Bookkeeping is the daily process of keeping records of all of a company’s financial transactions. A bookkeeper records the expenses, sales, and bank and cash transactions of a business in a general ledger, the accuracy of which is of the utmost importance come tax season.
Depending on the size of your business and the number of transactions it conducts on a daily, weekly and monthly basis, the bookkeeping process can be very complex. For this reason, businesses often turn to hiring or outsourcing the bookkeeping process.
But which should you do — hire, or outsource? Here are some factors to consider in making this decision.
What’s the Cost Difference?
By outsourcing your bookkeeping operations, you save money on paying wages and benefits to an employee.
“The salary and benefits paid to an in-house bookkeeper can be significant,” writes credit specialist Marco Carbajo.
If you collect payments, credit sales, invoices and other pertinent financial information to then hand to a third-party bookkeeper for accounting purposes, you’ll find the cost of outsourcing to be significantly lower than the cost of hiring a full-time employee.
Will Bias be a Problem?
One downside of hiring a full-time bookkeeper is that, over time, they may become emotionally involved with the daily aspect of helping run your business. While this can be a potential motivator, it can also lead to bias and incentivize dishonesty you wouldn’t get by outsourcing the work.
“An external bookkeeping service has nothing to do with your business,” Carbajo writes. “Its goal is to give you a clear insight into your business’s financial position, not to pat you on the back and tell you everything is going to be OK even when it’s not.”
If you want the most objective look at your business finances, outsourcing is the best bet for avoiding conflicts of interest.
How Can I Save Time and Maintain Business Focus?
Outsourcing your business’s bookkeeping operations can save you time, as the backend functions of bookkeeping can lead to distractions in the day-to-day operations if kept in-house. This has a negative impact on both your bookkeeper and your regular staff.
By outsourcing, you can strike two birds with one stone.
“It’s hard for a bookkeeper to do their jobs around the hustle and bustle of a business,” Hussain Sultan writes for Yahoo! Small Business. “Removing them from the site by outsourcing not only helps you focus on your business; it helps them focus on your business as well.”
What Tools Can I Afford to Provide?
Most business owners can’t afford to pay for the best bookkeeping software, nor do they have the time to learn how to use them or to always remain on top of the latest regulations. Hiring a bookkeeper would eliminate the need for the latter, but you’d still have to buy the software.
The cost of outsourcing already comprises the cost for that software and for that knowledge without the need for you to do any work — saving you even more money compared to hiring.
“These top systems create nightly backups and keep organized records and books for years, ensuring that if the IRS ever does come knocking for an audit, you’ll be more than prepared for them,” Sultan says.
What are the Benefits of Outsourcing a Team vs. Hiring an Individual?
Even if you hire a bookkeeper, it may not be enough.
“One bookkeeper is often not enough to find every subtle nuance that can benefit your company,” Sultan warns.
By outsourcing, you benefit from a team of workers and managers who check each other’s work to ensure there are no discrepancies and errors, and that you receive the best possible service.
Additionally, having multiple sets of eyes reviewing your financial statements can help reduce the risk of fraud.
Consider Payroll Solutions with Minster Bank
Hiring a bookkeeper is often better than not having a bookkeeper at all, but outsourcing bookkeeping operations, such as payroll, is the way to go if you want better record-keeping, fewer disruptions in your business’s day-to-day operations, access to the best tools and even lower costs.
Minster Bank offers payroll processing solutions in two forms:
- • Minster Bank Payroll Services – you handle the payroll for your business, and Minster Bank does the disbursements
- • Paycor – Minster Bank’s partnership with Paycor provides full payroll processing for your business
Visit our Payroll Solutions webpage to learn more about each option or contact us directly, and we’ll help you find the right solution for your business.
Published by Minster Bank.
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