Starting a business, managing purchases, logging sales—it’s all part of the entrepreneurial journey. But when it comes to recording every transaction, the task can seem overwhelming. Don’t fret! Outsourcing your bookkeeping responsibilities means you can leave the tracking to the professionals, giving you peace of mind and more time to focus on growing your business.
Now, the million-dollar question: who will you hire to handle your bookkeeping needs?
You have two primary options: hiring local bookkeepers or engaging “virtual” bookkeepers. Additionally, there’s a third option—employing an in-house bookkeeper. However, opting for in-house bookkeeping entails a significant cost increase compared to DIY bookkeeping.
Now, let’s examine the advantages and disadvantages of outsourcing bookkeeping. By doing so, you can transition away from the DIY approach of QuickBooks or spreadsheets and entrust your bookkeeping tasks to a professional.
Â
Why Should You Consider Outsourced Bookkeeping Services?
Starting a business isn’t about managing bookkeeping tasks—it’s about pursuing your passion and driving growth. Outsourcing your bookkeeping allows you to reclaim valuable time for focusing on core operations, exploring new growth opportunities, or simply enjoying some well-deserved relaxation away from the pressures of entrepreneurship.
With outsourced bookkeeping, you gain access to crucial reports and financial statements that every business owner should be familiar with: balance sheets, income statements, and cash flow statements.
Moreover, entrusting your bookkeeping to a professional streamlines the tax filing process. You’ll have all the necessary numbers at your fingertips to complete forms promptly, with IRS-compliant reports for your tax return.
When Is the Right Time to Outsource Your Bookkeeping?
There are several indicators that suggest it’s time to transition from DIY bookkeeping to professional assistance.
Consider outsourcing your bookkeeping if:
- Managing your own bookkeeping is consuming more time than you can spare.
- Your financial records are consistently lagging behind and are not up to date.
- You’ve overlooked potential tax deductions.
- Keeping track of your cash flow has become challenging.
- You’re struggling to monitor accounts receivable and payable effectively.
- Making estimated tax payments has become overly burdensome.
If you don’t see your specific situation listed above, remember that this isn’t an exhaustive list. Various signs may signal the need to hire a bookkeeper, and ultimately, you’re the best judge of when it’s time to outsource your bookkeeping.
For most business owners, it’s advisable to make the transition sooner rather than later. Even businesses in the pre-revenue stage benefit from professional bookkeeping, as consistent recordkeeping is essential for future growth and financial stability.
Â
Exploring Outsourced Bookkeeping Services
Outsourced bookkeeping services offer two primary options: hiring a local bookkeeper or engaging a virtual bookkeeper, whether they’re located nearby or operating remotely.
To help you determine the best fit for your needs, let’s delve into the advantages and disadvantages of each:
Hiring a Local Bookkeeper
A local bookkeeper operates in proximity to your business, providing face-to-face interactions and catering to businesses that rely on physical records rather than online banking or payment systems like Stripe.
How Local Bookkeeping Works:
- Freelance Bookkeepers: These individuals work one-on-one with you to manage your books, offering flexibility to work online, in-person, or a combination of both. Their expertise varies based on individual skill and experience levels.
- Bookkeeping Firms: While typically more costly than freelance bookkeepers, firms provide additional assurances such as professionally certified bookkeepers. In case of absence, another bookkeeper can seamlessly take over, ensuring continuity of service.
Whether you choose a freelancer or a firm, they operate independently of your business. Look for a provider that offers secure access to your financial reporting through a trusted accounting software.
Security is paramount when entrusting financial information. Ensure that the bookkeeper you hire can be trusted with sensitive data, such as bank details and invoices. Additionally, retain sole control over treasury functions to safeguard your financial assets.
By understanding the nuances of local bookkeeping services, you can make an informed decision that aligns with your business needs and preferences.
Â
Virtual Bookkeeping
The term “virtual bookkeeping” may evoke images of outdated software, but it’s actually a modern, paperless approach to managing your financial records.
Virtual bookkeeping simply means delegating your bookkeeping tasks to professionals who handle them online. This method combines the convenience of bookkeeping software with the expertise of traditional bookkeepers. When you enlist a virtual bookkeeping service, you benefit if you:
- Prefer conducting banking activities online and are comfortable navigating the web.
- Favor a flat monthly rate over hourly billing.
- Desire online access to your financial data through a mobile application.
- Prefer communicating via online chat or phone rather than in-person meetings.
Outsourcing your bookkeeping to professionals not only saves you time but also provides peace of mind. Working with an online service allows you to securely store your data in the cloud and access your financial information from anywhere, at any time.
How Virtual Bookkeeping Works
Virtual bookkeeping connects you with real bookkeepers through a secure online platform. A reputable service will automatically download your expenses via online banking and merchant processors, eliminating the need to send receipts in envelopes.
During tax season, an online bookkeeping service may provide you with a comprehensive year-end financial package containing all the necessary financial statements for your accountant to file your small business tax return.
For instance, when you sign up with Bench, you’re matched with a team of professional bookkeepers who compile your data and generate tax-ready financial statements monthly. Our platform enables you to track your finances, download financial statements for your accountant, and communicate with your bookkeeping team—all within a single platform.
Â
In-House Bookkeeping Solutions
As your business evolves, you may find that the solutions we’ve discussed no longer suffice. This often signals the need to expand your accounting department and bring on an in-house bookkeeper.
Determining whether your business can accommodate an in-house bookkeeper is a decision best made by evaluating your budgetary constraints. According to Salary.com, the standard pay for in-house bookkeepers ranges from $39,568 to $50,577 per year, excluding payroll taxes and employee benefits. However, if your requirements are limited to tasks like bank reconciliations and forecasting, this may seem like a substantial investment. Full-time, in-house bookkeepers are typically reserved for businesses with more complex needs.
If you require in-house support but can’t commit to a full-time hire, consider hiring a bookkeeper on a part-time basis and gradually increasing their hours as your needs grow. Alternatively, some businesses opt to employ a part-time bookkeeper while assigning additional administrative responsibilities to create a full-time position.
Â
How PVM Accounting Can Assist You
PVM Accounting offers the support you need to streamline your financial management. We seamlessly connect with your bank accounts, credit cards, and merchant providers to import transactions and update your financial reporting automatically. With PVM Accounting, you can message your personal bookkeeping team or schedule a phone call directly through our platform. Additionally, gain access to our tax professionals, who can provide valuable advice on minimizing your tax bill.
Â
Can’t My Accountant Handle It?
While it’s true that many accountants offer bookkeeping services as part of their offerings or are willing to assist with catch-up work before tax season, it’s important to consider the associated costs. Certified Public Accountants (CPAs) generally charge higher hourly rates than bookkeepers due to the rigorous accreditation process.
Opting for the services of a local or online bookkeeper often proves to be a more cost-effective solution. In addition to cost savings, you’ll benefit from year-round support for your financial management needs. This grants you access to critical financial data that aids in cash flow management and informed decision-making. You can then leverage the expertise of accounting firms and tax professionals specifically for tax preparation, thereby reducing your overall expenses.
If you find yourself in need of assistance with your bookkeeping needs, don’t hesitate to reach out to us at PVM Accounting. Our team of experienced professionals is dedicated to providing tailored solutions to help you manage your finances effectively and efficiently. Contact us today to learn more about how we can support your business’s financial success.
