiple clients, they can spread responsibility across the team, ensuring that someone is always available to complete needed work.
Virtual Bookkeepers
If meeting your bookkeeper in person is not a priority, online or virtual bookkeeping is your most cost-effective option. Because it doesn’t require transportation costs, virtual bookkeeping is typically cheaper than other forms of outsourced bookkeeping. Additionally, the lack of location boundaries gives you more flexibility when arranging synchronous meetings.
You can also outsource bookkeeping abroad. Because of the differences in global cost of living, remote bookkeepers abroad can often provide quality bookkeeping services at affordable rates. However, they might lack knowledge of local market conditions, laws, and regulations.
How To Choose Outsourced Bookkeeping Services
Choosing outsourced bookkeeping services means narrowing down your specific service needs. This includes budget, services, transaction volume accommodation, and software.
Establish a Budget
The median wage for a bookkeeper in Canada is about $27 hourly. Bookkeepers on the lower end make $18 hourly, while bookkeepers on the higher end make about $42 per hour.
If you hire a full-time bookkeeper on your payroll, you should expect to pay about $4,000 monthly, plus any additional benefits you include in their compensation package. Hiring a freelancer gives you the freedom to reduce hours, cutting down total costs.
Meanwhile, bookkeeping firms typically charge a monthly fee for bundled services. In Canada, these fees run from $150 to $1,500.
Determine Necessary Services
In-house bookkeepers should be available full-time for any service you include in your job description. Meanwhile, bookkeeping firms typically offer bundled services, including journal data entry, account reconciliation, financial reporting, and tax preparation.
Should you decide you only need one type of service, it might be best to seek a freelance bookkeeper. Contractors give you the option to pay per project or avail of services for a limited amount of time. Reducing hours also reduces the total cost of the bookkeeping service.
Assess Transaction Volume
Assess your transaction volume. Businesses that generate a high volume of transactions per month might need a full-time bookkeeper or a bookkeeping firm dedicated to their case. Consistent expense tracking and account reconciliation will help them maintain accurate books at a steady pace. It prevents them from taking on too much work as transactions pile up.
However, if your monthly transaction volume is low, you might not need the same level of service. Since you only need bookkeeping tasks completed a few times a month, part-time or per-hour bookkeeping services might provide more value for money.
Choose a Bookkeeping Software
There are many bookkeeping software available on the market. Because each has different interfaces, features, and commands, there is typically a learning curve when onboarding new software.
Professional bookkeepers will typically specialize in one type of software. Choose a bookkeeping service that aligns with your existing bookkeeping software. Otherwise, the worst-case scenario is that your chosen bookkeeper will refuse to work with you. At best, the misalignment in software choice might slow onboarding down.
Outsource Bookkeeping to EpicBooks
The EpicBooks team is the solution to your financial woes. Armed with years of bookkeeping experience and deep knowledge of local Canadian markets, we provide top-notch bookkeeping and accounting services at an affordable cost. Get bundled account reconciliation, asset tracking, journal recording, and financial reporting for as low as $150 per month.
Frequently Asked Questions
When should you outsource bookkeeping?
You should outsource bookkeeping if the burden of financial management slows down day-to-day business operations. Dividing your energy between bookkeeping and business activities will increase your likelihood of committing bookkeeping errors. Inaccurate recording thus gives you inaccurate financial records, leaving you misinformed as you make strategic business decisions.
Outsourcing bookkeeping saves you time and energy while ensuring bookkeeping accuracy. Their expertise empowers you to make informed financial management strategies.
What are the disadvantages of outsourcing bookkeeping?
Outsourcing bookkeeping means shelling out a part of your budget for service fees. These can run anywhere from $18 to $42 hourly or $250 to $4,000 monthly. However, the benefits of outsourced bookkeeping are worth the price. Outsourced bookkeeping reduces recording errors, ensuring you consistently base your financial decisions on accurate financial reports. It also frees up time for strategic business activities, empowering you to pursue growth with a clear picture of your financial health.
Can my accountant do outsourced bookkeeping tasks?
It is not wise to delegate bookkeeping tasks to your accountant. Bookkeepers and accountants have different functions. Bookkeepers are responsible for managing financial records. They maintain bookkeeping ledgers, generate financial reports, manage accounts receivable, accounts payable, and payroll, perform bank reconciliations, and prepare records for tax season.
Meanwhile, accountants generate financial insights from the information bookkeepers record. They play a more strategic role, analyzing your financial health to provide advice for future business decisions. You need to maintain good bookkeeping practices to maximize the services of your accountant.
