Bookkeeping is a necessary and inevitable part of running a business, but it’s not something you have to do yourself. Many small businesses decide to outsource the task to a professional.
This post details outsourced bookkeeping services for small businesses and the benefits of delegating this task to a third party.
There is an old saying in business, “Do what you do best. Outsource the rest,” and there is a lot of truth to it. The thinking is straightforward: you are in business to provide a product or service to your customers; any time you spend not providing said product or service is time you could have been spending on your core business.
By outsourcing your bookkeeping to a trusted partner, you not only get your time back, you get the reassurance that your books are being handled by a professional. If your core business is not accounting or bookkeeping, it’s worth asking yourself why you have not outsourced this task to an expert.
What can a bookkeeping service do for you? Plenty. Your bookkeeping partner could be responsible for reconciliation of your accounts (both accounts payable and accounts receivable), creating financial statements needed for tax returns, such as profit and loss, balance sheets, and others.
If you’ve been doing your own bookkeeping, this might sound familiar.. You get set up with software like QuickBooks, Netsuite, or Xero (all great programs) and start adding data. But then at the end of the day, or week, or month, you don’t reconcile all your accounts. Even with good software, this process still takes effort and a careful eye.
Without checking to make sure the numbers add up correctly, you’ll have no reliable way to know where your money goes and when it moves. Entering data without taking the step of reconciliation creates a false sense of security. When you have an inaccurate picture of your finances, it’s easy to start spending money you don’t actually have.
Why does this happen? There are certainly some people that just might not know what to do. But more often than not, it’s a matter of time. Bookkeeping takes a lot of time to do well, and if you’re focused on your core business (what you do best), it is understandable that you don’t have tons of time to devote to keeping the best of books.
Between the time commitment and expertise required to do it properly, you have two good reasons to start outsourcing your bookkeeping.
If you want another, taxes and bookkeeping go hand in hand. Your books need to be correct in order to generate accurate financial statements needed to complete your tax returns. In 2021 the IRS announced that it will be increasing the number of small businesses it audits by 50%—so now it is more important than ever to ensure that your books are in good shape going into the next tax season.
You can be audited at any time of the year and for years going back. You don’t want to risk getting audited and not have the records to support your position.
Also consider the benefit of having a neutral third party to take a look at your books. Sometimes it’s a matter of being able to see the forest through the trees—a bookkeeping partner will be able to spot errors and irregularities a lot better than you will be able to from your position. This could be simple mistakes, or more serious instances of theft or fraud.
There are three main considerations when making a decision to outsource the bookkeeping for your small business:
Let’s start with price. You’re going to find a ton of options as you start looking around, and they are not all created equal.
Bookkeeping is both a service and a skill—not just anyone can do it well. Be wary of really inexpensive options. You will get what you pay for when you go with a super low cost provider. You don’t want to pay someone to do your books in Microsoft Excel or Google Sheets; if that is what’s being offered it’s a mark of low quality. Instead you’ll want to find a partner that can work within your instance of QuickBooks (or other application) and have a single source of information.
So, what should you pay? You have to consider what outsourcing your bookkeeping is worth to you. It should be affordable (not completely out of your price range) and feel like a fair price for the level of quality, service, and professionalism that you expect.
Expertise is a huge factor in selecting a bookkeeping partner. Because a conversation about taxes is never far behind a conversation about bookkeeping, it pays to work with a bookkeeper who is a licensed enrolled agent or CPA who knows the tax code inside and out. A bookkeeper with expert tax knowledge can help you in the event you’re audited or overtaxed.
Organization is key to effective bookkeeping and is also a mark of expertise in this profession. When you’re interviewing possible partners, their sense of organization should be apparent throughout the encounter. You don’t want to work with a disorganized bookkeeper.
Lastly, you and your bookkeeping partner have to fit well together. You don’t want to be just another account; you want a partner who makes a point of understanding your business and needs. If your bookkeeper is taking your data and dropping it into a template and running with it, they’re not giving you the attention or solutions your business needs. Every business operates under its own unique circumstances and the best bookkeepers recognize that and act accordingly.
In addition to the personal touch, you should be aware of online bookkeeping services that entice you with promises of low cost and ease of use. While they do serve a role, it’s important to know that these services are closer to tools than they are to having a bookkeeper. People who use these tools must spend a lot of time manually entering data without a lot of contact with real people, so be aware of that as you’re looking around at your options.
If you’re looking for personalized bookkeeping from a partner who will commit to understanding your business and provide you with the expertise and professionalism you expect, then consider Tax Relief USA. We offer small business owners a monthly bookkeeping solution that saves time and offers peace of mind.
As bookkeeping professionals with the license to provide tax services in all 50 states, Tax Relief USA can help you with your books and any tax issues you may run into. Whether it’s help filing your returns, or if you’re facing tax troubles, we’ll get an in depth look at your business and help you balance your books and stay on top of your obligations to the IRS.
If you’d like to know more about how Tax Relief USA can help you with your small business bookkeeping, or if you have any questions about your taxes, please give us a call at (408) 610-1518 or book a meeting online.