You Need To Outsource Your Bookkeeping In 2023
This is the year! If you run your own business and you've been handling your own books, it's time to outsource your bookkeeping duties.
I know the pain of getting your small business off the ground. You are looking for cost savings wherever you can find them. You will do every job yourself, even the ones you've never done before. Just as long as you aren't spending money you don't have.
While this is necessary in the beginning, that doesn't make it a good long-term decision. Whatever your small business does, you excel at that skill. You have worked long hours to get to the point where you could start your own business.
You didn't get this far just so you could hire yourself (for free) to be the marketing director, courier, and bookkeeper.
Maintaining your company's financial records isn't just a legal requirement. Within those financial statements are the answers to how your business is doing and in which direction it's going. When you outsource your bookkeeping tasks, you open up a world of insights into your business that will help it grow.
Want to know more?
7 reasons you need to outsource your bookkeeping.
- Expertise and experience
- Time savings
- Cost savings
- Avoid unnecessary errors
- Access to the latest technology
- Enhanced financial analysis and reporting
- Flexible capacity
Expertise and experience
When you describe your business to a potential client, I'll bet one of your selling points is your expertise or your years of experience. Am I right? While you may have had some natural talent at your professional, it was only through experience that you gained the skills you have today.
For most of us who end up running our own business, we don't always consider all of the other roles we are about to take on. I've been doing some type of bookkeeping services since I was 14, so that part came easily.
On the other hand, I'm not a natural at marketing. When I started That Bookkeeper, I didn't fully appreciate how much of my time was going to be spent on non-bookkeeping work.
Unless you are a fellow bookkeeper, you don't envision long nights pouring over financial reports. Tax season was something that just involved handing your T4 or W2 to a tax preparer and waiting for your refund. Now you're looking for a stack of missing receipts so you can get your business tax preparation done on time.
By working with professional bookkeepers, you are tapping into their years of experience. The problem you had with your bank accounts last month is a problem they have faced and solved hundreds of times.
If you choose the right one, your bookkeeper will also have worked with other clients in your field. They will not only be able to solve your problem, but they will also have insights into industry standards in your field.
Good bookkeeping firms will be able to warn you if your office costs are too high. It's one thing to track your invoices and expenses, so your business doesn't collapse. Getting an experienced bookkeeper to manage your finances can actually help your small business grow.
Time savings
This one should be obvious. If you are currently spending 5 hours per week keeping your company's bookkeeping up to date, outsourcing your bookkeeping gives you those 5 hours back.
Actually, I'm willing to bet that you'll get more than 5 hours back. Don't just calculate how many hours you were elbow-deep in your accounting software, although that alone is a very time-consuming task. Add how many hours you were stressing about your accounting software.
Now add the hours you were online looking for QuickBooks Online tutorials. Then add the hours spent on message boards looking up error codes or sending emails to tech support.
You forgot to make a deposit on Wednesday morning, so now you're stuck in a line on a Friday afternoon when all you want to do is go home. You'd put it off until Monday, but you also forgot it was payday, so if you don't get this deposit in today, your employees' cheques are going to bounce.
That's just the time you're spending doing actual work. What about the hours you spend thinking about what you may have forgotten to do? Those sleepless nights wishing you knew more about your business and how to make it grow.
By outsourcing bookkeeping services to a professional, you get back all of that time and peace of mind.
Cost savings
The irony is that the time you spent doing your own bookkeeping wasn't the cost-effective solution you imagined.
Sure, you're currently paying your bookkeeper (you) $0/hr to perform these crucial tasks. But you're paying for software that is confusing or isn't giving you the insights you need.
Remember the bill you got from your accountant last year? Did they charge you a lot more than you expected? If so, it was probably to clean up the books you sent them. Before anyone thinks this is the accountant overcharging, let me come to their defence.
Getting a stack of receipts and a set of books that don't match the bank statements is a ton of extra work. If you look at many bookkeeping services price lists, you will see "clean-up" as an add-on service. I have had a lot of cases where the clean-up work took more time than the regular bookkeeping for the first year.
Plus, the time you free up gives you more time to work on your business. That's more time selling your product or services, which will bring in more money. It's also more time to focus on strategy. Instead of worrying about why your bank statements don't match your balance sheet, you can spend time enhancing your services or creating your next product.
Having professional bookkeepers working with you means far fewer headaches during tax season, but it also means cost-saving opportunities throughout the year.
Your bookkeeper can help you spot places where you're spending too much. They'll spot that software subscription you thought you cancelled a year ago or the home office expenses you didn't realize you could write off through the business.
While I don't always believe the "you have to spend money to make money" expression, spending money on your bookkeeping will save your company money in the long run.
Avoid unnecessary errors
Outsourced bookkeeping services don't just save you time and money. It can save you a lot of trouble.
It can start with small errors. You miscategorize one business expense or forget to enter an invoice. The financial statements don't quite match up with the credit card statements.
Over time these can snowball.
As an entrepreneur, you rely on these reports. They tell you how your business is performing. They are also an excellent warning sign of your cash flow problems. However, they're a terrible source of data if they aren't accurate. Your errors might prevent you from seeing an upcoming cash flow crisis.
Another area where you don't want errors is in payroll processing. There are so many rules to follow. You don't have time to stay up to date on the latest changes. Filing incorrect tax returns or just forgetting to file them can result in hefty fines.
This is where outsourced bookkeeping services come in. A good bookkeeping solution will ensure your reports are accurate and your returns are filed correctly and on time. They are trained to spot common errors and have systems in place to ensure accuracy and compliance.
These skills can provide you with peace of mind. You can have confidence in your own financial information, making it easier to plan for the future and focus on growing your business.
Access to the latest technology
Although accounting seems like an old, static industry, things are constantly changing and improving. When I got started , I was using huge stacks of printed ledgers and one of those loud calculators with a roll of paper hanging off the top.
Now we have access to artificial intelligence that helps ensure accurate financial statements and write up concise summaries. I can't imagine what I'll be using to help my clients in five more years.
Most business owners aren't going to keep up with bookkeeping software trends. They won't know the best tools for their particular business or how to use them to their fullest potential.
Plus, these costs start to add up. While it might make sense for a bookkeeping or accounting firm to invest hundreds or thousands into the latest software, that's too much for your typical business owners.
By outsourcing your bookkeeping services, you also get access to the professional tools a bookkeeper uses. Most of these costs are built into the fees for your bookkeeping services, so you're getting the benefits of better tools without the additional cost to your business.
These tools can give you access to the following:
- Increased accuracy
- Advanced reports and insights into your business
- Secure data storage
- Better ease of use
Nowadays, security is a big issue. It was hard enough keeping someone from breaking into your office and stealing your files. Now you have to worry about someone doing that from across the globe.
Having your data kept safe is crucial for your business. Make sure your bookkeeper uses secure methods to keep your bookkeeping data, including your reports, your logins and passwords, and your company secrets, safe.
Enhanced financial analysis and reporting
All accounting software can give you the basics.
- Profit and loss statements
- Balance sheets
- Accounts receivable management
- Accounts payable management
You'll be able to cover your basic financial reporting needs. What this will do is give you what you need to hand over your books during tax season so your accountant can file your return. It will also give you a surface-level view of how your business is performing.
When you outsource your bookkeeping, you will get all of that too. Of course, now someone else is doing it for you, which already makes your life easier. But it doesn't stop there.
A good accounting team will give you much more advanced reports. And not just new reports but also deeper insights into the reports you were already getting.
An income statement can tell you how much money you made (or lost) last month. But it can't tell you why without a bit of help. It also can't tell you what that means for your business in three months.
By adding a virtual bookkeeping team, you get their years of expertise. They can use that expertise to show you why certain parts of your business have struggled. And it's not just a history lesson. They can offer strategic planning and forecasting so you can see how small changes today will shape your company in the future.
Wouldn't it be great if you knew in advance when your business was going to grow? Or that next year, you'd have three really bad months? While no bookkeeper has a crystal ball, they do have the tools and knowledge to better predict these changes. Having that advanced knowledge can save you from a cash flow crisis and give you an advantage over your competition.
Flexible capacity
When your small business does change suddenly, you have a lot to manage. You might have to hire new people, expand your inventory, or bring on additional management. When you're doing your own bookkeeping, you may not have the time or knowledge to take on the additional work.
When you hire your first employee, you need to know about payroll processing. When you expand your operations, you may need to know about the tax laws in other provinces or states. These are important tasks to complete accurately, so you don't want to scramble to figure it all out on your own.
An outsourced bookkeeping firm is ready to add or remove services as your company changes. They can quickly adapt to whatever new bookkeeping needs come up.
This is also a big advantage over an in-house bookkeeper. If you are a big enough company, it makes sense to have an entire in-house bookkeeping team. However, for most small business owners, it's much easier to work with an external firm.
Instead of having to worry about hiring another full-time bookkeeper, you can let the outsourced bookkeeping team expand and contract their service offerings as your company changes.
This lets you focus on the core business and puts the bookkeeping process in capable hands.
Why outsourced bookkeeping?
I'm a big fan of the DIY mentality. I am always looking for ways to learn how to do things myself. However, there's always a point when I realize it's time to bring on a professional. I can figure out how to replace an electrical switch, but if the whole panel needs to be replaced, I'm going to call an electrician.
The same is true for your bookkeeping. You've spent a long time building up your skills, and now you're running your own business. In order to help it grow, you need experts in strategic positions. Doing this frees up your time to work on your business, and it gives you access to skills and insights you won't have if you're doing everything yourself.
When you outsource your bookkeeping, you save yourself time and money. You get access to advanced tools, reports, and insights that only a professional can provide. You reduce errors and avoid compliance issues that can hurt a growing business. And you have access to a bookkeeper or bookkeeping team that can adjust their services to match your needs.
If you are looking to outsource your bookkeeping this year, I'd love to discuss this with you. You can contact me to discuss your bookkeeping needs.
I'd love to be able to help you take your small business to the next level.
