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A man in an oxford shirt looks at his bookkeeping on his laptop

How to Outsource Bookkeeping – A Guide

Since starting your business, you’ve likely filled multiple roles–from product and customer service to bookkeeping and sales–at some point. However, as your business has grown, you may have felt like you don’t want to spend your time doing some of those tasks. 

For instance, you’ve probably asked yourself: Should I outsource bookkeeping?

Whether or not to outsource is a common question many small business owners face. Tasks like bookkeeping are ideal to hire outside help. Others like sales may be better to manage in-house. There are a few ways that you can hire a bookkeeper. Primarily, businesses choose virtual bookkeepers or local bookkeepers.

In this guide, we’ll dive into everything related to outsourced bookkeeping from what it costs to how to outsource it. You can click to go to a particular section below or scroll down to start from the top. 

When should I outsource my bookkeeping?

If your business is new and you don’t have significant revenue or budget to hire outside help, you’ll probably try DIY bookkeeping first.

However, most businesses prefer to outsource their bookkeeping, especially as they grow. These are some of the top signs that it is time to outsource your bookkeeping:

  • You’re spending several hours each week doing accounting and bookkeeping tasks yourself.
  • You plan to get funding through investors or business loans and need accurate financial statements.
  • Your books are behind, and you need to catch up.
  • You’re spending a lot of money hiring full-time, in-house bookkeepers or a local bookkeeper.
  • You aren’t sure about your current cash flow or financial health.
  • Tax season is coming up, and you don’t feel prepared to file your taxes.
  • You simply have no desire to learn bookkeeping or to do it yourself.

Why should I outsource my bookkeeping?

At first, you might be hesitant to trust an outside bookkeeper with your financial data. There are so many benefits to outsourcing your bookkeeping, as long as you choose a trustworthy CPA or bookkeeper. The top benefits of outsourcing your bookkeeping include:

Up-to-date books and more time for business

Small business owners are notorious for spending a large amount of time on administrative work, like employee scheduling, preparing payroll, and bookkeeping. It is estimated that small business owners spend 120 working days per year on administrative tasks like bookkeeping. Still, nearly 25% of businesses are behind on their books. 

Hiring a bookkeeper allows you to free up more time. With the time saved, you can focus on the tasks that excite you most as a business owner. Although bookkeeping it’s extremely important to the health and success of a business, it is not necessarily a task that most entrepreneurs enjoy doing.

Cost-effective bookkeeping

If you’ve attempted to do small business bookkeeping on your own, you already know that it can take a lot of time and money. Even if you utilize programs like Quickbooks or Xero, you can’t automate all your bookkeeping needs.

If you’ve hired an hourly bookkeeper or accountant, the cost per hour adds up fast. Xendoo offers pricing plans with a flat-rate monthly fee, so you can easily budget for your bookkeeping each month.

Business loan and funding preparation

As your business grows, your bookkeeping and accounting needs grow too. If you want to take out a loan or open a line of credit, your lender will want accurate financial statements. It can take hours to do this on your own, and it might not be accurate.

Bookkeepers have experience doing this for multiple clients, so they can put financial statements together quickly in a way that’s presentable for your potential lender.

Experienced bookkeepers can also help you by:

  • Advising you on tax savings. You’ll have a better idea of what you can deduct and how to reduce your taxes.
  • Providing answers to your financial questions. Bookkeepers can help you learn about financial reports, cash flow, depreciation, and more.
  • Identifying opportunities to improve profitability. They’ll have a clear picture of where you improve your business finances.
  • Keeping you tax-compliant and secure. Bookkeepers are familiar with tax laws and other legal considerations, so you won’t miss deadlines or have noncompliance penalties.

How do you outsource bookkeeping?

There are two primary options to outsource bookkeeping–virtual bookkeepers or local bookkeepers.

Virtual bookkeepers

If you hire a bookkeeper online then that would be considered a virtual bookkeeper.  Xendoo, for example, is a virtual bookkeeping service. Our team of bookkeepers works with you virtually, no matter where you a located in the United States. 

However, there are some differences between Xendoo’s bookkeeping services and other virtual bookkeepers. For instance, you might hire a freelance virtual bookkeeper that performs the same tasks that a regular bookkeeper would–they just do them online. 

The drawback of hiring an individual freelance bookkeeper is that they tend to be more expensive. Like an in-person, local bookkeeper, freelancers usually charge an hourly rate vs a set monthly payment.

They also may not have as many resources as a bookkeeping firm or company. For instance, when you get a Xendoo plan you also get perks like access to accounting software like QuickBooks and Xero. 

Another advantage of virtual bookkeepers is that because they work online, they tend to be familiar with different eCommerce platforms, payment processors, and other online financial services. Therefore, they can help you integrate your business banking account, expenses, and other financial data into a secure accounting system. With that, you can view your financial health, prepare for taxes, or plan for your business future at any time. 

Local bookkeepers

If you hire a bookkeeper that has an office or business location near you, that would be considered a local bookkeeper. Local bookkeepers usually charge by the hour and it tends to be expensive.

For instance, it is not cost-effective if you need to book more than one or two hours a month. This might make sense if you are booking an hour for a bookkeeping consultation a month. However, in this case, you would still be responsible for doing your own books.

If a local bookkeeper is managing your books and you have a complex business with many employees and revenue streams, it’s probably going to take more than a few hours a month. Those hours can get expensive.

In most cases, you don’t need a local bookkeeper unless:

  • You want to meet with your bookkeeper in person on a regular basis.
  • You keep your financial information in physical records only. 

Whether or not you use a local bookkeeper is based on your preference. Today, most accounting and bookkeeping tasks are performed online anyway. Therefore, the majority of businesses prefer online bookkeeping, because it’s more accurate, cost-effective, and easier.

How much does outsourced bookkeeping cost?

The size of your business and the number of monthly expenses you incur play a large role in the pricing for outsourced bookkeeping services. To get a better idea of how much outsourced bookkeeping costs, let’s compare it with some other bookkeeper options.

In-house bookkeeper cost

An in-house bookkeeper is usually considered a full-time employee, which means they would get a salary and benefits package. According to Salary.com, the cost to hire a full-time entry-level bookkeeper is $45,446. That is just the base salary and doesn’t include benefits or bonuses.

Of course, the cost rises in cities that have a high cost of living. It also increases when hiring bookkeepers with more years of experience. For example, in San Francisco, the living wage is higher. The average annual salary for business and finance professionals is $84,198, according to MIT. 

Most small businesses don’t have enough bookkeeping needs to justify paying a bookkeeper year-round for their services. They may consider a freelance bookkeeper or an hourly bookkeeper, however, that might be just as costly.

Local or freelance bookkeeper cost

If you look at any freelance marketplace you’ll find that the cost for freelance bookkeepers ranges widely.

It’s not unusual for the hourly rate for freelance bookkeepers to range from $21 per hour to $60 per hour.  However, more experienced freelance bookkeepers will charge upwards of $75 or more per hour, especially if they are doing complex bookkeeping or accounting tasks.

If your business has a lot of bookkeeping needs, a local or freelance bookkeeper who charges by the hour usually is not cost-effective. When you only get an hour of their time, you probably won’t get all your bookkeeping questions or concerns answered.

Outsourced bookkeeper cost

Of all the bookkeeping options, outsourcing tends to be the most cost-effective for small businesses. This is because you’re not hiring a full-time staff member or being charged an hourly rate.

Outsourced bookkeeping services usually charge a set monthly fee. These are popular with small businesses because the bookkeeping services come in packages based on your needs. 

It’s easier to budget for a monthly cost that’s the same each month. Plus, it costs half of what you could end up paying for an hourly bookkeeper. That’s why Xendoo offers this pricing structure with a variety of package options to fit your specific company’s needs. 

How does outsourcing with Xendoo work?

If you choose to go the outsourced bookkeeping route, you’ll be paired with a dedicated bookkeeper. Plus, because we are a team of financial experts, you’ll also get access to a CPA and an accountant. 

Your expert bookkeeper will set up a digital accounting system for you if you don’t already have one. This means that we’ll take your sales and revenue data, expenses, payroll, etc, and put it all together in one financial dashboard. You’ll be able to access it anytime–desktop or mobile–and get monthly reporting with balance sheets and profit-loss statements. If you’d like to learn more, you can schedule a consultation with our team here.

 

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Lil Roberts as a speaker at Endeavor Miami

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The Miami tech movement wouldn’t be what it is without the women founders, executives, nonprofit leaders, and venture capitalists who have spent years championing the region’s innovation community. An article by Ashley Portero, Senior Reporter, South Florida Business Journal. Read more here 

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The Best Small Business Bookkeeping Solutions

As a small business owner, your time is best spent on the revenue-generating features of your business— not hunched over a computer screen scrolling through QuickBooks! 

Thankfully, a reliable bookkeeping solution is just a click away. What should you look for in an accounting or bookkeeping service? Today, we’ll highlight five of the best small business bookkeeping service solutions.

Online Bookkeeping Service for Your Small Business

When your business is small, it can be tempting to try to handle the books yourself in order to cut costs. Even if this works for a while, it’s simply not a sustainable model. Small business owners should be focused on growing their core business, not on the back-office demands associated with small business bookkeeping.  

Adding another staff member often seems like a natural solution, but modern bookkeepers can cost well over $40,000 per year. Not only do these costs eat into your profits, but the addition of office personnel could also take up valuable space in your facility. 

Online bookkeeping services provide a simple, elegant solution that can save you time, money, and the headaches you get from trying to juggle the needs of your small business! 

Today’s accounting firms can handle a wide variety of SMB bookkeeping tasks, including:

  • Invoices 
  • Payments 
  • Costs 
  • Expenses 
  • Financial statements 
  • Corporate tax preparation  
  • Payroll

By outsourcing your needs to an online accounting firm, you gain the benefit of industry-leading expertise, all without breaking your budget.

Some business owners are leery of outsourcing their sensitive financial data to an online company. But at Xendoo, we value communication with our clients. Our bookkeepers and CPAs are available by phone, text, and email, so you’re never out of touch with our skilled team.

In fact, many customers are surprised at the ways that small business bookkeeping solutions increase financial transparency. This is possible because your financial data is instantly available to you at any time, no matter where you are. This may be especially important for businesses that process digital or online transactions, providing up-to-the-minute reporting regarding your cash flow.

Catch-Up Bookkeeping Services

Roughly one out of every four business owners are behind in their books. Sound familiar? Sure, you keep telling yourself that you’ll get caught up “someday,” but the longer you ignore the problem, the worse it will become. Some small businesses can quickly find themselves months or even years behind in their bookkeeping.

This is deeply problematic because it prevents entrepreneurs from knowing what’s really going on in their company since they lack access to current financial data.

Getting behind in your books also can leave you vulnerable to fines and audits when it comes to taxes or payroll. 

If you ever need a business loan, lenders will expect to see copies of recent financial statements. Without accurate, up-to-date information, you may be denied a crucial loan. 

So what can you do if you do get behind? Small business owners can take advantage of “catch-up” services. As the name suggests, these small business bookkeeping solutions are designed to bring your financial records fully up-to-date.  

If you’ve gotten behind in your books, this bookkeeping solution just might offer you a huge sigh of relief. Accurate, current financial data will provide you with a fuller picture of the health of your business, which can enable you to better plan for the future.

At Xendoo, we don’t merely offer catch-up bookkeeping services to bring your books up to date — we keep you up-to-date by reconciling your books on a weekly basis! This gives you the freedom and confidence to focus on your business, knowing your financial needs are in expert hands.   

Business Tax Preparation and Filings

Taxes represent a unique SMB bookkeeping demand. On the one hand, tax preparation is a yearly chore, but on the other hand, business tax codes can be complex, and ever-changing. 

That is why many business owners look for small business bookkeeping solutions that can assist with the complexities of tax preparation and filing. Not only can a professional accounting firm save you money, but they can also provide the best protection from common errors that can leave you and your business vulnerable to audits.

Keep in mind that your filing status depends on the structure of your business. Partnering with an online accounting firm like Xendoo can ensure that you file the appropriate form. You can feel confident when you’re working alongside a CPA who is familiar with businesses ranging from partnerships to LLCs to S Corps and beyond. 

Additionally, consulting a CPA can also help you to take advantage of existing tax codes, maximizing your deductions and ultimately saving money. These bookkeeping solutions not only take the hassle out of tax season, but their tax strategy and planning services can help you keep more of your profits.

Bookkeeping services can also assist you with your personal income tax preparation. This can be a lifesaver, as business owners often face tax situations that are complex. Xendoo offers personal tax preparation as an add-on to many accounting packages.

Accounts Payable and Receivable

One of the reasons that small businesses fail is that they don’t always get paid on time. Some businesses simply don’t know how to collect money from overdue accounts. We 

Unfortunately, there are many cases in which business owners can only collect their debts through persistent effort and regular contact with their clients. But once again, today’s entrepreneurs often lack the time for this kind of due diligence.

Online services can provide small business bookkeeping solutions that automate and manage your invoicing and collections process. At Xendoo, we rely on advanced online bookkeeping software that can be used to create and submit invoices, collect payments, and monitor every step of the process. 

Most businesses will likewise owe money to vendors and suppliers, and this process can likewise also be managed remotely by an online bookkeeping service. 

By relying on this same service for tax planning and preparation, small business owners can have peace of mind that their income and expenses will be recorded accurately when it comes time to file taxes.

Financial Reporting and Insights

Financial reporting might be one of the most advanced small business bookkeeping solutions available today. While the other services we’ve listed are focused on your company’s historic or current performance, financial reporting helps you plan for the future.

Financial reporting allows you to track, analyze, and generate reports about your business income. This data can help you to monitor cash flow, resource units, and the overall financial health of your small business. It’s like having access to a professional business consultant, tasked with preparing reports and data with precise accuracy.

 This can be important data to have if your business has any investors, who may want to see the progress your business is making. Additionally, these reports may be required when you want to receive a business loan or open a line of credit to facilitate growth.  

The insight provided by these reports can also serve as a catalyst for future business growth. Negative financial trends might alert you to an area that needs to be adjusted, while positive trends can encourage you to continue focusing on areas of success. 

This data can also help you manage your growth, allowing your business to scale with the natural trends of the market.  

Trust Xendoo for Small Business Bookkeeping Solutions

If you’re a small business owner, the choice is increasingly clear — you need to partner with an online bookkeeping service. Chances are that you’ll be relieved to have someone else shoulder the burden of maintaining and reconciling your books. 

Why not see for yourself? Sign up today for a free trial, and see what Xendoo can do for your business.

Startups Podcasts

Low-Burn | Scaling Your Startup S2 E8 with Neyborly’s Ben Seidl & Xendoo’s Lil Roberts | E1224

When it comes to financial health as your scaling your startup there are six steps to healthy financials for scaling your startup. Watch for insightful tips for your small business by our CEO and Founder Lil Roberts, at This Week in Startups – Scaling your Startup. E1224 of Low Burn.

 

 

Lil Roberts' founder profile

Profile of a Founder: Lil Roberts of Xendoo

We believe business owners should have time to do what they love, build their business – not do bookkeeping.

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“We believe business owners should have time to do what they love, build their business – not do bookkeeping.”

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One of Broward County’s biggest startup success stories continues to grow at a rapid pace.

Fort Lauderdale-based xendoo has developed a SaaS bookkeeping platform targeted at small businesses. The startup reported a two-year revenue growth of 777% from 2018 through 2019.