Keeping accurate and organized financial records is critical to business success. That’s why many companies turn to outsourced bookkeeping, where outside experts handle the books without the expense of an in-house team. An outsourced bookkeeper helps you make informed decisions that support your business’s financial health and growth.
Benefits of Outsourcing Your Bookkeeping
There are many benefits to outsourcing your bookkeeping. One significant advantage is the breadth of experience an outsourced bookkeeper brings. They’ve likely worked with numerous businesses and encountered various challenges and solutions, which can be incredibly valuable. Additionally, many outsourced bookkeepers work in teams, so if one person is unavailable, another can step in, ensuring continuity and reliability.
Finding a Reliable Outsourced Bookkeeper
But how do you find a reliable outsourced bookkeeper? Personal recommendations are golden. Ask fellow business owners in your community who they use and trust. If personal recommendations are hard to come by, you can turn to online resources. For instance, QuickBooks Online has a tool called Find a ProAdvisor, which helps you locate bookkeepers who are familiar with your industry and region.
Essential Qualifications to Seek Out
When evaluating potential bookkeepers, look for someone with:
- a background in business or accounting supported by relevant educational credentials
- experience with clients similar to you
- social proof, such as online reviews or personal recommendations
- certification in the bookkeeping software you use, such as QuickBooks
Setting Clear Expectations
Once you’ve found a bookkeeper, setting clear expectations is essential. You’ll want to agree on:
- the specific services they will provide
- how you will communicate
- the timeline for completing work
- the availability of both parties
It’s also important to discuss how you will use your financial records, whether for tax compliance, securing loans, or attracting investors. This helps your bookkeeper understand your priorities so they can tailor their services accordingly.
Since they are not your employees, they will have other clients and may prioritize those with more immediate deadlines. To mitigate this risk, respond promptly to information requests and set up regular meetings to maintain accountability on both sides.
Should an Outsourced Bookkeeper Have Industry Familiarity?
When selecting a bookkeeper, should they be familiar with your industry? It’s beneficial, but not at the expense of proficiency with your software. It’s a balance between industry knowledge and technical skill. Also, the bookkeeper’s personality and communication style should be considered to ensure a good working relationship in the long term.
How do bookkeepers charge for their services?
There are typically two models for outsourced bookkeeping rates: hourly or flat monthly fees. Hourly rates mean you pay for the time spent on your books, which can vary each month. Flat fees offer more predictability, as the bookkeeper commits to providing the agreed services for a set price, transferring the time management risk to them.
Handling Taxes with an Outsourced Bookkeeper
A common question is whether an outsourced bookkeeper can handle your taxes. While some do, you typically want a tax preparer with an EA (Enrolled Agent) or CPA (Certified Public Accountant) designation for tax matters. Bookkeepers often prepare your books for tax filing, but a tax preparer would do the actual filing.
Differentiating Between Bookkeepers and Accountants
But what is the difference between a bookkeeper and an accountant? The terms can be confusing, and their usage varies by state. Generally, bookkeepers make accounting entries and manage daily financial records, while CPAs can perform attestation services (compilations, reviews and audits) and represent you before tax authorities. In some states, anyone making accounting entries can call themselves an accountant, but only CPAs have passed the CPA exam and thus have certain legal privileges and responsibilities.
Understanding these roles can help you better allocate your financial tasks. For instance, while a CPA might handle high-level tax strategy and compliance, a bookkeeper ensures that every transaction is recorded and reconciled correctly, providing a sense of security in your financial records. This involves reconciling bank statements, credit card statements, and various balance sheet accounts such as payroll, prepaid expenses, and accounts receivable/payable.
Outsourcing your bookkeeping can bring numerous advantages, provided you select the right person or team. By focusing on qualifications and setting clear expectations, you can ensure your financial operations run smoothly with outsourced bookkeeping services.
Your Numbers Person offers outsourced bookkeeping services. Book a free consultation today to learn more.
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