How Does Outsourced Bookkeeping work?

How Does Outsourced Bookkeeping work?

Outsourced bookkeeping is high on the list of outsourced services most hired by small business owners. Today’s businesses are still heavily in remote working and often with a reduced staff. The business owner and key management team members are wearing multiple hats, making them a jack of all trades and truly a master of none. Outsourcing the bookkeeping function has become commonplace with SMBs.

What does a bookkeeper do?

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A bookkeeper performs all the daily, weekly, and monthly financial transactions required by a business. The bookkeeper prepares a management report package containing financial reports and other helpful information:

  • Profit and Loss or income statement is a detailed report of revenue and expenses for the month or specified time frame.
  • A Balance Sheet is a snapshot or financial summary of assets and liabilities essential for the owner to understand its financial position.
  • Statement of Cash Flow is the overall activity of cash coming into and leaving the business.
  • Accounts receivable and accounts payable detail provides insight into the revenue (receivable) you have coming in and the expenses (payable) you have paid out.

Some bookkeepers assist with other financial and financially related tasks such as bank reconciliations, credit card reconciliation, sales tax calculation, payroll, budgeting, and tax preparation for annual tax returns.

What is outsourced bookkeeping?

Often referred to as virtual bookkeeping, an outsourced bookkeeper manages your bookkeeping tasks remotely. Your virtual bookkeeper is accessible via software applications, such as Expex. The virtual bookkeeper pays your bills through electronic means, prepares your monthly financial statements, and ensures your books are tax-ready for your accountant.

Outsourced bookkeeping is traditionally less expensive than in-house bookkeeping and can offer a wide range of expertise based on your type of business.

What is the difference between outsourced bookkeeping and outsourced accounting?

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An accountant working with US tax forms

In many small businesses, the duties and responsibilities of a bookkeeper and accountant can become convoluted. A bookkeeper does not have the training or education to provide financial analysis and insights. While bookkeepers perform accountant-based tasks, they are not considered an accountant. It is essential to understand this as you consider what services your business needs to manage your finances.

Outsourced bookkeeping and outsourced accounting services offer expertise and quality at a level that most small businesses cannot afford to hire as full-time staff. A fully burdened headcount for each full-time bookkeeper and accountant could cost more than $110,000 a year or more, depending on your geographic location. Outsourced equivalents are minimal in comparison.

Do I need both a bookkeeper and an accountant?

Yes. Many small business owners perform bookkeeping tasks taking them away from growing the business. Hiring a bookkeeper ensures that transactional and administrative-accounting functions are correctly executed and monthly financials are completed.

An accountant understands and analyzes the data providing insight, analysis, tax planning, and strategies. At a minimum, a business owner should have an accountant to provide them with tax planning and preparation. However, as your business grows, having a CPA is strongly recommended.

What are the benefits of outsourced bookkeeping?

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Is outsourced bookkeeping the right fit for your business? Here are five compelling reasons to outsource your bookkeeping.

  • Reduces Fraud. It is simple. The number one reason you should outsource your bookkeeping is due to fraud.
  • Financial controls. In small businesses, fraud results from a lack or absence of controls, which an employee exploits. A critical process that should be examined as part of a fraud review is how bills are approved and paid. Using an outsourced bookkeeper can ensure proper practices are in place, which can quickly be addressed by implementing basic controls, which are easy to execute.
  • Financial management. Ok, we know the truth. No one likes bookkeeping except us. However, without consistent bookkeeping, you will be in the dark when it comes to your business’s financial health. If you stop doing your bookkeeping, you will no longer have a clear picture of your company’s financial health. Think about that for just a moment. How many decisions and business interactions require financial information to proceed?
  • Trained and skilled help. Hiring an outsourced or virtual bookkeeping service gives an SMB instant experience from an experienced and qualified bookkeeper. There is minimal ramp-up time, and with an automated solution, there is even less.
  • Engaging with an outsourced bookkeeper allows the business owner to start small and expand as the business grows. A start-up company with two employees still needs a bookkeeper but not at a larger entity level. Automated bookkeeping solutions such as Expex provide brilliant solutions to help small businesses manage their bookkeeping tasks and focus on growing their business.

Why hire an outsourced bookkeeper?

We want to ease the burden and stress of arguably one of the most critical business functions. Running a successful business is hard work. Bookkeeping is challenging for even the most experienced business owner. Hire Carly, and let her do the bookkeeping for you.

About Expex

Expex, based in Schenectady, NY, offers automated and innovative bookkeeping services to help your business succeed. Our application, Carly, can do everything a traditional bookkeeper does and more. This financial management program expertly delivers bill payments, bank and credit card reconciliation, and financial records consolidation. Call (518) 389-2305 today to get started, or contact us to learn more about Carly.

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