How Do You Know When It’s Time to Outsource Your Bookkeeping Services?
Cash flow is your business’s lifeblood, which means your bookkeeping practices determine how well you understand your company’s financial health. When you're just starting out, it often makes sense to keep your bookkeeping in-house. However, as your business grows, outsourcing your bookkeeping services may become the most cost-effective and efficient solution. If your books are in the hands of a qualified professional, you can manage your time and resources more effectively, make business decisions confidently, and focus on building your business. But, as a small business owner, how do you know when to delegate or outsource bookkeeping? Asking yourself these five questions can help you determine if the time is right for your business.
Am I spending too much time on administration?
As a business owner, time is money, and time management is challenging when you are pulled in a million different directions. According to Pulse surveys by The Alternative Board, the average business owner has about 1.5 hours of uninterrupted, high-productive time each day and only spends 32% of their time working on building their business. That means nearly 70% of your time is spent in the thick of administration, emails, management, and generally maintaining the status quo. Think about your average workday and workweek. If you’re feeling over-extended, delegating or outsourcing your bookkeeping could reduce your overtime and stress.
Would letting go of the process help me focus on business growth?
Sometimes it’s difficult for business owners to let go of or delegate a process like bookkeeping. Opening up your books to another person can feel like a loss of control or violation of privacy. But, business growth is all about scalability and maximizing your resources. By delegating the bookkeeping process, you can make better use of your time. Since time is money, your new schedule should positively affect your books. You’ll be able to focus on your business’s vision and redirect your attention to growth strategies for marketing, sales, lead generation, or product development. And outsourcing to a professional that knows the ins and outs of bookkeeping may help ease some of your concerns about stepping down as process owner.
Do I have the financial insights I need to make key business decisions?
To avoid potentially serious missteps, you have to be sure your business decisions are data-driven. Ahead of making a bold move, you need to know your choice is backed by timely, accurate, and actionable financial information. By outsourcing bookkeeping, you often gain access to better reporting, which shows you leverageable insights rather than just raw data. And you may have access to technologies, methodologies, and automated processes that increase accuracy and efficiency. A CPA can provide you with best practices and industry expertise. They can help with projections that incorporate economic and market data. Working with a CPA helps you stay on top of compliance, lower your tax burden, and maintain tighter control over your financial health.
Are my accounting functions properly segregated?
Segregating your accounting duties provides you with a system of checks and balances that helps you avoid costly errors and even fraud. When you’re starting out, there’s generally some overlap. But, once you’re established, it’s time to think about internal controls. For example, if the same employee that issues your company’s payments also reconciles your bank statements, you’re at a higher risk for these issues to remain undetected. By outsourcing your bookkeeping duties, you can add the proper separation as well as another level of review. CPAs are well-versed in fraud risk and prevention, and they are held to strict professional and ethical standards in performing their work.
Have I accounted for potential changes, uncertainties, and costs?
As a company grows, so does the business owner’s need for continuity and contingency planning. If you employ an in-house bookkeeper, what’s the backup plan if that person leaves the company? If you employ or hire other personnel, are there policies in place that ensure they perform consistent accounting procedures? Hiring, training, and employee management can be costly and time-consuming. By outsourcing to a professional, you have a backup plan and a relationship that doesn’t require additional hiring or ongoing training. And, when you weigh the cost, keep in mind that an outsourced professional doesn’t add to your costs for payroll taxes, medical coverage, worker’s compensation, PTO, or any other employee benefits.
If your answers to these questions tell you it’s time to outsource your bookkeeping, Brannen CPA Services can help. Contact me today to learn more.
Karla Brannen is a discerning provider of tax planning and compliance services, including services bearing multi-state intricacies. Her panoramic approach to bookkeeping and CFO services enables her to address multi-faceted and unique client needs. Karla works with individuals, their trusts and estates, and small businesses, and she provides tax filing services for employee benefit plans.