Bookkeeping is the process of recording, tracking, and organizing your business’s financial transactions. Without bookkeeping, it would be really difficult for business owners to figure out whether or not their businesses are profitable, either in the short-term or long-term.
It helps entrepreneurs and business managers to understand their ‘business numbers’. This also helps them identify financial challenges as early as possible and quickly address them. As such, if you are a business owner and do not already have a system of bookkeeping, you should immediately correct that.
But when it comes to deciding on a system for bookkeeping, there may be a bit of confusion as to which makes the most sense for you. Should you carry out your bookkeeping by yourself in-house or have a professional work for you?
In this article, we’ll explain how each system works and which can make the most sense for you.
What are In-House and Outsourced Bookkeeping?
In-house bookkeeping means that you either do your own bookkeeping personally or have one of your employees do it. This means that the duties of preparing financial statements, sending invoices, managing accounts, making and tracking payments will be carried out entirely in-house.
Although there are still a handful of businesses that rely on in-house bookkeeping, you should know that these days, many businesses choose to explore marginal gains by going the outsourcing route.
This is because the responsibilities of bookkeeping also come with all its headaches and stress. And this is something most business owners are often unwilling to undertake.
Outsourcing bookkeeping involves committing the bookkeeping needs of your business into the hands of professionals that are not directly employed by your company. When using this system, businesses usually have the benefit of working with widely experienced certified public accountants.
With the widespread availability of high-speed internet services and cloud technology, outsourcing bookkeeping has become much easier now than ever before. Businesses can communicate with their accountants on-the-go and access their professionally done books from anywhere using platforms such as QuickBooks.
Differences between In-House and Outsourcing Bookkeeping
Now that you understand how outsourcing and in-house bookkeeping work, here’s how they stack up against each other.
- Time-savings: While you gain the trade-off of being able to do your books personally, in-house bookkeeping will cost you a lot of time and effort. On the other hand, outsourcing will enable you spend more time on adding value to your clients and improving your products and services.
- Accuracy and risk management: When it comes to risk management and accuracy, bookkeeping mistakes are quite common and can easily result in very unpleasant consequences. As it’s unlikely that you are a trained accountant as a business owner, outsourcing will often enable far more accurate results than you may be able to accomplish.
- Access to experience: When you choose to outsource bookkeeping, you obtain instant access to highly trained professionals. Although you can also access this with in-house bookkeeping, that will likely come at the cost of a significant payroll check.
- Timely bookkeeping: Outsourcing bookkeeping helps to ensure that your books are balanced on time, regardless of your personal schedule. You don’t have to worry about how you will make up for time of leave, sickness or holidays, which must be factored in with in-house bookkeeping.
- Payroll savings: Hiring an in-house bookkeeper will come with payroll consequences, except if you plan on doing the bookkeeping yourself. But subscribing to outsourced bookkeeping will enable you avoid paying employee overheads, payroll taxes, holiday pay, and even training costs.
How we can help you solve your bookkeeping needs
You’ll see from these points that both in-house and outsourced bookkeeping hold advantages for businesses. But which would make the most sense for your business would depend on your peculiar needs. If your goal is to achieve efficiency, as well as time and payroll savings, outsourced bookkeeping should be the way to go.
At BooksbySchmidt, our main goal is to do three things for you, save you time, money and stress. We do this by helping you eliminate hiring costs, free up your time for more profitable activities and help secure your accounting data against loss as we store it on secure servers.
We can help you build a fully efficient and fully functional virtual bookkeeping platform specifically designed to your business’s needs on a secure, cloud-based system.
If you have any questions concerning whether outsourced bookkeeping is right for your business or how to effectively adopt it, reach out to us today. We will be happy to answer any questions you have and support you for a painless and stress-free transition.