Congratulations! You’ve decided to dump DIY bookkeeping, and outsource your books to a pro. That means accurate, up-do-date books, a smoother tax season, and more time to focus on building your business.
Now, the million dollar question: who’s going to do all that bookkeeping for you?
You have two main options: hiring local bookkeepers, or hiring “virtual” bookkeepers. There’s also a third option—hiring an in-house bookkeeper to do it for you—but in terms of price, it’s a big jump up from DIY bookkeeping.
Let’s take at the benefits and drawbacks of each, so you can decide which one is right for you.
Hiring a local bookkeeper
A local bookkeeper is a person or bookkeeping team based near your business. This is a great choice if:
You value meeting your bookkeeper face to face
You rely on physical records to run your business, and don’t use online banking or payment systems like Stripe
How local bookkeeping works
Generally, there are two ways to outsource your bookkeeping to a local pro: a freelancer, or a firm.
A freelance bookkeeper works with you one-on-one to get your books done. Freelance bookkeepers may be able to work online, in-person at your business, or both. Solo practitioners have varying levels of skill and experience.
Your second option here is to work with a bookkeeping firm. Firms will generally charge more than a freelance bookkeeper. However, they usually offer some “assurances” that solo bookkeepers can’t. For instance, their bookkeepers may be professionally certified. And, in the event that someone handling your books has to take a leave of absence, another bookkeeper can take over—so you don’t have to worry about service gaps.
A freelance bookkeeper or a firm will operate outside of your business—they’re not a contractor or an employee. Try to find one that offers you secure, immediate access to your financials.
Another important feature: security. Make sure the person you hire can be trusted to handle your business’s financial information. And never give a bookkeeper control of your treasury functions: when it comes to handling investments, signing checks, or making online payments or wire transfers, you should be the sole signing authority.
“Virtual bookkeeping” may sound a bit dated—like a Windows 95 application—but this (admittedly awkward) term refers to a popular, paper-free method of handling your books.
Virtual bookkeeping just means someone else doing your books for you, online.
Virtual bookkeeping combines the best parts of bookkeeping software and traditional bookkeepers. When you hire a virtual bookkeeping service, you get bookkeepers who do your books, and software to monitor your finances. It’s a good option if you:
Use online banking and are comfortable on the web
Prefer a flat monthly rate over hourly billing
Want online access to your financials via a mobile app
Prefer chatting online or on the phone, rather than in-person
Having professionals do your books will save you time and give you peace of mind. And the benefit of working with an online service means that you can store your data securely in the cloud, and access your financial info from anywhere, any time.
How virtual bookkeeping works
Virtual bookkeeping connects you with real bookkeepers via a secure, online account. A top-notch service will download your expenses automatically through online banking and through your merchant processor so you don’t have to send envelopes of receipts.
Come tax time, an online bookkeeping service may also give you a year-end financial package, which contains all of the financial statements your accountant will need to file your small business tax return.
For example, when you sign up with Bench (that’s us), you’re paired with a team of professional bookkeepers who gather your data and turn it into tax-ready financial statements each month. Then, the Bench app lets you track your finances, download financial statements for your accountant, and message your bookkeeping team.
When your business outgrows the solutions we’ve covered, it probably means you need to employ an in-house bookkeeper.
It’s up to you to determine whether your business can afford an in-house bookkeeper. Their standard pay, according to Salary.com, ranges from $35,223 to $44,620 per year—before taking into account payroll taxes and employee benefits.
If you need in-house support but can’t afford to hire a bookkeeper full-time, consider hiring one part-time, and increasing their hours as needed. Some businesses also bring in a part-time bookkeeper, but assign them extra administrative tasks in order to create one full-time position.
Local vs. virtual vs. in-house bookkeeping
In summary, here are the options you have to consider when outsourcing your business bookkeeping.
|Bookkeeping solution||Great fit if…||Benefits|
|Local bookkeeper||Your business has less than $1 million in revenue and fewer than 5 employees
You depend on physical records to run your business, or want to meet your bookkeeper in person
You’re prepared to cover bills that may vary month to month (due to hourly billing)
|Local bookkeepers work well with paper-based recordkeeping
Freelancers may be flexible with how they work (visiting your office or communicating online)
|Virtual bookkeeper||Your business has less than $1 million in revenue and fewer than 5 employees
You use online banking
You would rather pay a flat monthly fee, than an hourly bill
You want instant access to your financials on the go
|Allows you to run a paper-free office
Instant online communication
You get human bookkeepers, and software to monitor your finances
You get a team who does your books—no service delays if your bookkeeper is sick or away
|In-house bookkeeper||Your business has more than $1 million revenue or more than 30 employees||Efficient way to do the books for a larger business
The bookkeeper answers directly to you
Whichever bookkeeping solution you choose, make sure it delivers accurate financial statements, tax-ready books, and a secure way to store and access your business’s financial records and data.