If you have recently started a business, you may be a little overwhelmed with the whole idea of bookkeeping. That’s quite common, which is why many business owners like to outsource bookkeeping. Throughout this article, I will give you 7 reasons to outsource bookkeeping and why that might be the right option for you. Towards the end, we’ll also discuss why you might not want to outsource bookkeeping.
Below, I’ve explained the top 7 reasons to outsource bookkeeping.
7 Reasons To Outsource Bookkeeping
1. Focus On What You’re Good At
The main reason why you should outsource bookkeeping is that it allows you to focus on what you’re good at. Everyone has their speciality, and by letting someone else take over the bookkeeping, you have more time and energy to put into yours.
In most cases, that won’t only be less frustrating for you, but it will also help you grow your business. The reason for this is that every part of your business will have a specialist working on it.
You work on what you’re good at, and a bookkeeping specialist also keeps the books. It’s a win-win situation.
Your energy is limited. You can’t do everything in your business.
That’s why to scale; you must outsource bookkeeping or hire an internal team to work on it. Otherwise, other areas of your business will lose out, and you won’t be able to scale.
However, hiring staff is usually not the best option for small business owners which brings us to reasons to outsource bookkeeping number 3.
3. Reasons to Outsource Bookkeeping – Staff
If you don’t want to outsource bookkeeping, your other option is to hire and train staff. However, this requires an incredible amount of effort from you, but it can often be quite costly and inefficient.
This is because you’ll have to hire someone for a certain amount of hours which usually ends up being more than you need. You’ll also have a lot of additional supervising responsibility compared to if you were to outsource your bookkeeping.
That being said, for very specific types of businesses (which we’ll talk about later on) hiring an internal team may be the right option.
If you are using an outsourced bookkeeping service, it has more credibility than if you were to do it yourself.
As the bookkeeper is a third party and a specialist, they will have more credibility and be trusted by HMRC or banking institutions. This means the books will not be questioned the same way they would if you kept them yourself.
A qualified bookkeeper will have a professional accounting body membership, which has standards that they must follow. They will also register under Anti-money laundering. When you take on any bookkeepers or accountants, check their registration.
So, outsourcing bookkeeping can also make things easier for the HMRC and banking institutions, making your life easier, as it’s less hassle for your business.
Having team members look into your business’s internal financial records is something that many business owners like to avoid. The best way to do this is by finding a trusted virtual bookkeeping service with strong client references.
The reason this works better is simply because the bookkeeping service provider’s reputation is on the line. However, an employee wouldn’t have these worries, which leads to additional risk.
6. Access To Accounting Systems
Another strong reason to outsource your bookkeeping is that it gives your business access to accounting systems. Although it will not be you who uses them, there will be comprehensive systems that accountants use.
Just like you might have more efficient processes and systems for your speciality, an accountant does too. By outsourcing your bookkeeping, it gives you access to all of them without you even having to think about them.
The most popular accounting software is Xero, Quickbooks and Sage. There are lots of other packages available and depending on your business will depend on the most suitable.
7. The Accuracy & Quality Of The Books
Last but not least, the accuracy and quality of the books.
Although you’re probably great at doing what your business does, a bookkeeper is still better in their speciality. Because of this, your books will be kept at a higher quality and be more accurate.
What this means for you is less risk of any trouble or costly mistakes.
These are our top 7 reasons for outsourcing bookkeeping, but you may have other reasons as well.
Why You Might Not Want To Outsource Bookkeeping
To give you the full picture, I also wanted to explain why you might choose not to outsource your bookkeeping.
Privacy – Although privacy was also on our list of reasons to outsource, it can also work vice-versa. If your business works with private clients and provides a confidential service, you may not be allowed to share their names or details with other organizations. In this case, you may need to go for an internal solution. However, you may also be able to discuss with your clients and add it to your terms to share some information with your bookkeeping company.
Control – If you use an internal solution for keeping your books, you have more control over them. If that’s important to you or for your type of business it would make sense to avoid outsourcing.
Communication – Another reason you might want to avoid outsourcing bookkeeping is that communication may be limited compared to an internal option. For example, if you work with a 3rd party accountant, sending an email and getting a response may take a couple of days. On the other hand, if you have an employee, you can communicate with them much faster.
Outsource Bookkeeping: Frequently Asked Questions
Lastly, I wanted to answer some frequently asked questions about outsourcing bookkeeping.
How do you Outsource Bookkeeping?
Usually, you could either find a freelancer, or a bookkeeping firm locally. However, nowadays, you can also find them online and work closely to keep your books. It is always worth asking other businesses for recommendations. There are also registered bookkeepers on websites for accounting packages, they will all have been certified for using the software. Xero has a list of advisors in the UK.
Once you have selected a bookkeeper, you’ll discuss how and when they work on your books. It might be weekly, monthly, quarterly or at the year-end.
What should I consider before hiring a Bookkeeper?
The main thing that you need to take a look at before hiring a bookkeeper is probably their reputation. You’ll want to go for a service provider that has been trusted by various other clients to make sure there aren’t any issues.
Apart from that, you’ll also want to look at the details of the services they provide. For example, you might find one provider where less input from you is needed, but it’s a little more costly, depending on your business line that may be the right option.
How much does monthly bookkeeping cost?
The price varies based on your requirements.
Some of the factors that decide how much a bookkeeping service would cost include:
- Experience of the service provider
- How complex your business is
- Your turnover
For example, if you own a freelancing business that usually provides a service to the same clients with little costs, your bookkeeping needs would be quite basic. On the other hand, if you own a national store with a high turnover, lots of expenses, employees, etc., it would take the bookkeeper a lot longer, meaning the costs would be higher.
In general, the costs can range anywhere from £30 per month, to £1000 per month for small businesses. It all depends on the turnover, transactions, etc.
Can I do my own bookkeeping?
Yes, you sure can. However, as mentioned throughout this article, it may be worth considering to outsource it, as a specialist may be able to work faster on it, making more sense financially.
That being said, if you do want to go ahead and work on it yourself, you can check out our bookkeeping basics to get the hang of it.
For more reading on reasons to outsource bookkeeping, read the article on bookkeeping duties to understand how a bookkeeper can assist your business.