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Outsourced Bookkeeping: Everything You Need to Know to Find a Bookkeeper You Love

Outsourced Bookkeeping: Everything You Need to Know to Find a Bookkeeper You Love

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Pilot Team
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Published: 
June 24, 2022
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Outsourced Bookkeeping: Everything You Need to Know to Find a Bookkeeper You Love

Many businesses outsource their bookkeeping to third-party companies. There are plenty of reasons for this, as well as many benefits. But not all bookkeeping firms are created equal! So how do you know if outsourcing your books is right for your business? What services does outsourced bookkeeping actually include? How much does a bookkeeping service cost? Can you get away with just using bookkeeping software alone? Read on to learn everything you need to know about outsourced bookkeeping services and whether or not it’s worth doing for your company.

What Is Outsourced Bookkeeping?

Outsourced bookkeeping is when a company hires an external individual or firm to handle its bookkeeping—recording the financial transactions of a business and preparing financial statements, such as balance sheets and profit and loss statements. For example, if you’re an accountant who needs to focus on growing your practice, it makes sense that you might consider outsourcing your bookkeeping services to spend more time on client work. 

In addition to saving time and money by not hiring full-time employees, an outsourced bookkeeper can provide additional value by offering specialized expertise (for example, QuickBooks) and providing reports directly into tax software. Outsourced bookkeepers can be hired on a contract basis or as full-time staff members.

Does Outsourcing Your Books Make Sense for Your Business?

Outsourced bookkeeping is an option if you want to outsource your books and you have a small business. If you don’t have time to do the bookkeeping yourself or don’t have an accounting background, outsourcing can help save you time and money while ensuring the financials are accurate.

If there’s no one on staff with bookkeeping experience, it might make sense for your company to hire someone specializing in this area. You may also want to consider hiring an outsider so they aren’t as connected with your business or know as much about its operations—and can therefore do their job more objectively.

Who Outsources Their Bookkeeping?

Outsourced bookkeeping is becoming more popular as a business strategy, especially among small and medium-sized businesses. There are several reasons why outsourcing your bookkeeping makes sense, including the following:

  • Bookkeepers with specialized skills. Your company may require services only professionals can offer, such as reconciling complex financial statements or preparing financial reports for internal or external use. In these cases, hiring someone with experience handling similar work will help you get the most out of your outsourced bookkeeping service.
  • Companies in growth mode. Suppose your company is experiencing rapid growth and has increased its volume of transactions dramatically over the past year or two. In that case, it might be time to consider outsourcing important accounting tasks that take up too much of your team’s time and resources. These may include tax preparation, payroll processing, and other routine functions associated with smoothly running a viable business without sacrificing quality control standards.

What Bookkeeping Services Should You Outsource?

Outsourced bookkeeping can take the form of a few different services, including: 

  • Importing financial information from your bank statements, credit card statements, payroll records, invoices, and more (and with a bookkeeping service like Pilot, we integrate with the tools you already use)
  • Categorizing and reconciling those transactions to ensure everything is accounted for
  • Tracking bills and income yet to be recognized (which typically includes accounts payable and accounts receivable management).
  • Ensuring your books are always up-to-date and accurate.
  • Providing accurate financial statements at month-end, including Profit & Loss (Income) Statements, statements of cash flows, and a balance sheet on a monthly or quarterly basis.
  • Explaining those financial statements and other aspects of your bookkeeping, in terms you can understand
  • Handing complete and accurate financial reporting over to investors, tax preparers, and anyone else needing access.

You’ll have to verify the details with your chosen outsourced bookkeeping service. It’s worth asking questions upfront to ensure you are aligned on expectations of their offerings before signing up.

How Does Outsourced Bookkeeping Work?

While the process for outsourced bookkeeping services might vary depending on whether you outsource your bookkeeping to an independent professional bookkeeper, a human-only service, or a hybrid bookkeeping service, it is pretty straightforward.

First, you’ll contract with the company and pay them a fixed monthly fee for their services. Then the outsourced bookkeeping firm will work with your business to understand your needs and goals. Next, they’ll provide a report detailing your financial performance every month or quarter. You’ll then have the opportunity to make any necessary changes before receiving the next report—and so on. If there’s ever something you’d like clarified or don’t understand, you can contact them for help.

When you work with a service like Pilot, here’s how outsourced bookkeeping works:

  • Step 1: Your dedicated account manager will work with you to set up integrations and connect all the financial accounts and tools your business already uses. From there, the process is reliable and automatic—pulling your financial data from all sources into QuickBooks Online. You no longer have to worry about uploading and downloading PDFs, because it’s done automatically. 
  • Step 2: The bookkeepers record, categorize and reconcile transactions.
  • Step 3: At the end of each month, we send you clean and accurate financial statements.

At Pilot, your dedicated account manager is always available to support you and answer any questions.

What Are the Advantages of Outsourcing Bookkeeping Services?

When people think about outsourcing their bookkeeping, the first thing that comes to mind is cost savings. Some companies, especially small ones, can’t afford an in-house accounting department or a full-time bookkeeper. An outsourced bookkeeper has experience working with different types of businesses and their systems, so they can help your company organize its books without additional costs. Below are some advantages of outsourcing bookkeeping services:

  • Reduced costs: You can save up to 50% of your budget by outsourcing bookkeeping services. You won’t have to worry about hiring a full-time bookkeeper or spending money on software you don’t need, allowing you to focus on growing the business and improving its operations rather than dealing with financial paperwork or documentation.
  • Increased productivity: Your employees will be more productive when they’re not bogged down by tedious tasks like calculating taxes, preparing reports, and reconciling accounts. Additionally, as an employer, you may find it easier to attract top talent if you offer them this benefit as part of their compensation package since employees responsible for bookkeeping often have difficulty finding stable employment due to low wages.

What are the Costs of Outsourced Bookkeeping?

Outsourced bookkeeping is affordable for many businesses, but the exact costs will vary based on several factors. The first thing to consider is what type of booking service you need and how much time you’re willing to spend in the know with your bookkeeper. For example, hourly rates should be fine if your company only has simple needs and doesn’t mind doing without a dedicated point person for financials.

On the other hand, if you have complex needs or want someone who can help with more than just numbers (e.g., tax planning), it may be worth paying more upfront since they’ll provide ongoing services at a reduced rate over time. Additionally, some companies charge by the hour, while others base their prices on the number of transactions. Finally, even among those who don’t do either, there’s still room for variation due to overhead costs like office space or equipment rental fees, which vary from region to region.

In most cases, estimating that your outsourced bookkeeping services will cost between $500 and $2,000 per month is safe. The table below breaks down cost estimates by type of bookkeeping services:

Outsourced bookkeeping usually costs between $500 - $2,000/month, but can vary a lot based on things like complexity and transaction volume.

As a rule of thumb, the more complex your financial situation is, the more outsourcing bookkeeping services will cost.

Outsourcing Your Bookkeeping To Grow Your Business

Outsourcing your bookkeeping can open the door to several benefits that could help you grow your business. First, outsourcing allows you to focus on the things that matter most to your business, such as sales and marketing while saving time and money on other parts of the company. This benefits you now and positions you well for future growth because it frees up resources needed to expand into new markets or launch additional products or services.

While outsourcing bookkeeping services can significantly help your business, make sure that the outsourced bookkeeping company you choose is right for you. Unfortunately, different businesses have different needs for outsourced bookkeeping services, so finding the right one can be difficult. To help you with this process, here are some questions to ask yourself:

  • Does your company require a lot of ongoing support? If so, find out what training and support programs your outsourcing bookkeeping company offers.
  • Are there specialty services that only some providers will offer? For example, if payroll processing interests you but isn’t a priority for the majority of outsourced bookkeeping companies out there, find those who specialize in providing those kinds of services. This way, you know exactly where their expertise lies and whether or not they’ll be able to provide the quality service that would benefit your business best.

What Are the Best Outsourced Bookkeeping Companies?

So how do you determine which outsourced bookkeeping company is best for you? There are a few things that your outsourced bookkeeping company should be able to provide, but first and foremost, they must be reliable. The last thing you regarding your finances is for them to fall through the cracks because of poor communication or disorganization. A good outsourced bookkeeping service will also:

  • Understand your needs as a client
  • Provide clear communication about their services and pricing structure
  • Keep you informed about tax deadlines, payroll deadlines, etc.

Conclusion

There are many reasons to outsource your bookkeeping, which can be a good option for many companies. Outsourcing your books will free up time to focus on other business aspects. Hiring an experienced company familiar with various bookkeeping services can save you money. The key here is finding the right firm for your needs.

It’s always a good time to outsource your bookkeeping so you can spend more time focused on more important things. Learn more about our bookkeeping and tax services, or get in touch to set up a 1:1 chat with an expert.

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