Why Outsource Your Monthly Bookkeeping Services

The fractional economy is here. Small businesses are realizing the benefits of time and money to outsource the areas they need to gain expertise. This allows businesses to have expertise earlier and build more momentum in their business. The statistics for business failure rates are daunting. LendingTree reported that 1 in 5 businesses fail in the first year. Fundera cited a US Bank study of failed businesses stating 82% report cash flow mismanagement.  

These statistics highlight the need for financial professionals early in the business lifecycle. Monthly bookkeeping services are one of the lines of defense a business can set to prevent cashflow mismanagement. Monthly bookkeeping services don’t necessarily mean bookkeeping that happens once a month, rather, it refers to the most common pricing model for outsourced accounting firms. In this blog, we will explore what bookkeeping does and the value it can provide a small business. 

What Is a Bookkeeper? 

A bookkeeper is a financial professional responsible for recording and organizing a company’s financial transactions. Bookkeeping is the most basic level of accounting. Bookkeeping tasks include ensuring accuracy and maintaining up-to-date records of income, expenses, invoices, receipts, and other financial documentation. Bookkeepers play a crucial role in maintaining the financial health of a business by providing accurate data for decision-making and ensuring compliance with financial regulations.

Bookkeepers are typically college graduates with a degree in accounting. However, bookkeeping is a skill that can be learned in online accounting courses and with practice. Many small businesses have an internal staff member learn bookkeeping despite a lack of training in order to cover their bases without increasing costs. However, professionally trained accountants are typically more accurate and efficient with their bookkeeping. 

Is a Bookkeeper Cheaper than an Accountant? 

Bookkeepers and higher-level accountants serve different roles in financial management. The different levels of accountants include bookkeepers, assistant controllers, controllers, and senior controllers, Bookkeepers focus on daily financial transactions, maintaining records, and generating reports. Accountants, on the other hand, provide higher-level financial analysis, tax planning, and strategic advice. Generally, bookkeepers are more cost-effective than controllers. Comparing the price of bookkeeping to controllership needs to be more accurate. Controllers provide more strategic and tactical knowledge than that of a bookkeeper. For example, a controller might offer tax filing or advisory services. Hence, their value justifies their higher price. Bookkeepers and controllers typically fill different roles within a business. 

Who Needs Bookkeeping Services?

Basic bookkeeping services benefit businesses of all sizes, from startups to established enterprises. If you want to maintain accurate financial records, track expenses, manage cash flow, and generate comprehensive reports, bookkeeping services are crucial. Outsourcing accounting services for small business owners often find bookkeeping particularly valuable, as they may need more time or expertise to manage their financial records effectively.

Do I Need Monthly Bookkeeping If I Have Accounting Software? 

If you are the owner of a small, growing business, then the answer is likely yes! Monthly bookkeeping is highly recommended for most businesses. Hiring a dedicated bookkeeper is typically a good investment. Regularly updating and organizing financial records helps businesses stay on top of their financial health and make informed business decisions. Monthly bookkeeping does not necessarily mean bookkeeping work is only done once a month. However, monthly bookkeeping ensures that financial data is accurate and up to date, allowing businesses to identify trends, track expenses, and plan for future growth.

Can Bookkeeping Be Outsourced?

Outsourced bookkeeping is a widespread strategy for small businesses. Before searching “affordable accountants near me” or “business accountants near me,” entrepreneurs should consider outsourcing. The best outsourced accounting services for small businesses often come from outsourced companies. Cloud-based platforms, online banking, and financial technology have made accounting easier to do online than by hand or desktop. Outsourced bookkeeping companies are experts in finding the right technology and processes for your company. 

The main benefits of outsourcing bookkeeping are expertise, cost, and time. Outsourced bookkeeping companies typically have industry experience, so problem-solving and advice are rooted in experience. Additionally, outsourced bookkeepers are much cheaper than hiring a full-time employee. Finally, it offloads time from the business owners’ plates, giving them time to focus on other fires or growing their businesses. 

How Often Is Bookkeeping Done?

Depending on the size and complexity of the business, bookkeeping happens on a daily, weekly, monthly, or on rare occasions, quarterly basis. However, weekly bookkeeping is a common frequency for many small businesses. Weekly bookkeeping allows businesses to have up-to-date information consistently. Weekly bookkeeping is a good cadence for small businesses because they typically need more transaction volume for daily bookkeeping. Monthly bookkeeping should be more frequent. Information-based decisions are frequently made for small business owners. Monthly bookkeeping restricts the ability to make current and informed pivots, which are essential for small business success.

Bookkeeping vs. Accounting Services

Both bookkeeping and accounting services fit into the accounting function of the business. Bookkeeping services for small businesses include reconciliations, accounts payable and accounts receivable management, some financial reporting, and the recording of financial transactions accurately. Accounting services, more formally known as controllership, include strategic financial services. This includes meaningful financial statements, a formal month-end close, forecasting, and balance sheet reconciliations. 

What Is Included in Full-Service Bookkeeping? 

Full-service bookkeeping encompasses a range of tasks to ensure financial transactions are being appropriately managed and organized. It typically includes:

• Recording Financial Transactions: Bookkeepers enter and categorize financial transactions accurately, such as sales, expenses, invoices, and payments.
• Bank and Credit Card Reconciliation: Bookkeepers reconcile bank statements with financial records to identify any discrepancies, ensuring accurate financial reporting.
• Accounts Payable and Receivable Management: Bookkeepers manage invoices, payments, and customer billing, ensuring that financial obligations are met promptly.
• Payroll Processing: Bookkeepers handle payroll calculations, tax withholdings, and employee payments, ensuring accurate and timely payroll management.
• Financial Reporting: Bookkeepers generate regular financial statements, such as profit and loss statements, balance sheets, and cash flow statements, providing a clear overview of the business’s financial performance.
  

What Does Monthly Bookkeeping Include? Does It Include Payroll Services and Financial Statements?

Monthly bookkeeping packages typically include a combination of the following services:

• Recording and Organizing Transactions: Bookkeepers record and organize financial transactions, ensuring accuracy and completeness.
• Bank and Credit Card Reconciliation: Bookkeepers reconcile bank statements with financial records to identify and resolve discrepancies, ensuring accurate financial reporting.
• Accounts Receivable and Payable Management: Bookkeepers manage invoices, payments, and customer billing, ensuring timely payments and accurate financial tracking.
• Financial Reporting: Bookkeepers generate monthly financial statements, including profit and loss statements, balance sheets, and cash flow statements, providing a comprehensive view of the business’s financial health.
• Expense Tracking: Bookkeepers track and categorize business expenses, allowing for better expense management and budgeting.
• *Payroll Management: Some bookkeepers can handle payroll processing, including calculating wages, deducting taxes, and generating payroll reports. However, many companies include this as a separate service or under their HR department. Bookkeepers always perform payroll journal entries. 

If you want to check out an example of monthly packages for bookkeeping and controllership, visit our plans page.

Is It Worth Paying a Bookkeeper? 

Paying a bookkeeper is worth the investment for several reasons. First, bookkeepers give back time to higher-level personnel. If a business owner values his time at $200 an hour and hires a bookkeeper to do their 10 hours of bookkeeping work a month at $60 an hour, then business owners save $1400 a month. Bookkeepers also provide value by ensuring accurate and up-to-date financial records, which are vital for making informed business decisions and meeting compliance requirements. Additionally, the expertise of a bookkeeper helps minimize errors and maximize financial efficiency, ultimately contributing to the overall success of your business.

There are situations where paying a bookkeeper is not worth it. At the very beginning of the business, it’s good for a founder or business owner to handle the bookkeeping. This keeps the business owner in the weeds of the financials and prevents any unnecessary costs.  Moreover, newer businesses have low transaction volume, so a bookkeeper may not be worth it. 

Milestone Offers Some of the Best Online Bookkeeping Services: 

At Milestone, we understand the importance of efficient financial management for small businesses. We also understand what it means to offer an online bookkeeping service—emphasis on service. Our monthly bookkeeping services are designed to simplify your financial processes and provide accurate and up-to-date records. Our experienced bookkeepers will handle tasks such as recording transactions, bank reconciliation, accounts receivable and payable management, financial reports, tax advice, tax services, and more.

We offer customizable monthly bookkeeping, controllership, and CFO packages that blend customization and standardization. Our packages ensure we bring our proven process and tailor it to your business. With our expertise and commitment to accuracy and compliance, we help you stay on top of your financial health while you focus on growing your business. 

Contact Milestone today to learn more about our monthly bookkeeping services and how we can support your financial management needs.