You Should Outsource Bookkeeping and Accounting

Even if Your Business is an SMB

Written and Edited By Jessie McLaren Jessie McLaren September 4, 2019


It’s no secret. We at Siegel Solutions think you should outsource bookkeeping and accounting, even if your business is an SMB. Companies who hire outside experts to manage their bookkeeping and accounting have better success rates and higher profit margins. If you are on the fence about who should be managing these responsibilities for your business it’s worth examining the impact of both keeping this essential business function in-house or outsourcing it. It is always preferable to make informed decisions about money. Therefore, let’s start by exploring some essential questions.

  1. Are commissions and payroll taking up too much precious time?
  2. Is quarterly financial resolution a nightmare?
  3. Are employees entering financial data using completely different nomenclature? For instance, are commuting expenses showing up as fuel, gas, BP, and Dunkin Donuts?
  4. Do you cry over spreadsheets and wonder why you’re still using Excel or Quicken?
  5. Are confrontations or disagreements about bookkeeping and finances a regular occurrence?
  6. Do you resent the effort it takes to enter financial data, even when you’re making money hand over fist?

If you answered yes to even 1 of these questions, you might benefit from the expertise and total relief of outsourcing your bookkeeping and accounting functions to a reputable professional or local firm. Since the new millennium began, a trend towards outsourcing core business functions has been gaining momentum. Now many formerly in-house responsibilities like legal compliance, payroll, and many marketing and sales functions are done by consultants, agencies, and firms. The last major function still being performed within many start-ups and small businesses is bookkeeping & accounting. There are so many reasons that you should outsource bookkeeping and accounting functions.

Benefits of Outsourcing Bookkeeping and Accounting

If you’re open-minded you will quickly see the benefits of hiring an outside bookkeeper or accountant. The manifold perks include saving time, centralizing financial data and oversight, saving money, receiving cutting-edge accounting and accounting software expertise, advanced reporting, greater checks and balances over your financial record keeping, prompt invoicing and consistent monthly financial resolution with accurate reporting. Consistently, statistics show that startups and small businesses that use outside accounting resources from inception have better survival and success rates than those that do not. See what has to say about the top ten reasons small businesses fail. Notice number 2 and 3. Or, check out the top 10 accounting scandals of all time, as described by the Corporate Accounting Institute.

Still not convinced? Let’s explore why. Do you feel guilty outsourcing services you believe that you or a staff member can accomplish? Are you concerned about the added expense? If so, ponder the following questions:

  • Is your company an accounting or financial firm? No? That’s what I thought. Why then do you insist upon performing a core function that requires tremendous expertise? Because you know how to use the calculator pad on the right-hand side of your keyboard? Because QuickBooks is so user-friendly? Just because you know where the gasoline, wiper fluid, and oil go in your vehicle doesn’t mean you’re going to perform all the routine maintenance on your car. Right? OK, point made. Let’s say you did decide to perform all routine maintenance and maybe minor repairs to your vehicle. How much research would you have to do first? How much extra time would your maintenance and repairs take because you are not the professional for whom such tasks are routine? What kind of tools would you have to purchase? And lastly, would you need to take a course in order to perform these duties safely and effectively? How much time and money would research, tools, training, and then executing maintenance and repairs cost you? Would it be worth it or would you ultimately prefer to focus on your strengths and let mechanics handle your vehicle’s upkeep?
  • Are you a CPA or do you have CPA’s working for you? I’ll pretend you said, “Yes!” OK, but who oversees your work or theirs? Does an objective person review all of your data and monthly/quarterly/annual financial statements and resolution? If so, is that person as qualified or more qualified than you or the other in-house person? What about compliance? Do you have an attorney regularly look over your financials for compliance? How much money, time, and peace of mind is avoiding legal and financial missteps worth?
  • I’ll assume that you said you have a qualified loyal employee performing accounting duties. Are you qualified to analyze their work? Even if you are, do you ever get anxious wondering if company data is being misrepresented, or money is being misappropriated? If so, it is a completely justifiable business expense to pay an outside firm or expert to work in tandem with the team member who is responsible for the books and taxes. It is wise reasonable to make sure that everything checks out. In so doing you avoid unforeseen expenses, hassles, and audits later on.
  • Are you a software or IT expert? No? Me either, but I work with people who are. How do you know that the software and technology you’re using to manage bookkeeping, accounting, and client/vendor/employee data is the most efficient, comprehensive, current and user-friendly for your industry? Are you working in a cloud-based environment or require hosting? Or are you still functioning off desktop-only applications that do not share data unless you manually update and share? Are the platforms you use customized to your specific business? Unless you answered a resounding, “YES!” to most of the questions above, you should probably considering hiring us or another qualified accounting firm who also does software consultation. We will help you choose the best software solutions, convert and clean your data, and train your team in best practices on software that we customize for your business.

The Hazards of In-House Bookkeeping

The potential pitfalls of keeping bookkeeping and accounting in-house are numerous. The hazards only begin with decentralized processes and inconsistent data. These issues lead to extra communication and hyper-vigilant oversight of departments, and individuals’ financial record keeping.

Additionally, the loose ends of decentralized record-keeping and resolution cause manifold issues. Overdue invoicing, outstanding invoices, duplicate or missing purchase orders, miscalculated payroll and commissions, inaccurate timekeeping and services entries for projects and purchases, inaccurate inventory, inefficient and inconsistent parts, and supplies ordering all negatively impact manufacturing and sales timelines, corporate revenue. Also, such issues usually result in over-time pay for team members tasked with resolving the fallout of the aforementioned issues. EXPENSIVE! I could go on, but you get the point.

Paying an In-house Bookkeeper vs an Outsourced Contractor

Finally, consider how much it costs to hire, train, pay the salary and benefits for, and spend time managing an accounting team. Even just one in-house, entry-level bookkeeper salary starts at about $40K/year plus benefits and that doesn’t include training and management. So, for about $60K/year you hire a person who comes with a resume that needs tremendous fact-checking for a person who perhaps possesses 3-4 solid references. Or, for about $10-15K/year you can hire a firm or an outside expert accounting consultant who comes with countless client references, examples of their work, and a short-term contract which obligates the firm to achieve specific results. Plus, there’s no obligation to socialize with contractors or consultants over the water cooler and at holiday parties.

In conclusion, maybe you love gambling. Maybe you have so much money you tend not to worry if some of it is unaccounted for. Maybe you aren’t planning on your business succeeding either. However, on the off chance that you like so many other hard-working people, want your company to grow and succeed you should outsource bookkeeping and accounting. Otherwise, you face a good possibility of many sleepless nights fixing reports, resolving company books, and gathering documents for auditors. For a free consultation, give us a shout. (781) 487-7000 or email us at Accounting problems solved. Break-time: