All you need to know about outsourced bookkeeping
Outsourced bookkeeping is an essential service for any business. The industry is constantly changing and new technology is being developed that makes it easier for businesses of all sizes to keep track of their finances. Outsourced services help companies stay abreast of their finances while removing the stress of doing it themselves. However, just like with any other service, outsourcing bookkeeping costs vary depending on a number of factors. In this blog post, you will be able to understand everything about outsourced bookkeeping in the simplest words.
What is outsourced bookkeeping?
Outsourced bookkeeping is when a company hires an external provider to handle its financial record-keeping tasks.
Instead of having an in-house bookkeeper, the company sends its financial data to the external provider, who then manages it remotely.
This can include tasks such as recording transactions, reconciling accounts, generating financial reports, and preparing tax documents.
Outsourcing can save a company time and money, as it eliminates the need to hire and train an in-house bookkeeper and invest in software and infrastructure.
Different Types of Outsourcing Bookkeeping
There are several types of outsourced bookkeeping services available, including:
Virtual Bookkeeping Services
In virtual bookkeeping, a remote bookkeeper manages the company’s financial records online.
Onsite Bookkeeping Services
Onsite bookkeeping services involve a bookkeeper who works at the company’s location to manage the financial records.
Hybrid Bookkeeping Services
Hybrid bookkeeping services involve a combination of both virtual and onsite bookkeeping services.
Project-Based Bookkeeping Services
Project-based bookkeeping services involve a bookkeeper who is hired for a specific project, such as preparing tax documents or generating financial reports.
Pros of Outsourced Bookkeeping
Strong financial management
Companies that use outsourced services are usually very busy businesses with tons of moving parts. Outsourced bookkeeping allows managers to focus on running the company instead of the administrative side of things.
Companies that outsource their accounting benefit both financially and operationally by eliminating the cost of accounting personnel and overhead. This cost saving is passed on to the company’s customers through reduced taxes and increased profits.
Companies that outsource their accounting need flexibility because there’s no guarantee that the accounting changes that are required will be accepted by the accounting firm. Some companies outsource their bookkeeping to third-party accounting firms that make sure the accounting is consistent with the company’s internal accounting standards.
Cons of Outsourced Bookkeeping
Lack of control
When you outsource your bookkeeping, you are giving up some control over your finances. The outsourcing company will be responsible for managing your financial information and making decisions about how it is used.
Outsourcing your bookkeeping means sharing sensitive financial information with a third-party provider. This can raise security concerns about data breaches and identity theft.
If you outsource your bookkeeping to a company in a different time zone or country, communication can become difficult. Financial reporting may experience delays and mistakes as a result.
Outsourcing bookkeeping services to a provider that is not qualified or experienced can lead to poor-quality work. Financial statement inaccuracies could emerge from this, which could be detrimental.
Costly in the short term
Although outsourcing can save you money in the long run, it can also be expensive in the short term. You may need to pay a setup fee, as well as ongoing monthly or annual fees for the service.
How Much Does Outsourcing Bookkeeping Cost?
Outsourcing bookkeeping costs vary depending on several factors, such as the size of the business, the type of accounting services needed, and the location of the service provider. Generally, companies can save money on staff salaries, benefits, and overhead expenses by outsourcing accounting tasks rather than recruiting an internal accountant.
Cost For small businesses
Bookkeeping services for small business can cost anywhere from $500 to $2,000 per year, depending on the services needed. Small businesses usually require basic accounting services, such as income and expense tracking, bank reconciliation, and financial statement preparation. Many outsourcing firms offer affordable packages tailored to the needs of small businesses.
Cost for Medium-Sized Businesses
Medium-sized businesses usually require more advanced accounting services, such as payroll management, tax planning, and forecasting. Outsourcing these services can cost between $2,000 to $10,000 per year, depending on the complexity of the services required. Some outsourcing firms also offer custom packages that can be tailored to the specific needs of medium-sized businesses.
Cost for Large-Scale Businesses
Large-scale businesses often require comprehensive accounting services, such as auditing, financial analysis, and strategic planning. Depending on the size and nature of the company, outsourcing these services might range from $10,000 to $25,000 per year or more. Many outsourcing firms offer customized packages for large-scale businesses, which can include on-site support and dedicated accounting teams.
How do you pick the best service?
In order to select the ideal outsourced bookkeeping provider for your company, you should:
- Identify your business needs and requirements.
- Research and compare different services based on their expertise, experience, and reputation.
- Check their pricing and make sure it fits your budget.
- Look for reviews or testimonials from their previous clients.
- Consider their communication and availability to ensure they are responsive and accessible when you need them.
- Check if they use secure and reliable technology to handle your financial data.
- Finally, assess their customer support and make sure they can provide assistance whenever you encounter issues or concerns.
You get what you pay for when it comes to outsourcing. The outcomes are always better when the service is more expensive. If you’re on a tight budget or you’re unsure if outsourcing bookkeeping is worth the expense, the low-cost options are the most appropriate for small businesses. If you’re looking for a reliable, low-cost option, consider outsourcing to a third-party accounting company. When choosing an outsourced service, consider factors such as expertise, experience, reputation, pricing, communication, technology, and customer support. By doing your research and choosing the right service, you can ensure that your business’s financials are in good hands.
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