Effective bookkeeping allows a business to monitor financial growth, prepare statements, review transactions, and more. Bookkeeping services are key to a business’s financial health, but some bookkeeping solutions may be more beneficial than others. From better accuracy to up-to-date technology, here are the top 5 reasons why a business should outsource bookkeeping services.
Many business owners, especially those leading small businesses, handle bookkeeping themselves. This includes summarizing business transactions in journals and ledgers; maintaining a stock of supporting documents such as receipts, purchases, and expenses; and finally, proving entries and deductions on tax returns, a responsibility that the IRS labels the “Burden of Proof”—and it can be a burden. When you are running a business, taking on the responsibilities of a bookkeeper on top of everything else can slow down business operations and even lead to mistakes.
Having a professional do the bookkeeping takes the burden off of the business. It ensures accuracy, proper classification of expenses as per the applicable accounting standards, and allows the business owner and employees to stay focused.
To relieve themselves of bookkeeping responsibilities, the business owner may consider hiring a new employee—a full-time bookkeeper—to manage the journals and ledgers. However, hiring more employees can be a long, stressful, and expensive process. For example, CareerBuilder surveyed employers and found 75% claimed to have hired the wrong person for a position in the past, which cost them an average of $17,000.
Instead of looking for the “right” candidate, who will require repeating costs like employee wages, office space, and equipment, consider outsourcing. Outsourcing relieves the responsibility of training and onboarding that comes with a new employee, and it moves the accountability to someone who is a trained and qualified professional already.
An outsourced bookkeeper can also support business owners through financial statements. These reports help analyze a business’s recent activities and transactions to show financial growth for both the IRS and business owners themselves. For example, one type of financial statement is the balance sheet, which provides insight into assets, liabilities, and equity. Other than providing an overview, the balance sheet can help a business owner review financial health, net worth, and assets to cover debts.
Business owners without a bookkeeper must handle financial statements alone, thus interrupting their operations and slowing production. Instead, consider an outsourced bookkeeper equipped with the knowledge and experience to effectively manage your books, so you can focus on running the business.
Up To Date
An outsourced bookkeeper will stay on top of accounting standards without interrupting a business’s day-to-day operations or bookkeeping. According to a 2020 study conducted by Sage Group, a multinational enterprise software company, 83% of accountants believe new technologies push them to work quickly to keep up with the market. These challenges may lower productivity and slow financial reviews and reports to a business owner or in-house bookkeeper. In contrast, an outsourced bookkeeping professional works with the latest technology reviews recent changes, and works with other professionals to always remain aware of the changing market.
In Sage’s study, 79% also believe regulations from the government and the industry introduce continual changes. This is seen firsthand: the Financial Accounting Standards Board (FASB), an independent organization that establishes accounting and financial reporting standards for companies, has updated and amended its documents four times over the first five months of 2021. Following the standards, an in-house bookkeeper must interrupt work to review and consider the changes, while an outsourced bookkeeper makes knowing and understanding any changes an integral part of their day-to-day job.
With constant technological advances and legislative changes, it can take a long time to read through and understand everything that needs to be documented as well as how it should be documented. Working with a professional puts that responsibility on someone who makes it their business to know and understand any adjustments. While it may seem daunting to put your finances in someone else’s hands, especially if you have been managing your own bookkeeping, a good bookkeeper is always willing to help. Good bookkeepers keep an open line of communication with their clients so that the books are always kept up to date, and any issues or concerns are discussed and resolved promptly.
Outsourcing bookkeeping services can save time and money, and reduce the stress that comes with a complicated and ever-changing process. Contact our tax professionals to maximize your financial health through effective and stress-free bookkeeping.