When should I outsource my bookkeeping?

As a small business owner, you might be wondering…

When should I outsource my bookkeeping?

Outsourcing bookkeeping can be a strategic decision for businesses in various stages of business. Here are some stages when companies may choose to outsource their bookkeeping:

Startup Phase

Outsourcing bookkeeping from the beginning can help startups establish accurate financial records and ensure compliance with legal and tax requirements.

Growth Stage

When a business experiences rapid growth, outsourced bookkeeping can provide the scalability and expertise needed to manage increased transaction volumes and complexity.

Restructuring

During times of restructuring or cost-cutting initiatives, outsourcing bookkeeping can help reduce overhead expenses without compromising financial management quality.

Lack of in-house expertise

If a business lacks the necessary in-house expertise or resources to handle bookkeeping effectively, outsourcing can be a viable solution.

Ready to start outsourcing?

Any stage of your business can be a good time to work with a bookkeeping professional.

Not sure if you are ready to outsource?

Use the following five steps to compare the cost of outsourcing:

• Step 1: Calculate your internal Cost

  • Determine the total annual cost associated to complete your in-house bookkeeping, including salaries, benefits, taxes, and overhead expenses. Alternatively, as a small business owner multiply your hourly rate by the hours it takes you to complete your bookkeeping in a month. Add in any additional cost of training, software, or tools.

• Step 2: Estimate the outsourcing cost

  • Research outsourcing service providers. Ensure you provide them with the scope of work, transaction volume, and any specific requirements you have. They should be able to provide you with a monthly rate.

• Step 3: Compare the costs

  • Compare the internal hourly rate with the outsourcing cost to determine which option is more cost-effective. Also, consider the direct cost, indirect costs, and opportunity costs when comparing.

• Step 4: Consider additional benefits

  • In addition to costs, evaluate the value-add and benefits of outsourcing, such as expertise, scalability, improved accuracy, and reduced operational risks. Assess how these factors align with your business goals and overall financial management objectives.

• Step 5: Evaluate ROI

  • Assess the return on investment (ROI) associated with outsourcing. Consider the potential savings, improved financial management, and enhanced productivity that outsourcing can bring compared to your internal bookkeeping process. Calculate the ROI by dividing the expected benefits gained from outsourcing by the cost of outsourcing.