What are outsourced bookkeeping services?
What is outsourced accounting?
Outsourced accounting, which can also include outsourced bookkeeping services, is when small businesses outsource their accounting or bookkeeping to a firm that employs professional bookkeepers and accountants. Instead of hiring an employee as an accountant or financial manager and establishing an internal accounting department, the business hires an external firm or fractional accountant to manage all of their financial information and provide them with the reports that they need in order to make financially sound decisions, report to investors or board members, and run their business.
Bookkeeping and accounting services for small businesses can help owners reduce their costs, save time, and get rid of the headaches that can come with trying to do all the accounting inhouse.
How many small businesses outsource bookkeeping?
According to a survey done by Clutch, a B2B research firm, small businesses are more likely to outsource accounting as they grow older. 51% of small businesses that have been around for 5 years or more use an outsourced accounting firm or fractional accountant versus only 27% of newer small businesses. People who decide to outsource bookkeeping for small business often find that the advantages of being able to tap into expert advice and save the overhead of hiring an internal accountant are extremely beneficial.
What do outsourced bookkeepers do?
It varies based on the bookkeeping service that you hire, but most outsourced bookkeepers will handle a list of accounting services like:
- Processing vendor bills
- Recording credit card purchases
- Creating customer invoices and posting deposits
- Managing collections
- Reconciling bank and credit card accounts
Essentially, this service functions exactly the same as an internal bookkeeping department, handling the day-to-day transactions as well as compiling all the reports that you need to make your business run smoothly and help you make informed decisions.
How much does a bookkeeper cost?
Bookkeeping is one of those services where you can pay as much as you want or as little as you want, but keep in mind that the quality of service will vary. Another reason why there isn’t a simple “bookkeeping costs x” answer is that every small business has different accounting needs, and bookkeepers typically customize their pricing to reflect that.
Generally speaking, bookkeepers charge an hourly rate between $40 and $100, depending on the market. The Cost Guys found that $400 per month is the average price for a basic outsourced accounting, but that can also rise to $900 or all the way to $5,000 per month for more complicated bookkeeping situations. While this might sound pricey, this solution is often less expensive than hiring an employee to do the bookkeeping once you factor in salary, benefits, overhead, and other expenses related to bringing another person onboard.
What are the benefits of outsourcing accounting functions like bookkeeping?
There are many benefits that come with outsourcing your accounting, but one of the biggest ones for 80% of business owners is simple: not having to do accounting anymore—and that extends to bookkeeping. Bookkeeping is a time consuming chore that can get in the way of other essential business functions for busy small business owners and isn’t particularly enjoyable for most people. Giving that task to an accounting expert (who likes doing the books!) is a huge advantage of outsourcing your accounting.
A benefit we’ve already touched on is the cost. Starting and maintaining an internal accounting department is expensive, and it can be difficult to find the right fit when hiring a new employee. Outsourced bookkeepers are experts in their field and need no training to jump in and get you the information that you need.
Along with that, outsourced accounting solutions can grow with you without having any growing pains or bumps to overcome. Sometimes when businesses are in a rapid growth period, the scaling up of accounting practices can be very difficult if you’re not prepared, but outsourced accounting services have the flexibility to grow (and shrink) as needed.
Where do I start with outsourcing bookkeeping?
We believe a great place to start is with Milestone! Milestone is not your typical professional services firm, and our expertise and commitment to working with and for small businesses is unparalleled. Our team is essentially an extension of your team, and you have access to C-level leadership without the hefty price tag. Our flexible contracts can scale up or down to match your business needs without hassles or headaches. We offer two options for monthly accounting services that are customizable and start as low as $250 per month for bookkeeping. Let us provide the tools and support to bring your business to the next level and experience the difference with Milestone. Click here to learn more about the Milestone difference.
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