There is absolutely no business owner out there who would not know the importance of precise and regularly updated business financial records. Bookkeeping, whether done in-house or through outsourced bookkeeping services, involves not only the recording of the sources of income and expenses but also serves as the blueprint of the business in making business decisions, gaining financing, and obtaining proper compliance in paying taxes. Yet, many busy entrepreneurs find keeping the books in-house to be an ongoing struggle.
What are Outsource Bookkeeping Services?
Outsourced bookkeeping services simply mean a business hands over its financial bookkeeping responsibility to a professional or firm. The work generally takes place off-site by those bookkeepers, by the use of secure cloud-based accounting software. Offered services can include, but are not limited to:
- Data entry of income and expenses
- Bank reconciliation
- Accounts payable and receivable management
- Payroll processing (if applicable)
- Financial reporting generation (e.g., profit and loss statements, balance sheets)
There are two main models for accounting bookkeeping service:
Virtual Bookkeeper: A self-employed professional serving several clients, he offers the benefits of flexibility and likely provides the cheapest solution for smaller businesses.
Bookkeeping Firm: Larger businesses or those with more complex financial needs may be best served by partnering with a bookkeeping firm. Firms traditionally tend to have several expert bookkeepers who can offer services with a higher level of expertise.
Focus on Your Core Business:
If you run a business, you wear many hats: from marketing and sales to product development and customer service, you are always pull in a million different directions. Outsourcing your bookkeeping liberates invaluable hours that you could apply to activities that move your business forward.
Translate that idea into practical terms: each minute you are wrestling with receipts, reconciling bank statements, or generating reports is a minute wrested from strategic planning, relationship building, or closing deals. If your business grows to the point that handling your own finances is unmanageable, outsource bookkeeping, and free that time up from your plate.
There’s also a concept called opportunity cost to consider. Opportunity cost refers to the potential benefit you give up by choosing one option over another. In this case, the opportunity cost of handling the books internally arises when one fails to deploy time and energy into an activity that stands at a higher return on investment towards the business.
Cost-Effectiveness:
As previously said, using an external bookkeeper is more affordable than employing one internally. The benefits that one gets are broken down below:
Lower Payroll Costs
Avoid paying salaries, benefits, and employer taxes connected with an in-house bookkeeper. All that becomes quite large with time and salaries, much more than you would probably think when factoring in payroll taxes and other associated costs, such as health insurance.
No Overhead Costs
There is no need to set aside space in your office and provide either equipment or even software for an outsourced bookkeeper. Such expenses can quickly eat into your profits.
Scalability:
this is one of the major benefits that come by in your business. Your business demands are not constant; they change from time to time. When you outsource, you can dial your level of bookkeeping support up or down depending on your need at the given time. You won’t have to eat the fixed costs of a full-time employee, especially when business is slow.
Expertise When You Need It:
Get the expertise of a seasoned professional at the price of not hiring an in-house full-time CFO or Controller. With outsourced bookkeeping, you have experts from several outsourced bookkeeping companies that have a team of qualified bookkeepers with many years of experience in various accounting software and knowledge of industry regulations.
It means that your books will be service correctly, according to compliance, and without the big bill of a full-time senior accounting professional.
Enhanced Expertise and Accuracy:
Bookkeeping can get rather complicate, especially when delving into the financial backgrounds of businesses with less-than-straightforward financial structures or those involved in heavily police industries. They can also be privy to new practices in accounting and tax laws. This expertise translates into several benefits for your business:
Reduced Errors:
Some of the errors may be very small, but they could turn into big messes in the future. It means that outsourced bookkeepers are trained and experience, fully orientated, and know how to minimize errors and keep your financial records correct.
Improved Financial Reporting:
Informed decision-making requires timely and accurate financial reports. Preparing clear and brief reports from bookkeepers you have outsourced will be of value in understanding the performance of your business.
Compliance with Tax Regulations:
Filing taxes may be a difficult and time-consuming procedure. To assist you avoid penalties and fines, outsourced bookkeepers can make sure your books are kept up to date in compliance with tax requirements.
Scalability and Flexibility:
Accounting bookkeeping service will shift with your business growth and evolution. It will avoid the scaling issues of dealing with the bookkeeping in-house. Here’s how:
Increased Support During Peak Times:
Other times of the year, for instance, at the end of the month or during tax season, you might have more bookkeeping work than you can handle. Outsourced bookkeeping services can easily scale up their support during these peaks to ensure your books are always up to date.
Less Support During Slower Periods:
Yet, on the other side of the coin, there are going to be times when you don’t need the most support, per se, in your bookkeeping. During these times, you can scale back on the support you get and bring your costs down accordingly by enlisting outsourced services.
Access to Additional Services:
Most outsourcing companies usually offer additional services, which are beyond the basic set of activities offer. Some will have payroll processing, and in most cases, managing accounts payable and receivable, while in some cases, it will even involve tax preparation. As your business grows, you can easily add these on a pay-as-you-need basis.
Improved Financial Reporting and Tax Preparation
Every business needs accurate and updated financial records. Outsourcing the accounting bookkeeping service will make the business books maintained with much more care, thus giving multiple benefits to the business. Easy Tax Preparation with clean organized books.
Streamlined Tax Preparation:
Keeping your books neat and organised makes preparing your taxes much easier. You may get the financial information you need from outside bookkeepers to make sure your taxes are submit on time and appropriately.
Reduced Chances of Being Audited:
Mistakes in your financial records tend to be flag by the taxman, therefore increasing the likelihood of an audit. Outsourced bookkeepers would also ensure that your books are accurate and meet the required standards set by the tax regulator.
Read more:- Seven Tips for Efficient Bookkeeping in Singapore for Small Business
