It’s not just about the lowest monthly rate when selecting a bookkeeping service. The best service provider will be able to give you correct books, fast reports, safe data handling, proper communication, and a scalable process.
Some factors which you must take into account include a provider’s experience, knowledge of the software, services provided, and security, pricing, and reporting.
What does the Bookkeeping Service do?
Transaction recording – keeping detailed transaction records as they occur, keeping books up to date.
Bank Reconciliation – compares internal records with statements from the bank or credit card to identify discrepancies or errors.
Accounts payable – involves tracking and processing what the business owes to vendors and suppliers.
Accounts Receivable – tracking customers’ outstanding bills and ensuring that they are paid.
Payroll support – payroll calculations, deductions and payroll records.
Financial reporting – creating financial statements like profit and loss, balance sheet and cash flow statements
Closing books – at the end of each month; finalization and review of books
Catch up and clean up bookkeeping – rectifying the unorganized or backlogged books to get them up to date.
When to hire a Bookkeeping Service?
Do you need to be outsourcing bookkeeping? Consider it if:
- Transactions continually accumulate ahead of books’ ability to keep them current
- Reconciliations do not get done – bank and book accounts don’t reconcile
- The owner spends too much time on bookkeeping and hours are spent on data entry rather than the business
- Financial reports are not reliable – numbers cannot be relied upon for decision making.
- The business is increasing and the transaction volume is outpacing capacity.
- Transactions are getting more complicated – many of the accounts, entities or revenue streams are more difficult to keep track of manually
- Tax preparation time is too lengthy – disorganized books drag down the filing season
In-House or Outsourced Bookkeeping: Which Is Right for You?
| Factor | In-House | Outsourced |
| Hiring | Higher commitment | Flexible |
| Training | Required | Provider-managed |
| Scalability | Slower | Easier |
| Expertise | Depends on hire | Access to specialists |
| Cost structure | Salary/benefits | Service-based |
| Technology | Company-managed | Provider-supported |
What should you look for in a bookkeeping service?
- Industry experience – knowledge of the accounting regulations and problems associated with their particular business.
- Expertise in accounting software – ability to be efficient with the software that your business uses or would like to use
- The scope of the services – make sure that they know what is covered and what isn’t.
- Accuracy and quality controls – internal checks to detect errors prior to their inclusion in reports.
- Communication – ability to quickly and easily get your bookkeeper’s attention when you have questions
- Data encryption – how financial data is encrypted, and how it is safeguarded from unauthorized access
- Publisher transparency – clear and upfront cost of their services, no hidden fees.
- Scalability – the ability to process greater number of transactions/services as your business expands
- The range and customization of financial reports provided.
- Tax-ready books – books that are kept in a manner that is usable by your CPA or tax preparer.
What are some questions you should ask before hiring?
- Who will manage my books?
- What is the frequency of account reconciliation?
- Which accounting software are you familiar with?
- How do they deal with errors in bookkeeping?
- What reports will I receive?
- How do you protect the financial information?
- Do you think you are able to do catch-up bookkeeping?
- Will My business scale into your service?
- What is covered under your monthly fee?
- Do you communicate with my CPA/turkey or tax preparer?
How much does Bookkeeping cost?
There is no simple average cost, but rather a number of factors:
- Hourly bookkeeping vs fixed monthly – the billing model itself can impact predictability of cost
- Full-service bookkeeping packages – package services often cost differently than standalone tasks
- Cleanup and catch-up pricing – bringing backlogged books current is priced separately
- Transaction volume – the more transactions the more time and expense
- Multiple bank or credit cards – increase the load of work
- Payroll requirements – payroll processing can be an extra service
- The more complex the accounts receivable and payable the more invoices and vendors.
- Pricing – detailed or customised financial reporting may impact on pricing
What are the Red Flags to Watch For?
- Lack of definite scope of work.
- No clear pricing.
- No security policy.
- Inconsistent answers to questions.
- No reconciliation process.
- No qualified feedback.
- Promise that are impractical.
- No definite turnaround time.
How do you compare providers Side by Side?
- Experience – years of experience within industry/ type of business.
- Expertise – having depth of accounting and software knowledge.
- Pricing – transparency and affordability to fit your budget.
- Security – aspects of keeping data safe.
- Knowledge – the subjects and knowledge they know
- Communication – being responsive and clear.
- Reporting – quality and usefulness of the financial reports they provide
- Scalability – how easy they can grow your business.
This scorecard allows you to easily compare several providers.
Can Bookkeeping Service be used along with your CPA?
Yes. The flow of the relationship is usually, Business to Bookkeeper to CPA/Tax Professional. Bookkeeping and tax/acct work go hand in hand. The bookkeeper keeps records accurate and up-to-date, the CPA uses the bookkeeper’s records to prepare taxes and plan financial strategies.
Why Outsource Your Bookkeeping?
- Reduce administrative burden – spending less time on manual data entry and record-keeping
- Access to best expertise – experts who know best practice and compliance requirements
- Faster & better financial visibility – accurate and reliable reporting to speed up decision making.
- Scalability – Services that adjust with your expanding business.
- More time on core business – less time on books and more time on business.
Frequently Asked Questions
Would it be worthwhile to hire a bookkeeper?
Definitely, when books are not kept up to date, reports are no longer accurate, or when bookkeeping consumes too much time to run the business.
How much a bookkeeper costs?
There is no fixed rate, it depends on the pricing model, on how many transactions you have, on the number of accounts you have, on your payroll needs, on the complexity of AR/AP and on the requirements for reports.
Should small business outsource bookkeeping?
An experienced accountant can be valuable in administrative support, expertise, financial insight and scalability as the business expands.
Is bookkeeping online safe?
The security of the bookkeeping service provider determines the safety of online bookkeeping, so understand the security policy of the data the provider has before you input your financial information.
Will a bookkeeper be able to work with my CPA?
Yes, the bookkeeper is the one who keeps the records and the CPA uses the bookkeeper’s records to file taxes and plan financial strategies.
