Bookkeeping is integral to every company’s functioning, and so the need for bookkeeping services has increased drastically over the past few years. Bookkeeping services providers manage the most crucial aspect of the business, finances. These services involve identifying, recording, and classifying financial transactions per accounting standards and principles in the books. Companies must maintain complete and accurate records to prepare financial statements and taxation reports. The books provide insights into the company’s cash flow, receivables, payables, assets, and liabilities position.
Clean and sound financial records enable budgeting, forecasting, financial management, KPI reporting, financial analysis, etc. These facilitate accurate reporting to internal and external stakeholders to make appropriate decisions. The improved visibility and transparency with professional bookkeepers help in promoting business growth. A company can either conduct bookkeeping in-house or outsource it to a skilled team based on its needs. Let us understand bookkeeping services in detail.
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What do bookkeeping services do?
Bookkeeping service providers track all the financial transactions incurred by businesses and record them correctly. They develop and maintain the entire financial process and manage it to fit the business’ needs.
Accounting and bookkeeping services begin with an accounting software specialist who tailors the files and data for a business’s requirements. They make these reports accessible to approved officials. Next, a full-charge bookkeeper undertakes its responsibilities. The scope of their duties is broad and includes:
- Accounts payable
- Accounts receivable
- Payroll
- Documenting financial transactions
- Handling deposits
- Creating financial reports
- Tax preparation, withholding, and calculation
- Bank account reconciliation
- Facilitating during internal or IRS audits
Apart from the services mentioned above, bookkeeping services providers also assist in raising loans, answering auditors, designing next year’s budget, business planning, etc. The service providers ensure punctuality, completeness, and accuracy in working. They help maintain the relevance and usefulness of financial records.
Bookkeeping services providers analyze the expenses incurred by different departments compared to their budget. They help detect inefficiencies and inconsistencies for accurate future budgeting. The controller reviews the accuracy and reliability of financial records. They assist in maintaining the accounting integrity of files. Moreover, they highlight the critical issues in monthly financial reports for businesses to address and correct soon.
Although bookkeepers can assist in tax preparation, they cannot file the records. Instead, they empower others with information that influences their decision. Their primary aim is to maintain accurate, reliable, and complete files, financial recording, and tracking. They signal underlying illnesses that lower the business’s financial health through monthly snapshots. Maintaining comprehensive financial information requires double-checking by professional bookkeepers. Proper categorization, organization, and presentation are critical.
How does a bookkeeping service benefit a business?
Availing proficient bookkeeping services offers the following merits to the businesses:
- Strengthening financial health:
Bookkeeping services maintain a consistent financial process that strengthens the firm’s financial health. Uniformity in tracking, paying, and reporting encourages and creates a solid financial position. These practices ensure the business stays risk-free and eliminates costly processes.
- Enhanced coordination among departments:
With professional bookkeeping services, people and organizational skills contribute to enhanced coordination among departments. The purchase and payment department can function smoothly and prepare accurate expense reports. The management and math skills ensure no-hassle between individuals and departments and make cash flow and budgeting easier.
- Cost-effectiveness:
Bookkeeping service providers minimize mistakes, fees, penalties, and mismanagement that will enhance costs. They apply the latest technological advancements to expedite the processes and turn tedious and time-consuming tasks into cost-effective practices.
- Time and efficiency:
Bookkeeping services save the business time and allow them to focus on the core operations. They can free their resources tied to bookkeeping and allocate them to other growth activities. The service providers are already proficient in their work, and thus, there is no tension, and only peace of mind prevails. Growth becomes seamless and hassle-free.
How much do bookkeeping services for small businesses cost?
The cost for availing of bookkeeping services varies for small businesses. Several factors affect its rates, including the business size, transactional volume, lifecycle, payroll processing function, number of employees, credit cards, expense accounts, invoices, bill payments, reconciliation, etc. It will also consider the firm’s policies, procedures, accounting systems, and reporting needs.
The variations in price ranges are to accommodate the growing and scaling business needs. A full-charge bookkeeper charges anywhere between $35,000 to $55,000 annually. On the other hand, outsourcing companies charge a monthly fee of $500 to $2500.
Cost analysis: Part-time vs. full-time vs. outsourced
Let us consider the costs businesses need to incur for essential bookkeeping services. They can either choose to do it themselves or hire a bookkeeper part-time or full-time. However, if they decide to outsource, there are options like local bookkeeping firms, local CPA firms, and offshore or onshore outsourcing.
A detailed evaluation of these costs includes:
- Doing it yourself- If a firm tries to do the bookkeeping itself, there will be no added financial costs.
- Part-time bookkeeper: Hiring an internal part-time bookkeeper can cause charges up to $20 per hour, varying based on job description and location. On average, businesses pay around $400- $800 per month plus benefits.
- Full-time bookkeeper: A full-time bookkeeper can cost up to $3000- $4500 per month plus benefits. These expenses add up to $35,000- $55,000 plus benefits and overheads annually. Moreover, the maintenance and infrastructure costs to manage them are separate.
- Outsourced bookkeeping services: Average outsourcing prices for bookkeeping services are $500- $2500 a month. These vary based on complexity and the number of transactions the business incurs.
Firms should consider the most suitable and fitting bookkeeping services providers based on these costs and business needs. Whiz Consulting is one of the leading bookkeeping service provider which has a team of bookkeepers that makes the process smooth.
Hiring a bookkeeping service apt for your business
Every bookkeeping services provider offers varied merits and demerits to businesses. Each firm has different needs, capacity, lifecycle, transactional volume, etc. Therefore, the general rules may not apply to all. However, the pros and cons of each service provider, their costs, and compatibility with business needs are essential to analyze for fitting solutions.
Businesses need to figure out the existing and potential problems and ensure appropriate tackling without hassle. While in-house bookkeeping can provide the necessary control and supervision, outsourcing bookkeeping services save cost, time, and resources. Consider all the alternatives and understand whose price and worth are valuable as the right bookkeeping service will be vital in having a seamless business finance process in place.
Reference links:
https://solutionscout.com/bookkeeping-services/bookkeeping-ultimate-guide/
https://www.growthforce.com/blog/how-much-bookkeeping-services-cost-small-businesses
https://www.accountingdepartment.com/blog/what-are-bookkeeping-services-exactly