Outsourcing your bookkeeping and accounting can be a great way to save time, money, and energy. By outsourcing these services to a professional company, you can focus on running your business while leaving the finances to someone else.

But what exactly are outsourced bookkeeping services, and what do you need to know before making the decision to outsource?

In this article, we’ll answer those questions and more, so that you can make an informed decision about whether or not outsourcing is right for your business.

What is outsourced bookkeeping?

Outsourced bookkeeping is the process of hiring a professional bookkeeping and accounting company to take care of all your financial needs. This can include bookkeeping, preparing and filing taxes, and providing financial advice.

The main benefit of outsourcing your bookkeeping is that you can rely on the expertise of professionals who know what they’re doing. By outsourcing, you can avoid the hassle and stress of trying to do everything yourself, and you can rest assured that your finances are in good hands.

How does outsourced bookkeeping work?

When you outsource your bookkeeping, you will typically sign a contract with a bookkeeping company. This contract will outline the services that the company will provide, as well as the terms and conditions.

The company will then assign one or more bookkeepers to work with your business. They will be responsible for tracking your income and expenses, preparing financial statements, and filing taxes. In addition, they will provide advice and support whenever needed.

If you have any questions or concerns, the bookkeepers assigned to your account will be happy to help. They can be reached via phone, email, or chat box, and they are always happy to answer any questions you may have.

Bookkeeping Mistakes Businesses Make (and Why You Need to Outsource Your Bookkeeping Tasks)

Inexperienced employees are likely to make mistakes when they update your small business accounting books. These errors will give you false information about the financial status of your company.

Some common bookkeeping mistakes include:

1. Forgetting to keep receipts for documentation and reimbursements of petty cash.

A receipt allows you to determine where an employee used the money. This also enables you to monitor daily expenses and possible deductions once you start filing your small business’ taxes. Documentation allows you to avoid mistakes in handling petty cash.

2. Forgetting to monitor reimbursable expenses

Some entrepreneurs forget to monitor expenses they could reimburse. If they had monitored these expenses, they could’ve saved more money.

3. Misclassifying employees

Owners sometimes misclassify their employees, whether they’re in-house and full-time or just temporary freelancers and contractors. This mistake can lead to possible lawsuits and penalties.

4. Forgetting to back up

One common mistake is not backing up documents whether additional copies or digital ones. Misplacing or losing records makes it difficult to paint a clear picture of your company’s financial situation. You might lose documents because of natural disasters or human error. 

5. Neglecting bank reconciliation

Neglecting bank reconciliation creates problems for your small business. This task allows you to identify mistakes in inputs and transactions. Bank reconciliation also enables you to determine the amount of cash on hand you have for daily operations.

6. Using the wrong categories for items and transactions

Some owners and their employees doing their own bookkeeping put items and transactions in the wrong categories. This may result in error-ridden calculations and possibly higher expenses that reduce profit.

Doing bookkeeping on your own can lead to many mistakes in your accounting books. This is often the case when owners and employees don’t have the experience and background in accounting.

Outsourcing your bookkeeping and accounting to experts can eliminate mistakes in your accounting books. After all, bookkeeping professionals have the experience and skills to do bookkeeping efficiently and within your given budget.

Benefits of Outsourcing Your Bookkeeping and Accounting 

When it comes to bookkeeping and accounting, many business owners choose to do the work themselves. This can be a big mistake, as doing your own bookkeeping often leads to mistakes that can cost you time and money.

Outsourcing your bookkeeping and accounting needs to a professional company can help you avoid these mistakes and ensure that your books are always up-to-date and accurate. Here are just a few of the benefits of outsourcing:

1. Bookkeeping Expertise and Accuracy

You don’t need to worry about inaccuracies or falling behind on updating your books when a pro has it covered. They can easily identify any inconsistencies and mistakes in your books. They could rectify these immediately and provide you with real-time financial information you can use to make business decisions.

Mistakes in your accounting books may lead you to make bad financial decisions about the direction of your small business. Let outsourced bookkeepers update your books so that the financial data you use is error-free and updated. This allows you to make better decisions about your company. You’ll also be able to manage your budget better when you refer to accounting books with no mistakes.

2. Bookkeeping Experience and Efficiency

By outsourcing, you get access to professionals who are skilled in bookkeeping and accounting. You don’t have to do it yourself! They will be able to do the work quickly and efficiently, saving you time and money.

This provides you with more time to focus on growing your small business. Assigning bookkeeping to an employee that lacks the skills or experience in doing this task will lead to numerous mistakes in your books. 

In this sense, outsourced bookkeepers allow your team to focus on their strengths instead of trying to learn a new skill that’s beyond their job description or area of expertise. Invest in the development of your employees instead of delegating bookkeeping tasks to them.

3. Cost Savings

When you outsource, you pay a fixed price for the services rendered. This is often much less expensive than hiring an in-house accountant or bookkeeper.

Many outsourced bookkeeping services are more cost effective than paying a full-time bookkeeper’s salary with benefits. Hiring an in-house accountant or bookkeeper costs more. You have to train them and pay them. Outsourced bookkeepers will get to work quickly, meet your deadlines, and update your accounting books with no errors.

4. Peace of Mind

Knowing that your finances are being taken care of by experts gives you peace of mind, allowing you to focus on what you do best – running your business.

When it’s time to raise money or file your tax return, you know your books will be professional and complete. Late payments and erroneous tax returns incur penalties that reduce your profit and cause problems. Outsourced bookkeeping services experts make sure your accounting books and tax returns are error-free. Use your update books to apply for short- or long-term loans that inject cash into your operations and growth plans. 

5. Flexibility

Outsourced bookkeeping is more flexible, allowing you to scale the service up or down as needed. You don’t have to pay for a service you don’t need. Customize your package and only pay for what you need. Once your small business grows, you can add more services at your convenience. 

6. Better bookkeeping software; Better processes

An outsourced bookkeeping company can help you set up accounting software such as Xero or QuickBooks Online. Accounting software simplifies the bookkeeping process and stores your financial information in the cloud. 

These firms are frequently equipped with the most recent software and are up to date on the most sophisticated methods. All of these they can provide you if you hire them.

7. Access to top professional bookkeepers

When you outsource your bookkeeping and accounting needs to bookkeeping and accounting firms, you have access to a group of professional bookkeepers who are hired and trained to do just that — manage books!

You don’t have to vet each of these bookkeepers because someone else handles the vetting and hiring of qualified, professional bookkeepers so you don’t have to worry about this process. An outsourcing company will screen the bookkeepers that they will assign to you. They will cross-check credentials and work experience so that you’ll only work with the best.

What services does an outsourced bookkeeping firm provide? 

Outsourced bookkeeping services provide a full range of services which include bank reconciliations, payables, receivables, payroll, sales taxes, reporting, and others you may need. Their experienced bookkeepers update your accounting books in a timely manner. You can get real-time updates once you access your financial documents in the cloud. 

  • An outsourced bookkeeping service will use any program you choose, whether it’s Xero or QuickBooks Online, in order to support cash-basis and accrual-basis accounting.
  • Outsourced bookkeeping companies can manage books for 1000s of businesses.
  • Outsourced firms provide potential cost savings of up to 50%. This allows you to reduce accounting costs. The extra money you save allows you to invest in growth opportunities, develop new products, train or hire employees, and improve the efficiency of your operations. 
  • Outsourced bookkeeping companies allow you to save up to 50% on all bookkeeping, accounting and tax-related tasks. You not only save money but also free your employees from doing work outside their core competencies. Mistakes in your books can lead to penalties and wrong business decisions. Let your employees focus on what they do best while you let experienced bookkeepers update your accounting books.
  • Outsourced bookkeeping service providers offer multiple engagement models that suit every requirement of an accounting firm. An outsourced company can customize the package you want at the price you are willing to pay. 
  • Outsourced bookkeeping services have a robust data security system that is built into every aspect of their service. You don’t have to worry about data theft or loss because your documents are stored in the cloud. You provide access to chosen employees in your company. Access your financial data at your convenience regardless of where you are and the time zone you’re in.

Types of Outsourced Bookkeeping Services

Outsourced bookkeeping services come in two primary varieties: a local bookkeeper or a virtual bookkeeper, whether you’re working with someone you know down the street or have someone handling it internationally.

Before you make your decision, take a look at the advantages and disadvantages of each option.

Local Bookkeeping and How It Works

Local bookkeeping is a service where a bookkeeper comes to your office to work with you and your team. He or she will have access to your books and records and will work with you to get them updated and filed properly.

How it works:

1. You hire a local bookkeeper.

2. The bookkeeper comes to your office to work with you and your team.

3. The bookkeeper updates your accounting books in a timely manner.

4. You can get real-time updates once you access your financial documents in the cloud.

Pros:

1. You have a bookkeeper who is physically present in your office.

2. You can develop a good working relationship with your bookkeeper.

3. You can get real-time updates on your accounting books.

Cons:

1. You have to pay for the bookkeeper’s time, even if he or she is not working on your books.

2. You have to provide office space and other resources for the bookkeeper.

3. You may have to train the bookkeeper on your accounting software.

Virtual Bookkeeping and How It Works

Virtual bookkeeping is a service where a bookkeeper works with you and your team remotely. They will have access to your books and records remotely and will work with you to get them updated and filed properly.

How it works:

1. You hire a virtual bookkeeper.

2. The bookkeeper works with you and your team remotely.

3. The bookkeeper updates your accounting books in a timely manner.

4. You can get real-time updates once you access your financial documents in the cloud.

Pros:

1. You don’t have to pay for the bookkeeper’s time when he or she is not working on your books.

2. You don’t have to provide office space or other resources for the bookkeeper.

3. The bookkeeper can work with you and your team regardless of location.

Cons:

1. You may not have a good working relationship with your bookkeeper since he or she is not physically present in your office.

2. You may not be able to get real-time updates on your accounting books.

3. The bookkeeper may not be familiar with your accounting software.

Outsourced bookkeeping services are a great way to save money and time. You can choose the type of bookkeeping service that suits your requirements. Make sure to check the reviews of the bookkeeping service providers before hiring one.

Each client’s needs are different so at Robookkeeper we pride ourselves on being able to set up customized bookkeeping services that are tailored specifically to the needs of each individual client. You won’t be charged for what you don’t need. 

To determine how our bookkeeping services can best help you run your business, we will start with a thorough assessment of your needs and then design a system that can grow alongside your company. This makes it easier to scale up the services you get once you need to accomplish additional bookkeeping tasks.

How to Outsource your Bookkeeping

If you’re like most business owners, bookkeeping and accounting probably aren’t your favorite things to do. But unfortunately, they’re a necessary evil if you want your business to succeed.

So what can you do to make the process easier on yourself? You could try to do it all yourself, but that’s likely to be time-consuming and error-prone.

Or you could outsource it to a professional bookkeeping service. Outsourcing your bookkeeping can save you time and money, and it can also help ensure that your books are always in order.

The process of outsourcing bookkeeping services includes finding a provider, agreeing to terms and conditions, and starting the service. Some companies allow you to customize their package. Customization allows you to maximize the value of your investment.

Here are some tips on how to choose the right bookkeeping service for your business.

  1. Look for a bookkeeping service that offers a free trial. This will give you a chance to test out the service and see if it’s a good fit for your needs.
  2. Make sure the bookkeeping service you choose is compatible with your accounting software. This will make it easier to transfer your data and keep track of your finances.
  3. Choose a bookkeeping service that offers 24/7 customer support. This way, you can always get help when you need it.
  4. Choose an outsourced bookkeeping service that offers migration assistance if you are moving to an outsourced bookkeeping solution. They can assist you with moving from paper-based financial documents to storing your data in the cloud.
  5. Ask for recommendations from other business owners. They may be able to suggest a bookkeeping service that they’ve used and been happy with.
  6. Get quotes from several bookkeeping services before making your decision. This will help you find the most affordable option.

Outsourcing your bookkeeping can be a great way to save time and money. Just be sure to do your research and choose a reputable service that meets your needs.

The Cost of Outsourcing Bookkeeping

Business owners often wonder if outsourcing their bookkeeping is a cost-effective solution. The answer, as with most things, is it depends.

The costs depend on a number of factors, including the scale of your business transactions and expenses, the number of financial accounts you need to connect, and the caliber and time investment of support you get access to. 

However, outsourcing your bookkeeping can be a great way to save time and money. Just be sure to do your research and choose a reputable service that meets your needs.

The cost of outsourced bookkeeping services can range from $500 to $2,000 per month. However, you can find affordable bookkeeping services without sacrificing quality output.

For example, Robookkeeper provides a package starting at US$49 per month. They use cloud accounting software such as Xero or QuickBooks Online. They’ll help you set up your account after which you can access your financial information whenever you need to.

The extra savings Robookkeeper provides you with allows you to invest in your employees, in the growth of your small business, in developing new products and services, and in expanding your customer base.

It’s costlier to hire an in-house bookkeeper because of the benefits you have to provide them. It’s also costly to delegate bookkeeping tasks to an inexperienced employee. You have to wait until they learn the job and pay for their training. During that time, they may make frequent mistakes that result in error-filled accounting books. 

Risks of Outsourcing Bookkeeping Services

When it comes to outsourcing your bookkeeping, there are a few risks you need to be aware of.

1. Outsourcing bookkeeping services can cost a lot of money

It’s important to screen the bookkeepers or the outsourced bookkeeping company you hire. Review the companies they worked with and the type of work they do. Doing so allows you to maximize your investment.

2. Bookkeeping outsourcing can be time-consuming and difficult

You’ll need to find a bookkeeping company you can trust. Build a strong business relationship with your outsourced partner. Communication about the scope of work, objectives, schedules of meetings, and deadlines reduces possible problems throughout the duration of the partnership.

3. Subpar level of service compared to an in-house bookkeeper

One risk is that you may not get the same level of service you would if you hired an in-house bookkeeper. Make sure you do your research and choose a reputable bookkeeping service that meets your needs.

4. Your data may not be safe if it’s stored off-site

Be sure to ask the bookkeeping service about their security measures and find out what happens if their servers go down. The third risk is that the bookkeeping service may not be familiar with your accounting software. This can cause problems when trying to transfer data or create financial reports.

Make sure the bookkeeping service you choose is compatible with your accounting software and ask for recommendations from other business owners who have used their services.

5. Outsourced bookkeeping services can lead to major financial risks

A company can leave the work you gave them unfinished. However, there are more reliable outsourced bookkeeping companies than unreliable ones. That’s why you should review the companies on your shortlist first before hiring.

Make sure you have a backup plan in place in case something goes wrong with the bookkeeping service. This could include having a part-time bookkeeper on staff or keeping paper copies of all your financial records.

Outsourcing your bookkeeping can be a great way to save time and money. Just be sure to do your research and choose a reputable service that meets your needs.

Challenges of Outsourcing Bookkeeping  

Small business owners often find themselves overwhelmed with the day-to-day tasks of running their businesses. This leaves little time for them to focus on long-term strategic planning and goal setting.

Outsourcing bookkeeping services can help lighten the load, but it’s important to be aware of the challenges that come with this decision.

Here are six of the most common challenges small business owners face when outsourcing their bookkeeping.

1. Lack of Control

One of the biggest challenges small business owners face when outsourcing their bookkeeping is a loss of control. When you outsource your bookkeeping, you’re essentially giving someone else access to your financial records.

The outsourced firm you hire might not allow you access to reports and updated financial documents within the time you want.

2. Confidentiality Issues

Another challenge small business owners face when outsourcing their bookkeeping is ensuring the confidentiality of their financial information.

When you outsource your bookkeeping, you’re entrusting your financial information to another person or company. This means it’s important to choose a bookkeeping service that has experience handling confidential information.

3. Increased Costs

One of the biggest concerns small business owners have when outsourcing their bookkeeping is the cost. Hiring an outside firm to handle your bookkeeping can be expensive, especially if you’re working with a large volume of transactions.

Without proper guidance, small businesses might end up paying for services and package inclusions they don’t need. This adds to a company’s costs and may reduce its profit.

Moreover, You might not get the payment terms you want from your potential business partner. You can always try to negotiate the payment terms if you think the outsourced bookkeeping firm on your shortlist is worth the investment.

It’s important to weigh the cost of outsourcing your bookkeeping against the cost of hiring an in-house bookkeeper. In some cases, it may be more cost-effective to hire an in-house bookkeeper.

4. Time Constraints

Another challenge small business owners face when outsourcing their bookkeeping is time constraints. When you outsource your bookkeeping, you’re essentially giving someone else control of your financial information.

This can be a daunting task for some business owners, but it’s important to remember that you can always ask for a detailed report of the work that’s been done.

5. Communication Woes and Poor Customer Service

You might miscommunicate with each other for various reasons such as the conflict in schedules for meetings, unsettled disagreements about workload and output, and failure to establish the platform (online or in-person) used for discussions.

If you hire the wrong company, you’ll deal with poor customer service. The firm you hire might be late in responding or not respond at all to your requests. They might not follow the deadlines you established. They won’t attend meetings and submit poor-quality work.

6. Technical Know-How Mismatch

You might not agree or they might lack the skills needed to use the bookkeeping and accounting software you are familiar with.

Outsourcing your bookkeeping can be a great way to save time and money. Just be sure to do your research and choose a reputable service that meets your needs.

Best Practices for Outsourcing Bookkeeping Services

  • Always communicate with the company you hire. Doing so puts all parties on the same page when it comes to the quality of the output, deadlines, mode of communication, and accounting software used.
  • Clarify the type of bookkeeping services you need such as bank reconciliations, payroll, inventory management, managing accounts receivables, or others.
  • Use a financial agency that charges by the number of accounts you need them to manage.
  • Review all the outsourced bookkeeping companies on your list and identify which ones provide you with the most value that’s within your budget.
  • Choose a company that uses cloud accounting software. The latter provides small businesses with plenty of benefits such as data security, accessibility whenever and wherever, the ability to generate reports, and makes it easy to identify mistakes in the entries just to name a few.
  • Look for a company that provides you with clear timelines for their service delivery.
  • Hire a firm that offers seamless customer support from start to finish. 

Frequently Asked Questions About Outsourcing Bookkeeping

Small business owners have plenty of questions about outsourcing their bookkeeping.

What are the benefits? What are the risks? How do you find a good company to work with?

Below, we’ll answer some of the most common questions about outsourced bookkeeping.

Read on to learn more.

Q: What are the benefits of outsourced bookkeeping services?

A: Error-free and updated accounting books, customizable package, work with experienced bookkeepers, and first-rate and on-time output just to name a few.

Q: How much does outsourcing bookkeeping services cost?

A: Robookkeeper offers packages starting at US$49. 

Q: Who will you work with?

A: You will discuss your needs, schedule meetings, and establish deadlines with qualified and experienced bookkeepers. 

Q: Will my financial documents be secure?

A: Yes, your documents will be safe in the cloud. The cloud system used has layers of security and encryption. Users can choose who has access to the data. You won’t have to worry about losing your documents to natural disasters or negligence. 

Q: Can I access my financial documents?

A: Yes, since your documents are in the cloud you can access them remotely.

Q: What does an outsourced bookkeeper do?

A: They review your accounting books and check for errors. They make corrections, do bank reconciliation, and do other related tasks. They can also help you set up Xero or QuickBooks Online. 

Q: How will I know the progress of the work?

A: Discuss meeting schedules whether online or face-to-face with your chosen company. You can also access your documents in the cloud.

What can Robookkeeper do to help

Robookkeeper is one of the best and most affordable outsourced bookkeeping service providers out there.

Robookkeeper is an outsourced bookkeeping company you can rely on. We offer affordable and first-rate bookkeeping services for entrepreneurs. We have a team of experienced and qualified bookkeepers qualified and managed by D&V Philippines. They can work with you and update your accounting books while you focus on growing your business. They can do bank reconciliation, accounts receivable and payable processing, balance sheet report, and profit and loss report just to name some services. You can also have your package customized based on your needs.