(disclaimer: this is not legal advice consult with a licensed professional)
Bookkeeping, accounting and tax preparation are incredibly important to running a successful business. Given that, we don’t blame you if you’re not exactly a fan of recording your day-to-day transactions and expenses. For many business owners, there just isn’t enough time in the day to keep up-to-date and accurate financial accounts.
However, maintaining accurate financial records can help your business understand and stay within your budget, and will make completing tax returns easy. If you’re also looking for funding, your investors and lenders will need to see your financial performance – and for that, they’ll need to see your accounts!
Despite this, the time it takes to sort out their expenses can lead to many business owners neglecting their bookkeeping. Also, many small businesses don’t yet handle the volume of transactions required to justify a full-time accountant – or have the funds to do so, anyway!
That’s where outsourcing your bookkeeping can become a handy option. With the advent of online bookkeeping, it’s easier than ever to let the professionals do the tedious work for you!
Outsourcing your bookkeeping is one of the best decisions you can make for your business. It can save you time and money, allow you to focus on your core business, and improve your bottom line.
What is outsourced bookkeeping? How does it differ from outsourced accounting? What are the key benefits of outsourcing bookkeeping services?
At SynkBooks, we believe bookkeeping and tax preparation should be simple and stress-free. That’s why our dedicated small business team has worked tirelessly to make bookkeeping as seamless as possible.
In this article, we’ll introduce you to the lucrative world of outsourced bookkeeping and give you the insiders’ guide on how to streamline your accounting workflow and grow your business.
What is Outsourced Accounting?
Outsourced accounting is the process of hiring an external company or individual to manage and keep track of your company's financial records. This can include tasks such as bookkeeping, preparing and filing taxes, and other financial consulting services.
What is Outsourced Bookkeeping?
The job of a bookkeeper is to record and maintain an accurate, up-to-date record of all your financial transactions. Some of the information they would record include:
- Loan payments
- Insurance payments
- Business assets and their depreciation
This information will need to be tracked and updated on a day-to-day basis – with timely and accurate reports being a cornerstone of a well-run small business.
The issue here is that many businesses don’t have the capacity to complete this job by themselves. Hiring a qualified bookkeeper can be expensive, and for small firms, this expense can be better used elsewhere to grow the business.
That’s why outsourced bookkeeping can be so useful. Outsourcing bookkeeping simply means hiring someone else: whether that’s a company like SynkBooks, or a freelance accountant.
By outsourcing to a dedicated bookkeeping firm, you’re making the best use of their skills and expertise. There’s no way small businesses or startups can handle bookkeeping and tax preparation as efficiently as the professionals.
Should I Outsource My Accounting Or Bookkeeping?
As you can see, accounting and bookkeeping are very similar roles. The key distinguisher here is that bookkeeping is a subset of the responsibilities of an accountant.
Whereas outsourced bookkeeping involves recording your business’s financial information, it is the job of an accountant to interpret any financial data and plan a financial strategy based on this information.
Outsourcing your bookkeeping is far more affordable. Many small businesses find that the other responsibilities of an accountant aren’t all that important to them. This is because with smaller organizations, the financial decision-making is best left to the business owner.
However, medium-to-large enterprises (MLEs), will prefer to outsource an accountant. This is because, if you have the budget for it, a good accountant and their financial strategies can lead to better financial decision-making and hence higher growth and greater profitability.
What Are The Benefits Of Outsourcing Your Bookkeeping?
Why should you outsource your bookkeeping and accounting responsibilities? Here are the main benefits of outsourced bookkeeping:
It Saves Your Valuable Time
Outsourcing your bookkeeping saves you valuable time. According to research by Clutch.co, almost half of all small businesses (45%) don’t employ anyone to do their bookkeeping for them.
The responsibility to keep accounts up-to-date therefore falls to the business owner – or another non-accountant such as an HR manager. In a fast-paced startup, there simply isn’t time to do this! Time spent doing your bookkeeping yourself is less time you can spend growing your business or improving your product.
It Saves You Money
Large businesses and enterprises often opt for full-time bookkeeping or accounting teams. That’s because those businesses have the volume of transactions to warrant a full-time job. Most small businesses can’t benefit from this scale.
What is the point of hiring someone full-time and wasting hundreds of dollars to do a task that takes a skilled bookkeeper 2 or 3 hours?
Smart Bookkeeping Allows You To Budget Better
On the topic of saving money, regularly maintaining and keeping track of your financials is the best way to understand how much you’re spending and what you need to optimize to stay within your budget.
However, with online outsourced bookkeeping platforms, it stretches further than this. With SynkBooks, for example, your specialist bookkeeping team will sort and neatly lay out all of your expenses into meaningful categories.
This allows anyone in your organization to understand, at a glance, what’s being spent and how to more efficiently allocate your resources. No more reckless spending!
Safer And Easier Tax Preparation
Tax preparation is one of the most difficult tasks a bookkeeper has to complete. Unfortunately, it’s a responsibility that’s too dangerous to get wrong. Misfiling your taxes or being late with your tax returns can cost you thousands in tax penalties.
Luckily, outsourced bookkeeping makes “tax time” a breeze. Experienced outsourced accountants and bookkeepers should know exactly how to lay out your tax information in a way that’s easy to understand for the IRS.
An outsourced bookkeeping service can work with you to discern what forms need to be filled out, and when, and set out your financials correctly – just in time to file to the IRS.
Greater Flexibility And Scalability As Your Business Grows
If you were to handle your bookkeeping in-house, your growth would be shackled by your ability to keep track and log your transactions. As your business grows, it will become harder to keep on top of bookkeeping.
Outsourced accounting services have the capacity to keep up with your business, every step of the journey. These providers will allow you to adjust your plans and dedicate more resources to your business whenever you need them.
If sales slow, or if there’s less need for a bookkeeper (for example, outside of tax season), you can often scale your accounting resources and adjust what you’re paying for to suit your current needs.
Best Practices For Making Outsourced Accounting Work For Your Business
Now that we’ve covered the key benefits of outsourcing your bookkeeping, let’s discuss how to get the most of accounting outsourcing. Building a successful relationship with an outsource partner requires you to be upfront and honest with your needs.
Here are some of our tips and best practices:
Identify And Communicate Your Needs
Given that accounting is such a diverse discipline, not all outsourced services will be right for your company. A key step is to understand what aspects of accounting and bookkeeping you need help with.
You can pick these jobs based on:
- The time it takes you - or a senior manager - to complete the task.
- How difficult it is for you to meet the responsibility.
- The gaps in your own knowledge.
- The frequency you need the job done.
For example, a small task that needs to be done irregularly might best be kept in-house (or done by the owner). But complex and difficult responsibilities like tax preparation are best delegated to an outsourced accounting firm.
It’s also important that you relay these needs to your outsourcing provider. What do you need doing? How often do you need it? What deadlines do you expect from your outsourcing partner? How often will you need updates and communication from them?
Consider The Security Measures In Place To Protect Your Data
Outsourcing any task - especially those related to financing - adds an extra data security risk. However, this can be minimized by asking the right questions regarding security and data handling.
Some examples of questions you should be asking to a prospective outsource partner includes:
- What security measures are in place to protect my data? How effective are they? Have you been security audited?
- What does your security and IT infrastructure look like? How is it safeguarded?
- How do you handle my company’s financial data? Where is it stored?
Asking them to sign a non-disclosure agreement here can also be helpful (and is standard practice). It affords you some extra legal protection just in case things go wrong.
Outsourced accounting firms are usually upfront with their security infrastructure and practice. For example, at SynkBooks, we never download your financial information. We instead use APIs to handle and process your data. This is the same process trusted by major banks and Venmo for instance.
Pick A Company That’s Used To Dealing With Your Business Size
As we’ve mentioned before, the bookkeeping requirements of large firms and enterprises are wildly different to those of small businesses. Outsourcing partnerships are usually far more successful if your outsourced accounting service advertises and focuses on your firm size.
A small business bookkeeper like SynkBooks will offer the services you need at a fairer price whereas an accounting provider built for enterprises will have the resources to handle the data volume of a large business.
Which Outsourced Bookkeeping Service Is Right For Me?
Here at SynkBooks, we’ve developed a straightforward outsourced bookkeeping service perfect for small businesses and startups! We offer two distinct services:
Our standalone accounting and bookkeeping software costs $15 a month. This includes:
- The previously mentioned AI-powered expense categorization helps you understand all your spending.
- The ability to automatically sort your financial information into the exact categories the IRS is looking for in your tax returns.
- The ability to automatically import your bank and credit card transactions and easily create unlimited expense entries.
- A beautiful report generator for profit & loss and tax-time ready reports.
This brilliant software suite is designed for do-it-yourself bookkeeping. If you don’t think you need to outsource your bookkeeping just yet, this is a great option for you.
However, it’s our custom bookkeeping services that offers the most personalized helpt for small businesses. These plans start at around $200 a month. A team of three professionals will:
- Categorize your income and expenses for you.
- Record your cash transactions
- Produce income statement reports
- And even represent you if you’re audited for no extra costs.
Your dedicated team will know exactly how to help small businesses like yours and will work with you throughout the year - getting you ready for tax time!
Access Your Own Personalized Outsourced Bookkeeping Team Today!
We’ll ask you a few short questions about your business and your very own dedicated bookkeeping team will handle all your bookkeeping and tax preparation needs for you!