How to outsource accounting & save your time

Take bookkeeping off your to-do list

Editor’s note: This is a guest post from our friends at Bench. Prefer to DIY? Try GoDaddy Online Bookkeeping. Find more articles on dealing with finances in our Funding a Business collection.

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If you’re like most business owners, dealing with accounting tasks doesn’t exactly spark joy.

Here’s how you can take accounting off your to-do list and find more time to focus on your business—through the life-changing magic of outsourcing.

Accounting: All the moving parts

When we talk about accounting, what we’re really talking about is three interlinked processes: Bookkeeping, accounting, and tax planning.

  • Bookkeeping tracks all your day-to-day transactions—money entering and leaving your business. It also categorizes those transactions, so you can see how you’re spending money, and how you’re making it.
  • Accounting takes information from your bookkeeping, crunches the numbers, and shows you the big picture. Financial reports like income statements and balance sheets show you how much money you’re earning, and how much you have to work with.
  • Tax planning involves looking at your bookkeeping and accounting figures, and using that info to save as much as possible on your taxes.

These three areas often overlap. For instance, your bookkeeper might prepare financial reports for you, and your accountant may help with your tax planning.

[ Related: Accounting 101 for entrepreneurs ]

Why outsource your accounting?

Small businesses often hire some kind of outside help to manage their accounting tasks. There are a few reasons why.

Accounting eats up time

There’s no way around it. Even if your spreadsheets are true works of art, DIY accounting will cut into time you could otherwise spend helping your business grow.

Accounting is high stakes

Make a mistake on your tax return, and you could get fined by the IRS—or even trigger an audit. Miscalculate your income for the month, and you could find yourself coming up short on cash when it’s time to pay vendors. Accounting is high stakes, and small errors can have big consequences.

Good accounting takes expertise

Even if you spend sleepless nights poring over textbooks, you won’t have the expertise of a professional bookkeeper, accountant, or tax planner. That’s because they have experience—they’ve worked with many businesses, and understand first-hand the mistakes to avoid. When your accounting is outsourced, you have experts fighting on your side.

How to outsource your bookkeeping

When you outsource your bookkeeping, a hired professional tracks money entering and leaving your business and categorizes it for you. That information can be used by an accountant to create financial statements.

There are two main options for outsourcing your bookkeeping: Hiring a local bookkeeper, or hiring an online bookkeeping service like Bench.

Hiring a local bookkeeper

Cost: $20 to $50 per hour, usually with a $100–150 monthly minimum.

Best for: Small to medium sized business owners who want to meet their bookkeeper face to face, or who work with a lot of paper records like receipts.

How it works:

When you hire a local bookkeeper, they’re either a freelancer, or a firm.

A freelancer works on their own. Their clients usually include a number of businesses. Many freelance bookkeepers will specialize in a certain industry—like restaurants.

A firm is a company that employs many bookkeepers. A large firm will serve any business, regardless of industry.

One of the best ways to find a local bookkeeper that serves your needs is to ask other business owners in your area. This is especially true if you’re looking for a freelancer specializing in your industry.

 

Pros and cons of hiring a local bookkeeper

Pros Cons
  • In-person interaction. You can meet with a local bookkeeper face-to-face. They may also be able to make visits to your office to collect hard copies of financial records.
  • Industry specialization. You may be able to find a local bookkeeper who specializes in your industry.
  • Price. Local bookkeepers are typically more expensive than online solutions like Bench.
  • Variable monthly costs. Since they charge by the hour, months when your bookkeeper needs to do more work—such as leading up to tax time—could cost you more.
  • Manual transaction recording. Your bookkeeper may need you to hand-submit your bank statements and other documents, so they can enter transactions on the books.

 

Using Bench

Cost: Starting at $119 per month, flat rate

Best for: Small to medium sized business owners who use online banking and credit cards, and are comfortable working online with their bookkeeper.

How it works:

When you sign on with Bench, you get a dedicated team of remote bookkeepers who do all of your bookkeeping for you. You can login in Bench any time and see all of your transactions, and financial reports show you how your business is performing.

To communicate with your team, you message them through the Bench app. The mobile version of the app lets you manage your bookkeeping on the go.

Your business accounts are linked to Bench, so each new transaction is automatically imported. Then, your team categorizes it for you.

 

Pros and cons of using Bench

Pros Cons
  • Automatically imported transactions. Since your business accounts are linked to Bench, you typically won’t need to submit financial records by hand.
  • Financial reports. Your Bench team prepares income statements and balance sheets, the same financial reports provided by an accountant.
  • Easy tax filing. Every year, Bench gives you a year-end tax package, which includes all the info you or your accountant need to file taxes.
  • Computer use. If you’re uncomfortable using computers, or keep a lot of paper records, then Bench isn’t a great fit for you.
  • Cash basis. Bench only uses cash basis accounting. If you use accrual basis, Bench will not work with your business. If you aren’t sure which type of accounting you use, Bench  can help you figure it out.

 

How to outsource your accounting

An accountant takes all of the info recorded and categorized by your bookkeeper, then produces financial reports that show you how your business is performing.

They can also advise you on financial decisions—such as taking out loans, bringing on employees, or expanding your business. And they can file your taxes for you, doing their best to save you money on your tax return.

Hiring a local accountant

Cost: An accountant will typically charge $150–$400 per hour, depending on their level of experience.

Best for: Businesses dealing with a lot of paper financial records, or business owners who want to meet with their accountant face to face.

How it works: 

Like bookkeepers, accountants either work on their own as freelancers, or as a part of accounting firms. In fact, often bookkeepers and accountants will work together in one firm.

The way you work with your accountant will depend on your business. You may deliver your bookkeeping info to them on a monthly or quarterly basis, or all at once at the end of the year, before tax time.

Even if you use a bookkeeping service like Bench, which offers many of the same services as an accountant—like creating financial reports, and helping you track cash flow—you still benefit from hiring one. When you have an accountant working for you, you’ve got someone reliable you can turn to for financial advice.

Pros and cons of hiring a local accountant

Pros Cons
  • Face-to-face interaction. You can meet with your accountant at your office or theirs, making it easy to share paper financial records.
  • Adaptable to your tech skills. If you’re unfamiliar with online banking or accounting software, you should be able to find an accountant who can work with you on your level.
  • Price. Local accountants typically cost more than online services.
  • Communication. You’ll likely be communicating with a local accountant by email or phone. You may find it difficult to get in touch if your accountant is on vacation, or during tax season when they’re working with many other clients.
  • Limited options. Depending on the size of your community, you may have trouble finding accountants who specialize in businesses like your own—for instance, online stores or tech startups.

 

Hiring an online accountant

Cost: According to Upwork, the cost of hiring an online accountant on their platform starts at $20–$35 per hour.

Best for: Business owners already comfortable with handling financial tasks online.

How it works:

To hire an accountant online, you can go one of two routes.

Large, national accounting firms often offer online versions of their in-person services. However, their services may be limited compared to face-to-face. And you may need to become acquainted with their online platform in order to use them.

The other option is to hire a freelancer on a platform like Upwork. An online freelancer is much like a local freelance accountant, but they may charge less than your local options. Also, because Upwork is global, you have many accountants to choose from—meaning you may have an easier time finding an accountant who specializes in your industry.

Pros and cons of hiring an online accountant

Pros Cons
    • Less paper. Since you’ll be dealing with 100% digital financial records when you have an online accountant, you’ll avoid many of the pitfalls of paper records. And if you’re already using lots of printed documents, this could be the motivation you need to fully go paperless.
    • Zero travel time. There’s no need to visit your accountant’s office, or vice versa. You can handle meetings by videoconferencing or VoIP.
  • The tech barrier. If you’re unfamiliar with handling basic financial tasks for your business, dealing with an online accountant may be overwhelming.
  • Too many to choose from. With so many accountants to choose from on platforms like Upwork, you may find it hard to narrow down the list and pick just one.
  • Quality control. Particularly if you’re using a platform like Upwork, there are plenty of freelance accountants to choose from. Their levels experience vary widely—so it may take trial and error to find one who suits your business.

 

Outsourcing tax planning

Often, an accountant—especially a certified public accountant (CPA)—can help you plan your tax deductions. But in case your accountant isn’t up to the task, or if you’d like an especially in-depth look at all your tax options, tax planners are here to help.

While it costs money to hire a tax planner, you often save money in the long run because of the tax deductions you’re able to write off.

Hiring a local tax planner

Cost: According to the CPA Practice Advisor, it costs on average $273 to hire a tax planner to itemize your deductions at both the state and the federal level.

Best for: Business owners who want to meet face to face with their planner, or ones who keep mostly paper records.

How it works:

Your tax planner may work as a solo freelancer, or as an employee at a local accounting firm. You bring all your bookkeeping and accounting info to them, and they help you file for as many tax deductions as possible. In some cases, that means itemizing every deduction. In other cases, that means opting for a generalized deduction.

Hiring a tax planner will cost more depending on the state of your business records. The more time your tax planner needs to spend working for you, the more they’ll charge. If your bookkeeping is disorganized and you’ve got a shoebox of paper receipts that need to be sorted, be prepared to pay more.

Pros and cons of hiring a local tax planner

Pros Cons
  • Paper records. If you have a lot of paper receipts or other hard copies of financial records, an in-person tax planner is the best individual to help you sort them out.
  • Referrals. If you know other business owners working in the same industry as yourself, you may find it easier to  pick a tax planner in your community than to search for one online.
  • Price. Partly due to limited choices in your community, you may find it hard to hire a local tax planner who can offer rates as low as those of online freelancers.
  • Limited choice in terms of industry. As with hiring a local accountant, it may be difficult to find a tax planner in your community who specializes in your industry.
  • Limited choice in terms of certification. There are different levels of certification for tax planners. If your community is small, you may have trouble hiring a local tax planner certified at the level you’re looking for.

 

Hiring an online tax planner

Cost: Starting at around $30 per hour on Upwork, with total price according to scale

Best for: Business owners already familiar with managing finances online, or businesses in small communities where there are slim pickings for tax planners.

How it works:

Hiring a freelance tax planner on a platform like Upwork is similar to hiring an accountant in the same way. In fact, your accountant may offer tax planning services—or vice versa.

Once you’ve hired a planner, you deliver your financial records to them, and they help you through the process of planning how you’ll file your taxes in order to save the most amount of money possible.

As with a local tax planner, the total amount you pay will be based on how long it takes your tax planner to do their job. That means it’s smart to bring them organized financial records.

Pros and cons of hiring an online tax planner

Pros Cons
  • Plenty of choice. With so many online tax planners to choose from, it shouldn’t be hard to find one experienced in working with businesses in your industry. And if you’re based in a small community and there aren’t many tax planners to choose from, looking online can broaden your horizons.
  • Paperless planning. Similar to working with online bookkeepers like Bench, or online accountants, working with an online tax planner is paper-free, meaning less hassle overall.
  • Fewer people to hire. If you already plan to hire an online accountant, it makes sense to find one who handles tax planning too. Fewer professionals to deal with means less work for you.
  • No paper records. Dealing with a tax planner online is difficult if most of your expenses are recorded as paper receipts.
  • Non-negotiable screen time. If you’re inexperienced handling finances online, or you just want to spend more time away from your computer, an online tax planner may not be the best choice for you.

 

Outsourcing your tax filing

The final step of outsourcing your accounting is to have your taxes taken care of. This is  something that your bookkeeper or CPA might offer as an additional service.

If you’re outsourcing your books to Bench they can file your taxes after completing your year end financial package. So your bookkeeping and taxes are outsourced by the same team who takes care of your books throughout the year.

The first step to outsourcing your accounting is to hire a bookkeeper. Try Bench, and get one month’s worth of free bookkeeping.

Image by: Bench