Types of Outsourced Bookkeeping

As a sole owner, you sell and make purchases. Then comes accounting for these transactions. Such compliance-related tasks steal your time and choke the business' workflow. You can avoid it by knowing "How to outsource your bookkeeping?"

You must also know the answers to "Who will you outsource it to?

Who to and How to Outsource Your Bookkeeping

You have three options for choosing who will execute your bookkeeping.

• Local bookkeeper (accountant or a bookkeeping services)
• Virtual/ remote/ outsourced bookkeeping services
• In-house accounting team

Whichever option you choose, it will be costlier than doing your business' accounting yourself.

Let's focus on why you should pick an outsourced bookkeeping firm.

Benefits of Bookkeeping Services

You start a business to make a profit by adding to society and not by immersing in administrative, time-consuming tasks like accounting. Once it is outsourced, it is no more of a headache. The bookkeeping firms are well-prepared to handle it. As a result, they reduce your workload and save time. You can use this reclaimed time to streamline your operations, find new opportunities, or go home early to your family. Or to let go and relax from the stresses of managing a business.

Your outsourced bookkeeping firm gives you access to financial statements and reports like balance sheets, income statements, and cash flow statements. Moreover, a team of experts takes care of your day-to-day operations and tasks like tax filing.

Types of Outsourced Bookkeeping Firms

As mentioned earlier, you can choose from the three options to streamline your bookkeeping function. Depending on your business needs, you may opt for a local bookkeeper or a virtual or outsourced bookkeeping firm.

Local bookkeeper

A local bookkeeper can be an individual bookkeeper or a bookkeeping firm near your office. There are benefits of choosing such an entity:

• You can meet them face-to-face
• You can submit your physical documents to them

Freelancing Bookkeeper

A freelancing individual bookkeeper works with you on a one-to-one basis. The professional may even visit your office to get the work done. Or you may have to scan and submit your financial documents like receipts, invoices, and bills.

If you decide to go this way, make sure they are familiar with the financial reporting standards of your jurisdiction and have enough experience to handle the task.

Bookkeeping Services Firm

From a local bookkeeping services firm, you can expect standard bookkeeping services like:

• Balance Sheet and P&L Statements
• Fixed Assets Ledger
• General Account Filing
• Bank Reconciliation
• XBRL Statement
• Cash Flow Statement
• Financial Analysis for weekly, quarterly, monthly, and annual periods
• Singapore Financial Reporting Standards Services
• Directors’ Report

This firm employs a team of bookkeepers and accountants. So someone is always present to take the slack and fill in for the absent team member. A freelancing bookkeeper has no such support.

Virtual or outsourced bookkeeping services firms can be from anywhere. They are not paper and pencil firms. But use the latest accounting software systems and tools to manage their workflow online. You should hire them if you:

• Are you comfortable with the online or net banking
• Ready to pay a flat monthly rate
• Need access to financials 24X7 through a mobile app
• Can communicate effectively using online chat

Outsourced bookkeeping firms connect you with their efficient bookkeepers via secure software online. They download your bank statement online to know your expenses. It means you do not have to scan and submit your receipts or send them an envelop-full of documents.

During tax season, your outsourced bookkeeping service may provide you with a year-end financial package. They will prepare all the financial statements that you need to file your tax returns for your small business.

In-house Bookkeeping Setup

You can only set up an in-house bookkeeping department when your business has grown considerably. Otherwise, it will drain money out of your pocket. The setup will allow you better control over your financials. And you will be able to provide as much security as you want. However, searching, interviewing, training, and firing (if needed) bookkeepers will increase your workload.

Depending on your bookkeeping needs, you can hire a full-time bookkeeper to handle all your filing, data entry, and preparation of financial documents and reports. If you work under financial constraints, you can hire a part-time in-house bookkeeper.

Generally,

• If you have fewer than five employees, rely on physical records, and want to discuss issues with your bookkeeper, you should go for a local freelancing or bookkeeping firm. Here you will be paying hourly rates.
• If your employee count is less than five and you want to access your financial data instantly, go for a virtual or outsourced bookkeeping firm. Here you will be paying a flat fee for each month.
• Invest in an in-house bookkeeping setup if your business has grown considerably and has more than 30 employees. This way, you will have more control over your data and bookkeeping.

The answer to the "How to outsource your bookkeeping?" is complicated.

Like individuals, they are unique and have different needs. You can choose your bookkeeping services firm only after understanding your business needs. Whichever bookkeeping option you take, ensure your output is accurate and in time to ensure your compliance.