7 of The Best Benefits From Outsourcing Bookkeeping

Are you a business owner that doesn’t have time to do the bookkeeping and doesn’t have the information you need to make informed business decisions?

It’s probably time to consider outsourcing bookkeeping tasks.

Your options are to either hire an employee to do the bookkeeping or outsource bookkeeping to a third party.

We’ll discuss some of the benefits of outsourcing your bookkeeping services, as it can save you time and money compared to hiring.

Why you should outsource your bookkeeping

There are several reasons to outsource bookkeeping to a bookkeeper. Here are a few common ones:

1. you spend too much time bookkeeping
2. you don’t have confidence in your bookkeeping skills
3. you’re constantly playing catch-up with your paperwork
4. you have to answer too many questions from your accountant at tax time
5. you are missing tax deadlines
6. your cash flow is unclear
7. you don’t have a clear financial picture of your business
8. you’re ready to grow your business.

There are many signs that indicate it may be time to hire a bookkeeper. If you have these or any other concerns about your bookkeeping, the sooner you outsource your bookkeeping, the sooner you can focus on the things that matter to you.

Here are 7 benefits of outsourcing bookkeeping.

1. Outsourcing bookkeeping saves you time and money

Save your time

By outsourcing bookkeeping, you can save time and focus on things you do better than bookkeeping.

Bookkeeping can be a time-consuming task, especially if you’re not good at it or don’t like it. When you outsource bookkeeping, it drops off your to-do list so you can get back to growing your business.

Save your money

Hiring an employee can be costly. There’s salary, benefits, training, employer CPP and EI, and possibly a desk, chair, and computer to consider.

If the average wage for a bookkeeper is around $25 per hour, that’s about $50,000 annually for a full-time employee, just for the salary.

By outsourcing your bookkeeping, you can save a significant amount of money. You only need to pay a monthly fee, and that’s it, no benefits, training, source deductions, or capital assets to pay for.

If outsourcing bookkeeping can be done for $500 per month for the services you need, that’s $6,000 annually, which is significantly less than hiring an employee.

If you charge out your time at $100 an hour, and it takes you 10 hours per month to do bookkeeping, then it costs you $1,000 per month to do your bookkeeping. If you were to outsource bookkeeping at a monthly rate of $500 per month, you’re saving $500 per month.

2. Get all your expenses recorded

Many business owners have a box or folder they use to store all their receipts and bank and credit card statements. Then they take it to their accountant at year-end to have them do the bookkeeping for the whole year.

The problem is that you often misplace receipts and documents throughout the year, resulting in missing expenses. There will be cash purchases or expenses paid with the owner’s credit or debit card that is likely to get missed too.

When your bookkeeping is done monthly throughout the year, there is a better chance that all your business expenses will be recorded, resulting in a lower tax liability.

Bookkeepers, who have dealt with many businesses just like yours, know what to look for and what questions to ask to get all of your business expenses recorded.

3. You’ll have better information during the year

By outsourcing bookkeeping, you can access up-to-date financial statements and reports throughout the year.

You can get a lot of information about how your business is doing by looking at the financial statements regularly, such as:

1. You can see if your revenue is increasing or decreasing.
2. You can see if your profits are increasing or decreasing.
3. You can see there are likely any missing expenses by comparing accounts to previous periods.
4. You can see if any clients aren’t paying their bills and if they need to be contacted.
5. You can see if any expenses might be too high and investigate them.
6. You can keep an eye on your cash flow during the year.

The information you get from these statements allows you to dig deeper at the time the changes occur so you can make adjustments if needed.

4. A CRA audit will be easier

With changing technology, an outsourced accountant will likely set up receipt capture software that links to your bookkeeping software, either QuickBooks Online or Xero.

This makes any CRA audits much more effortless.

For example, if CRA audits your travel expenses, all your receipts will be attached to each transaction in your bookkeeping software. This means no more hunting for receipts, reducing the risk of CRA denying those expenses because you couldn’t find the supporting documents.

5. It will make your year-end easier

If you’ve been used to having all of your bookkeeping once per year at year-end, you’re probably used to having to answer a massive list of questions about revenue and expense transactions during the year. If this occurs during your busy time of year, it’s even more stressful for you.

In addition, if your business has a December 31 year-end, your file preparation is going to land close to the personal tax season in March and April. This could lead to delays in getting your file completed, and you could miss the payment deadline or the filing deadline, which can lead to interest and penalties.

Outsourcing your bookkeeping means that all of these questions are answered throughout the year, making the year-end process much easier and less stressful for you.

6. The scalability of outsourcing bookkeeping

As your business grows, so to does the amount of work required to complete the bookkeeping.

By outsourcing bookkeeping tasks, you will be able to grow without having to worry about hiring more bookkeepers to keep up with all the work.

You’ll be able to move to another bookkeeping package should your business need more services. So, if you need payroll processed every two weeks or advisory services such as cash flow forecasting, your outsourced bookkeeper can help you.

As your company grows, you not only have an increase in the volume of bookkeeping, but the transactions may become more complicated, and you may have additional documents to file. You may:

• have to start filing and remitting employer health tax (EHT),
• start providing taxable benefits,
• need to determine if a worker is an employee or a contractor,
• buy new capital assets and dispose of others

Depending on the employee you hire to do your bookkeeping, they may or may not be able to provide these services, or be aware that something like the EHT needs to be filed.

There are many things that change as a business grows, and an outsourced bookkeeper will be able to handle them.

7. Outsourcing your bookkeeping reduces errors

In the past, bookkeeping would involve manually entering transactions from bank and credit card statements. Manual entry increases errors with transaction amounts, missing transactions, and duplicate transactions. In addition, if accounts aren’t reconciled during the year, then you run the risk of using incorrect information when making business decisions.

Nowadays, the risk of error in bookkeeping is reduced significantly due to the ability to connect your bank and credit card accounts to your bookkeeping software and automatically download transactions into the software.

Summary

Outsourcing bookkeeping can save you money and time as well as provide you with a scalable option for your growing business. Its lower cost can allow you to allocate your hiring budget towards an employee who can help increase your company’s revenue.

In addition, if your business is too small to justify hiring a full-time employee to do the bookkeeping, an outsourced bookkeeper is a great alternative to doing the bookkeeping yourself. It gives you back time to either work on growing your business or take time to relax.

Visit our bookkeeping services and plans pages to learn more about how we can assist you in reaching your goals. They provide an overview of our services, including information on the benefits and features of each. Feel free to contact us if you have any questions about our services.

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