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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.

 

10 Reasons Your Small Business Needs a Bookkeeper

Are you behind on your books? Losing track of your expenses? Do you need someone who can help you file your taxes and stay compliant? 

A small business bookkeeper or bookkeeping service can support you with everything from simple bookkeeping to offering more in-depth tax filing services and business consulting. A skilled bookkeeper will save you time and money, set you up with systems that will simplify running a small business, keep you tax compliant and ready, and ensure you are always in-the-know when it comes to your financials.

Save time

Whether you’re filing your taxes or just doing simple data entry, it is incredibly easy to make mistakes when you aren’t a professional bookkeeper and these mistakes can cost you a lot of time. When it comes time to speak with a lender, make a big decision, prepare your taxes, or just wrap up your monthly reconciliation you might end up having to undo an entire month’s worth of data entry – or likely even more due to one little mistake. One simple slip-up in your books can have a huge ripple effect and cost a busy business owner like you a massive amount of time that would be better spent elsewhere.

Save money

Small business bookkeepers and bookkeeping services can save small businesses money in many different ways. Since one simple slip-up in bookkeeping can have a huge ripple effect and cost you a massive amount of time as you try to fix your problems – you know you’ll be saving money by trusting a professional with your books from the start. A very popular option with small businesses is an accounting service that charges a fixed amount every month. It’s easy to budget for, and it can cost less than half what you would pay an hourly accountant for the same amount of service.

Xendoo bookkeeping service plans come with a dedicated team of bookkeepers who are committed to helping you grow your business. Xendoo offers a variety of packages because we know not all business owners are created equal, so you can choose the package that works best for you and your business. A great place to start is the Hustle plan – it’s made for self-employed small business owners like you and starts at $195/mo. You’ll get expert bookkeeping and on-time financials – and you won’t stay up at night worrying about catching up.

Gather Information

Bookkeepers can help you with the big picture aspects of running a small business, such as reviewing options for how to finance your business. Whether it’s how to apply for loans and which ones to apply for in the first place, to exploring options for lines of credit, bookkeepers can help you navigate how to grow your business. Big picture bookkeeping services can include financial analysis, tax reporting, year-end tax projections, and so much more. 

Keep you up-to-date

When you don’t have up-to-date books during the year, you can’t use monthly or quarterly financial statements to guide your business decisions.

One of the most essential services a bookkeeper can provide for a business owner is to keep the company’s books accurate and up-to-date. Being able to quickly and easily review the status of your finances is crucial to short and long-term success for any business owner. When you know the health of your finances, you can make decisions quicker concerning everything from who to hire next, to what marketing strategy recently worked best. It truly informs all aspects of a healthy business. 

There’s no need to play catch up when you have a professional bookkeeper keeping you up-to-date every step of the way!

Keep you organized

A small business bookkeeper helps everyone stay organized. They help you categorize expenses correctly, reconcile your accounts, and even help you keep your business and personal accounts separate. In small businesses especially, you’ll often see bookkeepers paying bills, cutting checks to employees, invoicing clients, and making deposits. Just like a small business owner, a small business bookkeeper wears many hats!

Xendoo will keep you organized – we provide on-time monthly reports and data for your business. You’ll receive monthly balance sheets and profit and loss statements that you can easily access from your desktop or mobile, as well as weekly reconciliations so you have clear visibility of your business’s financial health.

Payroll

A small business bookkeeper can save you time and money by managing your business’s payroll – and many choose to use online payroll services such as Gusto. With Gusto, you can schedule payroll to run automatically each pay period, and even reimburse employees for out-of-pocket expenses at the same time. They take care of all the employee management involved in payroll, too, like setting up direct deposit, online onboarding, digital paystubs, and tracking vacation and sick time management.

Financial reports

Small business owners who have access to up-to-date financial statements are more confident and quick in their decision-making. Every kind of decision, from what kind of inventory and equipment to invest in, to who to hire next, is made easier when you have a recent profit and loss statement and balance sheet in hand.

As you grow you may want to borrow money or open a line of credit. Your lender will want accurate financial statements, and ideally, you aren’t scrambling to create them right then and there. With a professional bookkeeper on your side, you can quickly access all financial statements necessary as soon as you need them.

A small business bookkeeper can help you report sales taxes on time with a system that accurately tracks sales amounts, so you don’t accidentally overstate your sales and remit too much sales tax – a surprisingly common error that bookkeepers can prevent.

File your returns

A small business bookkeeper will set up a tax recording system for you and submit government reports – like employee tax and sales tax – making it simple for an accountant to regularly file your returns.

Work with accountants

Bookkeepers focus on the everyday tasks that maintain your business’s finances while accountants consider the big picture strategy needed to keep your business strong and growing. 

Accountants can answer your questions about financial reports, cash flow, depreciation, and more. They can give tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains. They can identify opportunities to improve profit margin and business growth and keep you legal – preventing missed deadlines and noncompliance penalties.

Working with an accountant can be complicated, confusing, and expensive – but bookkeepers make it easy and save you money by being an efficient and knowledgeable partner for the accountant to work with.

Xendoo offers a dedicated bookkeeper that keeps monthly books up to date, plus you also have access to a CPA and an accountant. This allows us to offer tax consulting and yearly planning to all Xendoo customers.

Overall contributing to the success of your small business

Every aspect of a company is affected by its finances, so having a clear and accurate picture of these records is key to a company’s health and success. Properly managing and organizing your small-business finances and operations will help ensure that you are hitting your profit goals, staying legally compliant, and will overall contribute to the success of your business. 

Final

Hiring a small business bookkeeper or bookkeeping service like Xendoo will keep your books organized and accurate so you always have easy access to the most up-to-date information on your company’s finances. It is invaluable to your business to have the administrative details taken care of, so you can focus on running your business and doing the parts that you do best – or even taking a day off! 

The Best Bookkeeping Service For Your Small Business

There are different types of bookkeeping services for small businesses. You can handle it all yourself, utilizing software like Quickbooks and Xero; hire a part-time small business bookkeeper; or opt for a full-service bookkeeping service like Xendoo that can handle it all for you. 

What are the different types of bookkeeping services for small businesses?

You may choose to handle all of your small business bookkeeping on your own, but keep in mind that it’s more than just simple data entry. You’ll need to familiarize yourself with your software of choice, such as Quickbooks or Xero and set up your Chart of Accounts among other things – and of course make sure your records are always as up-to-date as possible. 

A popular option for small business owners is to hire a part-time bookkeeper. This is a great solution for small business owners who have enough time to take on some of the bookkeeping work themselves or who have someone on staff who can manage it. One important aspect of hiring a part-time bookkeeper to keep in mind is that you will still need to oversee and be involved with the part-time bookkeeper’s work. You’ll need to review their data entry, monthly reconciliations, and any communication they have with your accountant. Additionally, you will need to organize receipts, invoices, and any other financial paperwork for them and make sure to stay organized on your end.

As a small business owner, you wear many, many hats. From sales and marketing to employee management and not to mention, your specialty – the good or service you set out to provide in the first place – whether it’s operating a small bakery, selling home goods, or running a childcare center – you do it all. When you are ready to catch up on your bookkeeping and make sure it always stays up to date, you can opt for hiring a full-service bookkeeping service like Xendoo. Xendoo is proud to support thousands of small business owners with their financial needs to help set them up for success and provide financial peace of mind. It’s one important thing you can take off of your to-do list, and you can rest easy knowing your financials are being properly handled throughout the year by professionals – no more worrying about when you’ll do your bookkeeping, and no more playing catch up when tax time rolls around.

When should a small business hire a bookkeeper?

It is estimated that small business owners spend as many as 120 working days per year on administrative tasks and bookkeeping. That’s almost four months! This is time that could be spent doing the work you love that led you to start a small business in the first place. Perhaps you set out to own and operate a dog grooming business – you never thought you would end up spending all your days at your computer with piles of paperwork! Small grocers, massage therapists, photographers, dentists, even nail salon owners – every small business owner is different, yet they all need someone to handle their bookkeeping. 

An excellent time for a small business owner to consider hiring a bookkeeper is when you see that your small business is growing. Perhaps your bookkeeping tasks are taking more time than you can afford, and your books are never up to date. Maybe you recently added on a new location, hired more team members, or have seen a sharp increase in sales – whatever the case is, it looks like your small business is growing. As your business continues to grow, your bookkeeping workload will also increase, so if you’re posting more and more transactions each month, entering data on a regular basis can make bookkeeping more difficult and time-consuming. Even when you use online bookkeeping software solutions such as QuickBooks or Xero, a bookkeeping service for small business service can help you manage and maintain your books accurately and save you a large amount of time and money.

A bookkeeper will keep your company’s financial records accurate and up-to-date by performing basic bookkeeping services, that in the end can take hours and hours that a busy small business owner just doesn’t have. This includes regularly reviewing source documents such as your monthly bank and credit card statements, invoices, expense reports, payroll, and receipts, and recording basic accounting information for you – such as your data entry and monthly reconciliations – in your company’s books.

Small business owners notoriously spend a large amount of time on administrative work, like employee scheduling and management, preparing payroll, reviewing invoices, and especially hours and hours of bookkeeping. When you find you can’t afford to spend your precious time on administrative work like bookkeeping any longer, you know it is time to delegate and outsource the work to a bookkeeping service for small business.

Are there bookkeeping packages for small businesses?

Xendoo offers bookkeeping services for small businesses packages of all shapes and sizes. No matter the plan, each one comes with a dedicated financial team – you will have a dedicated bookkeeper assigned to your account who is supported by a full team of bookkeepers that have your back, and are available to talk, text, or email with you as you navigate your busy workday.

Xendoo offers five different bookkeeping service for small business plans for small business owners to choose from – and even offers custom plans. To determine which bookkeeping package is right for your small business, check out the pricing page on the Xendoo website. You’ll see that the five different packages are determined by the amount of your small business’s monthly expenses. We know every small business is unique, so when necessary, we work with our customers to create custom bookkeeping packages to suit their specific needs and goals. 

And it’s easy to change your Xendoo plan if you ever need to! Perhaps your monthly expenses have increased and you need to bump up to a more robust plan, or maybe you are in a slow season and need less help with your bookkeeping. Whatever the case may be, you can easily log in to your account and modify your plan.

No matter which bookkeeping service for small business package you choose from Xendoo, you will be up to date, compliant, and ready to grow. Not to mention, you will have peace of mind and one less thing on your to-do list. You will rest easy knowing you are not part of the 25% of small business owners who report that they are behind on their bookkeeping. 

Do bookkeepers save small businesses money?

Bookkeepers and bookkeeping services for small businesses save both time and money. Small business owners notoriously spend a large amount of time on administrative work, like employee scheduling, preparing payroll, and especially hours and hours of bookkeeping. It is estimated that SMBs spend 120 working days per year on these administrative tasks and bookkeeping. A bookkeeper can save you money by helping to maximize your business’s income, help you determine where you can cut costs, and give back your valuable time to focus on the reasons you started your business in the first place. For a set monthly fee, Xendoo’s bookkeeping solutions come with a fully dedicated financial team to save you time, money, and most importantly – stress.