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How to Outsource Your Bookkeeping In 2022 (Full Guide)

Most business owners are highly inefficient with their bookkeeping, or simply don’t enjoy the process. Sounds familiar? Consider outsourcing your bookkeeping.

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Bookkeeping is an extremely important aspect of running a business, however big or small the company is.

It involves recording and tracking the money that comes in and out of the business, and yet, most business owners aren’t sure how to do it effectively — or simply don’t enjoy the process. 

If you find yourself in a similar situation, you may be asking about how to outsourcing your bookkeeping.

Why outsource your bookkeeping?

Unless you have a passion for accounting, bookkeeping can be a time-consuming, boring, and complicated process.

When you started your business, you likely didn’t even think about this aspect of entrepreneurship.

That’s why so many companies, from startups to mid-sized to large enterprises, outsource this kind of work. 

Bookkeepers can provide you with financial reports and statements like balance sheets, cash flow statements, and income reports.

Proper bookkeeping also makes filing taxes much easier once the time comes.

You won’t believe how quickly you’ll be able to fill out all of your IRS forms if you have access to all of the correct information. 

Now that you know why it’s helpful to outsource your bookkeeping, you may be wondering whether it’s the right solution for you. It may be time to outsource your bookkeeping if:

  • Bookkeeping on your own is taking up too much time
  • Your books are never accurate
  • You have no idea what’s going on with your cash flow
  • You missed out on some cost-effective tax write-offs
  • You’re unsure how to make your estimated tax payments

One of the biggest lessons you’ll learn in bookkeeping is that it pays to stay ahead of the game. Even if you don’t relate to any of the above situations, you could find yourself there one day without even realising it.

It’s also worth mentioning that if you hope to grow or scale your business, you won’t be able to without proper bookkeeping in place.

If you want to get back some of that precious time wasted poring over your books, outsourcing your bookkeeping is the way to go. 

What’s more, you’ll save money vs hiring an in-house, full-time bookkeeper. 

Cost of outsourcing bookkeeping

We get it — you’re a business owner, so budget is important. Outsourcing your bookkeeping sounds great, but at what cost?

It’s helpful to start by saying that it’s a lot less expensive than hiring a full-time bookkeeper on salary. For reference, an in-house bookkeeper’s average salary ranges between $39,780 and $50,848 per year.

This doesn’t include employee benefits and taxes that you’ll have to cover. If your company can’t afford an additional salaried team member, it pays (literally) to outsource your bookkeeping. 

You’ll find that the cost of outsourced bookkeeping options are much friendlier to your wallet. Services start at under $100 per month and can reach up to about $1,000 per month.

Depending on the size of your business and your needs, you can find a solution that works for your budget. Even if you opt for more expensive options, you can save up to half of what you would spend on an in-house bookkeeper by outsourcing your bookkeeping. 

Of course, the cost of outsourced bookkeeping will depend on what kinds of services and support you need. Consider the following questions:

  • Do you want to work with software, real humans, or both?
  • Does your business follow cash-basis or accrual-basis accounting?
  • How many financial accounts do you need to connect?
  • How often do you want to receive financial reports? What kind of reports do you want?
  • How complex is your business’s financial model?

Answering these questions will tell you what type of bookkeeping service you’re looking for. Then you can narrow down the outsourced bookkeeping service ideal for you.

How an outsourced bookkeeping service can help

It’s also important to note that bookkeeping is not accounting.

Put simply, bookkeeping is all about keeping track of your business’s transactions and expenses. Bookkeepers provide financial statements and reports, and their work ends there. 

Accounting uses the information your bookkeeper has gathered for you to determine the health of your business. An accountant will review the reports that a bookkeeper provides to help you make important financial decisions. 

Now that we’ve covered those differences, what can an outsourced bookkeeping service do for you?

  • Provide up-to-date financial reports including profit and loss statements, balance sheets, cash flow charts, and expense reports
  • Explain the above reports so that you understand what they mean
  • Categorize your transactions
  • Connect and import information from bank accounts, PayPal, Stripe, credit card statements, invoices, and payroll to one convenient place
  • Track money coming in and coming out
  • Keep your financial records up to date and accurate
  • Provide everything you need to prepare for tax season

Being aware of what an outsourced bookkeeping service can provide will help you determine whether you need to invest in one or not.

What about taxes?

With all of this talk about finances and financial reporting, taxes come to mind.

You may be wondering about a bookkeeper’s role when it comes to taxes and tax preparation. 

Again, there is a lot of confusion around the differences between an accountant and a bookkeeper. When you throw a certified tax preparer into the mix, things can get even more muddled.

Accountants and bookkeepers can help with tax prep, while it’s all a tax preparer does. These people are also called IRS Enrolled Agents (EA). 

When you have up-to-date books thanks to your bookkeeper, filing your taxes will be a lot less stressful.

That said, they don’t prepare tax returns. They can help by providing tax forms like 1099s to any independent contractors you hire.

Additionally, when you have accurate books, you can qualify for write-offs that will save you money when you go to file your taxes.  

An accountant can help you prepare your tax returns. They can also help you evaluate what you’re doing well (and not so well) in your business. 

You can hire a tax preparer once a year to help you file. EAs know all of the inner tax workings of whatever state you’re operating out of, as well as what the federal government is looking for. 

They are usually much more well-informed than certified accountants as far as taxes go. 

When you outsource your bookkeeping you can rest assured that you’ll have all of the correct information to provide to an accountant or EA.

If you had to choose one reason to invest in a qualified outsourced bookkeeping service, having accurate books come tax season is it. 

Benefits, drawbacks, and challenges of outsourcing your bookkeeping

Nothing is perfect. That’s why we want to take a moment to outline not only the benefits but also the drawbacks and challenges of outsourcing your bookkeeping. 

Benefits

Let’s start with the upsides of outsourcing your bookkeeping. There are several advantages you can benefit from.

  1. You get your time back. Time is just as precious as money for a business owner. By outsourcing your bookkeeping, you can save 60 hours or more per year spent on bookkeeping tasks. With that time, you can take a moment for yourself or dedicate more brainpower to improving business operations and coming up with new ideas.

When you give yourself a little more breathing room to run your business you’ll be surprised at how productive you could become.

  1. You save money. We already mentioned that outsourcing your bookkeeping is cost-effective.

This is especially important for startups or new businesses. Take the money you save and funnel it back into your project.

  1. You have access to experts. It can be tempting to want to handle your books yourself. But, if you’re not a certified bookkeeper, you may be doing it all wrong without even realizing it.

When you outsource, you have the opportunity to work alongside folks who actually enjoy this stuff — and who know what they’re doing.

  1. You’re able to scale your business. A qualified outsourced bookkeeper can help you grow your business if that’s what you’re after. When you have all of your expenses and revenues accurately recorded in front of you, it’s easier to know what’s possible.

Drawbacks and challenges

Outsourcing does have its disadvantages that you should be aware of too. Be aware of the points below as you prepare to sign up for an outsourcing service.

  1. There are some security risks. Security is paramount, especially in the age of data leaks, hacking, and security breaches. You have to be comfortable giving your outsourced bookkeeping service access to the lifeblood of your business: your financials.

Hence, it is essential that you work with a reliable and qualified service. 

  1. You have to give up some control. Along the same lines, you’ll need to be okay with giving a third-party access to the inner workings of your books. Again, as long as you work with a top-notch outsourced bookkeeping service, this can be a good thing.

You won’t be weighed down by the responsibility of doing your own bookkeeping. But, you won’t be able to check in on your bookkeeper as you would your other employees. 

  1. You could end up with the wrong service. This is a risk that you run in any case, whether you outsource or hire an in-house bookkeeper. If you end up unhappy with your outsourced bookkeeping, you’ll lose a lot of time.

That’s why it’s important to do your research, read online reviews, and ask friends what services they use. 

Outsourced fiscal year-end financial filing 

Another area that an outsourced bookkeeping service can help you is in your fiscal year-end financial filing.

Companies in the US are required to file annual reports that detail their financial health. Requirements differ state by state.

No matter which state you operate your business from, you’ll have to provide some sort of year-end report. The Securities and Exchange Commission (SEC) reviews the reports to make sure that you’re compliant.

It can provide investors (or those interested in investing) information about your company’s performance. It’s also a helpful way to analyze how your business has progressed over the years.

Remember that your business’s year-end may not land on December 31. Each business has its own financial year that begins on the date you officially opened. The fiscal year and calendar year are two different things!

An outsourced bookkeeping service may be able to assist you with your year-end financial filing. If it’s something that interests you, make sure to look out for this feature when you’re shopping around. 

How to outsource your bookkeeping

When you choose to outsource your bookkeeping, there are a few steps to take to get the ball rolling. 

Step 1: Do your research

Every business is different and therefore has different needs. Remember to consider what you’re looking for in a bookkeeping service, as outlined in the cost section above.

The next important point to think about is how much you have to spend. Finally, make sure you’re prepared to share your financials with a third party. We know that can be scary, that’s why it’s important to choose a top-tier outsourcing service. 

Reading online customer reviews is another great way to gauge a services’ performance. Websites like Trustpilot, G2, and GetApp are great for comparing different services and software. 

Step 2: Choose your service

Consider Binery’s bookkeeping services. We’re passionate about helping businesses get their books on track – and keeping them there.

We’ll take a good hard look at your books and find the issues, then we’ll fix them for you.

If you have a DIY bookkeeping system in place, don’t worry. Everyone needs to start somewhere.

If you don’t already work with accounting software we’ll get you set up with one. Then we’ll make sure the proper communication channels are in place so that we can get in touch when we need to. 

Binery works with a team of CPA-certified accountants and dedicated bookkeepers. We’ll manage your books all while solving any financial issues you may have.

You can easily upload invoices and connect accounts via our user-friendly interface that integrates with your accounting software. No more time wasted and no more having to hold onto every little receipt.

We do the heavy lifting for you so you can get back to business and come up with the next bright idea.

Step 3: Provide your information

You’ll have to provide a lot of important information about your company when you sign up with an outsourced bookkeeping service.

This is another reason why it’s so important to choose a qualified service. Remember what we mentioned about security and giving up some control. 

You’ll have to be comfortable sharing the most intimate side of your business: the financials. 

Most services will have an onboarding process you have to go through when you get started. This is also where you will connect your accounting software or get one set up if you don’t have one.

Finally, you can connect with your dedicated bookkeeper to determine what works for you as far as financial reports. You can also determine when to receive your books every month. 

For example, Binery provides your books 5 days after the last day of the month. We’re flexible – if you need to change when you get yours, we can work with you.

Step 4: Set up communication channels

If you can’t reach your outsourced bookkeeping service when you need them, then it’s almost like they don’t exist. 

Some services will require you to sign up for specific apps or tools so that you can communicate. Some will rely on old-fashioned email and phone calls. Consider what will work best for you.

If your head starts spinning when you think about downloading yet another video or messaging app, opt for a service that works with what you already use, like Binery.

When we get started we’ll ask you how you like to communicate. We’ll adapt to your needs so you don’t have to.

Step 5: Sit back and relax

Once you’ve gotten set up and have your expenses and income automatically sent to your bookkeeper you can relax.

Enjoy the fact that you won’t have to worry about your books anymore. Getting back your precious time is one of the top reasons to outsource your bookkeeping. Soak it up!

Wrapping up…

Outsourcing your bookkeeping to a professional online service is one of the best ways to save on time, money, and stress. When your books are accurate, you can breathe a lot easier during tax season.

You’ll be better prepared come tax season and you’ll have constant access to important financial reports. Outsourced bookkeeping is a lifesaver for all businesses, no matter the size. 

Binery can help you with that. We offer bookkeeping and accounting services to startups and small to mid-sized businesses. This includes up-to-date reports as well as explanations to help you understand them better.

We even offer financial advice when you need it – free of charge. We’re passionate about helping owners and founders who work with us grow and scale.

If you’re ready to take the plunge with Binery’s bookkeeping services, we’d love to welcome you.

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