Bookkeeping service is one of the most crucial business operations. It helps business owners to keep a track of the companies’ cash inflow and outflow, which ensures the accomplishment of the day-to-day operations and also decides if the company needs business finance to keep the ball rolling. Bookkeeping enables business owners to understand whether their businesses are making profit or loss or just breaking even. A bookkeeper regularly summarizes a business’s transactions into financial reports, which reveal the financial condition and the day-to-day performance of the business. Bookkeeping services also include invoicing, preparing tax returns, monitoring performance indicators, cleaning up books of accounts, maintaining accounts receivables and accounts payable, reconciling financial statements with bank statements, performing cash flow analysis etc. Following a double-entry system, bookkeeping often helps to record every single transaction in at least two different nominal ledger accounts.
Accounting reports, prepared with accurate and up-to-date financial data, are considered by business owners to make important business decisions. Hence a company must have experienced and skilled bookkeepers, who can prepare monthly financial reports like balance sheets, profit loss, cash flow, accounts payable and accounts receivable statements. But, hiring in-house employees with considerable work experience often turns out to be expensive. Hence, many businesses, especially small ones, prefer to outsource bookkeeping to ensure cost-efficiency and error-free financial reports and enjoy various other perks of outsourcing bookkeeping services.
5 Primary Benefits of Outsourcing Bookkeeping:
- Saves time and reduces bookkeeping errors.
A small business or start-up owner often needs to wear multiple hats due to insufficient working capital and lack of manpower. From managing employees, planning promotional campaigns, paying bills, acquiring and coordinating with clients, and analyzing costs to maintaining financial reports, start-up owners tend to perform all the tasks and hence, usually stay overloaded with work. In such a situation, it becomes quite difficult to ensure operational efficiency. Besides, bookkeeping activities turn out to be a time-consuming exercise when performed by one, who doesn’t have enough experience in the particular field and is juggling multiple things at a time. But, when it comes to bookkeeping, inaccurate financial data and reports can cause operational disruption and seriously affect a business’s growth graph. Hence, it is often advisable to outsource the bookkeeping services to reputed external bookkeeping agencies, which are equipped with qualified and experienced bookkeepers and assure timely error-free reports. Also, after outsourcing bookkeeping services, business owners are left with sufficient time to utilize in business development and expansion.
- Cuts down on payroll costs.
As mentioned above, hiring in-house bookkeepers is a costly affair. This is because the hiring company needs to invest in training the newly-hired bookkeepers and provide them with all the employee benefits. For small businesses and start-ups, outsourcing the service to reputed third-party bookkeeping agencies, which provide bookkeeping service packages at rates that don’t change over the partnership tenure, is often considered more viable than hiring in-house employees, who need to be provided with sick leaves, casual leaves, privilege leaves, yearly increments, bonuses etc.
- Gives access to cutting-edge bookkeeping software
Today, software licences come at quite high prices. Hence, not every business can afford to purchase those. Small businesses and start-ups, which usually have tight budgets often consider outsourcing the bookkeeping services to outsourcing companies to get access to all the latest software, as these bookkeeping firms often get software at wholesale rates because of their high and frequent requirements. Also, these third-party agencies allow their clients to access the cloud and view their books in real-time. Bookkeeping firms that operate on cloud-based or online interfaces maintain complete transparency with their clients and make sure the processes are streamlined.
- Offers multiple bookkeeping services.
In-house bookkeepers have limited skill sets and perform only a few functions, but bookkeeping firms, equipped with multiple teams of experienced and qualified personnel, provide their clients with a wide array of bookkeeping services. As the accounting needs keep changing, outsourced bookkeeping makes it easy for a company to add or remove services, when required.
- Helps a company to stay ready for tax season
Companies often struggle to get all the financial records ready for the tax season. Also, many times, companies realize that their accounting systems do not follow the current tax rules and their CPA will charge extra to re-audit the financial statements. In such a scenario, companies must consider outsourcing the bookkeeping services to external firms, which are equipped with tax experts, and capable of making sure that all processes are tax compliant and their clients are ready for the tax season.