While bookkeeping might seem like a relatively basic, entry-level task, it’s one that business owners overlook at their peril. Without high-quality bookkeeping, leaders are effectively making decisions based on guesswork: not real-time knowledge of their business’s financial position.
Accurate, timely bookkeeping is at the heart of every successful business. It’s a rule that holds true for every type of business: from established professional services firms to aspiring entrepreneurs taking on emerging industries.
The quality of your bookkeeping affects everything from your ability to raise external financing to the confidence with which you’re able to make forward-looking decisions. But despite the undeniable importance of bookkeeping, it’s a task that many business owners fail to prioritize.
It’s not difficult to see why this is the case. Bookkeeping can be a monotonous, labor-intensive task. Hiring a bookkeeper in-house, either part-time or full-time, can help, but that’s not an option that makes sense for every business. Recruiting, training, and managing employees is an expensive, time-consuming endeavor. On top of that, business owners are responsible for providing their bookkeeping employees with the resources and tools they need to be successful.
These factors, and others, lead to many business owners neglecting their bookkeeping until it deteriorates into a disorganized mess that can seem impossible to untangle.
Fortunately, there’s a solution: outsourced bookkeeping. In this article, we’ll share what to expect when outsourcing your bookkeeping and explore some of the benefits business owners can experience when partnering with a reliable outsourced bookkeeping provider.
What is Outsourced Bookkeeping?
When a business outsources its bookkeeping function, it essentially assigns responsibility for all bookkeeping tasks to a third party, rather than an internal employee.
Outsourced bookkeepers handle all of the same tasks that an in-house bookkeeper would handle. These include:
- Reconciling bank accounts and recording transactions
- Maintaining accounting ledgers and other records
- Compiling monthly financial statements
- Tracking accounts receivable, accounts payable, and the business’s cash position
- Running payroll
- Sending and paying invoices
- Other work to maintain the financial records of the business
The work of a bookkeeper is very important but it is primarily made up of relatively straightforward data entry tasks. Bookkeeping is regarded as an entry-level position, but the cost of hiring a full-time bookkeeper can still be expensive for small businesses. The average full-time bookkeeper in the U.S. earns approximately $45,000 before bonuses and other benefits – a key reason many businesses are exploring outsourced bookkeeping services.
Freelance Bookkeeper vs. Outsourced Bookkeeping Firm: What’s Best?
Bookkeeping can be outsourced to a freelance bookkeeper or an established outsourced bookkeeping firm, which may often be part of a larger accounting firm.
Freelance bookkeepers tend to represent the cheaper option but the services they provide tend to be less sophisticated and leave more room for error. Working with a professional outsourced bookkeeping firm allows businesses access to a proven bookkeeping approach that’s backed by the resources of a larger business.
Why Do Companies Work with Outsourced Bookkeepers?
Many companies begin with a DIY approach to their bookkeeping. Perhaps someone sets up a Quickbooks account, links it to the business’s bank account, sets up a few automations, and leaves things to run in the background.
This accounting technology might work in a business’s early days, but once you reach any kind of scale, it’s likely you’ll run into bookkeeping issues that could hold your business back. Often, the decision to work with an outsourced bookkeeper is triggered by some kind of event. Common challenges include:
- Tax Challenges: if your books are disorganized, it’s possible you’re missing out on opportunities to claim tax credits or deductions. Additionally, your accountant may find it difficult to prepare your tax filings.
- Year-End Issues: bookkeeping issues can often be pronounced at year-end. Trying to close out the year with outdated financial data is extremely challenging.
- Cash Flow Problems: inadequate bookkeeping can result in your business experiencing unexpected cash flow challenges due to leaders having an incomplete picture of your business’s cash position.
- Challenges with Decision Making: when business owners don’t have access to reliable financial information, it’s extremely difficult to make strategic decisions. This often costs businesses to miss major opportunities.
Of course, these issues aren’t the only reasons a business might consider working with an outsourced bookkeeping service.
There’s also the question of your time: if you, or other members of your leadership team, find yourself spending hours each month on bookkeeping, that’s an issue. As the leader of the business, your time is too valuable to be spent on basic bookkeeping tasks. Instead, you should be connecting with customers, nurturing employees, and working on new strategies to grow your business.
These time savings are one of the major advantages of working with an outsourced bookkeeping firm, but they’re far from the only benefit.
What Are The Benefits of Working with an Outsourced Bookkeeper?
Partnering with an outsourced bookkeeping service streamlines accounting and finance across every element of your business. Unsurprisingly, this leads to several clear benefits that add up to a significant value unlock for your business as a whole.
For most business owners, one of the primary benefits of working with an outsourced bookkeeper is the cost savings compared to hiring an in-house bookkeeper. Outsourced bookkeepers work on a fractional basis, providing services as needed. By leveraging sophisticated accounting technology and well-developed processes, outsourced bookkeeping firms are able to deliver superior performance at a fraction of the cost of hiring in-house.
Outsourcing your bookkeeping to an established firm also allows entrepreneurs increased peace of mind. Business leaders can rest assured their financial data is accurate, up-to-date, and easily accessible at any time.
LBMC: Outsourced Bookkeeping in Tennessee, Kentucky, Indiana, and Beyond
If you’re interested in learning more about outsourcing your business’s bookkeeping tasks, the outsourced accounting team at LBMC is here to help. Our professionals offer a full range of outsourced accounting services, ranging from full-service bookkeeping to advanced CFO-level strategic advisory services.
At LBMC, it’s our mission to help entrepreneurial businesses go further. Every outsourced bookkeeping engagement is tailored to the unique needs of your business – not some predefined checklist. Our team is passionate about helping your business grow and reach its full potential and has a proud track record of working with leading organizations in Kentucky, Indiana, and beyond.
To learn more about LBMC’s outsourced bookkeeping services, contact us today.