Last Updated on September 14, 2022 by kavin
To make your business successful, you must expertly manage costs. No matter how exceptional the service or product, if you can’t get the cash inflow and outflow right, you won’t survive.
Outsourced bookkeeping is one of many ways a modern-day business owner can cut costs. No longer is there a need to hire an in-house team when you can book virtual experts to do the same, in even better ways.
Why Consider Outsourced Bookkeeping?
An in-house accounting team takes more than salaries. You don’t just pay them bucks to do their job; you have to provide them with other forms of compensation and security. These include medical, fuel expenses, paid holidays, and other benefits.
Not to forget, you also have to set up a designated department, pay the rent, buy supplies, pay bills, and manage other overhead expenses. Add them up, and you end up with a hefty package.
In contrast, outsourced bookkeeping saves you from all expenses mentioned above. You no longer have to cover medical, pay for fuel, provide paid holidays, or sustain the cost of equipment, maintenance, and overhead expenses.
As it stands, you only have to pay the bookkeeper for what it does; bookkeeping. So, rather than paying in-house teams for so much more. It is better to pay bookkeepers on an hourly basis.
So How Does Outsourcing Financial Tasks Look?
Financial services outsourcing allows you to get the full accounting department experience without the internal hiring process hassle and expense. You get the benefit of knowledgeable and experienced finance professionals who can take financial tasks off your plate and free up your precious time. The valuable insight they bring to the table helps guide your business decisions while you receive meaningful financial information insights.
Financial Services providers do what they do best, and you get to focus on coming up with great ideas that are backed by financial data to grow your business rapidly.
In-House VS Outsourced Bookkeeping Annual Costs
With all the benefits and compensations added, an in-house bookkeeper in 2022 costs on average $50K/year. Once you add other overhead expenses to the mix, the number goes further up.
In contrast, an outsourced bookkeeper, on average, costs anything between $30-35K/year. This number comes after factoring that the virtual resource does your business bookkeeping for 8 hours a day, 5 days a week, and 12 months a year.
That makes outsourced bookkeeping 100% cost-efficient. Every buck you pay is paid for the service, not for weekends, benefits, etc. You don’t have to cover your bookkeeper’s expenses.
Check out the infographic below to better understand the cost benefits of outsourced bookkeeping:
Is In-House Team Worth it?
Remember, you must pay benefits, compensations, and other overhead expenses for an in-house team. However, is it worth it? The stats say NO!
One in every two businesses fails within the first five years due to their inability to manage the cash flow. Add to that, 70% of these businesses have in-house bookkeepers.
Not to say there are no good apples in the market. However, not every business can afford to hire a skilled in-house bookkeeper. Thus, they have to settle for less, and it ends up costing them everything.
Top Benefits of Outsourced Bookkeeping
Here are the four top benefits of outsourced bookkeeping that helps business owners run their business like a pro and significantly boost their odds of success:
1. High-Quality Service
Most outsourced bookkeepers are experts with years of experience in managing small and medium business finances. As they get paid solely for their skills and the work, the odds are they know their way around the books.
2. No Recruitment Hassle
All things aside, hiring an in-house team in itself is a hassle. The recruitment process is lengthy, time-consuming, and costly. And, at times, you have to go through it over and over again to find the perfect fit.
3. Easy to Scale
As said before, even if the work requires a couple more resources, you have to think a million times before hiring them due to the costs involved. In contrast, you can add another virtual resource to the mix through a single call.
4. No Taxes
Last but not least, outsourcing bookkeeping saves you tons of different kinds of business and employee-related taxes like payroll tax.
When Should A Business Consider Outsourcing Accounting And Bookkeeping
Getting work done with different companies, outsourcing bookkeeping and accounting tend to work best when the:
- Small business does not require a full-time bookkeeper but needs a person with more skills than the office manager, or receptionist can provide usually.
- Company of any size cannot find a full-time employee with suitable abilities at affordable prices.
- Growing company is looking for opportunities to scale its accounting and bookkeeping services anytime anywhere.
- Temporary services are needed, e.g., extra help with end of the year reports or if a full-time employee is going on holiday, maternity leave and others
Moreover, when you hire a skilled and qualified person, someone (usually the executive director) will still need to be involved in the process while approving invoices, making deposits, reviewing timesheets etc.
Getting the most out of your accountant
In order to make sure you get the most benefit from hiring outsourced accounting services, think about the challenges you’re trying to address and the results you’re hoping for. You may need ongoing bookkeeping and payroll services that help build out a specific analytic report, or just general guidance on what crucial benchmarks you should aim for.
Identifying what your goals before you involve outside help will guide you to ask the right questions and ultimately hire the right accounting firm like Monily.
Clients who outsource their accounting tasks get huge advantages. To begin with, cost-efficiency, and ending with flexibility in terms of contracts or scaling the number of functions. Accounting and bookkeeping are a vital part of business, but also complex. It requires time and specific knowledge. Without accounting experience, there might occur many errors which can lead to a decrease in your business or even lead to bankruptcy.