It’s time. You are ready to outsource your bookkeeping needs. Now what?
Business is booming and you just don’t have time to keep up with your books, or you are thinking of selling and know your books need to be perfect for potential buyers. Either way, there are a few options to consider when hiring your new bookkeeper, as you most likely don’t need a full-time in-house bookkeeper.
This article will go over the differences between freelancers, firms, and virtual bookkeepers, in order to help you decide which is the best option for your business.
Freelancers are a great option for very small businesses with minimal transactions. Freelancers usually charge by the hour, so if your bookkeeping needs are simpler, this might be a good solution for you.
The Cost of Hiring a Freelancer
Freelancers typically charge less than a firm, since they don’t have huge overhead costs. Although it is common for freelancers to charge an hourly rate, some do offer flat rates.
The time it takes to complete your bookkeeping depends on things like the number of monthly transactions you have, if you have employees, and how intricate your industry is.
Keep in mind, if you are currently behind on your bookkeeping tasks, there will also be an extra one-time charge to bring you up-to-date.
If your freelance bookkeeper is local to you, they might stop into your business and collect all paperwork needed. If your business is digitalized, your freelancer may be virtual, communicating online only.
Whether your bookkeeper is virtual or local, you will need to make sure they use the same software you currently use and are comfortable with. Your bookkeeper may be able to import your business expenses remotely, saving time.
Some freelancers work with CPAs, and some do not. You should always inquire about this, as you want the tax process to go as smoothly as possible with your accountant.
One drawback of hiring a solo freelancer is if they get sick or go on vacation, it can be a hassle.
Freelance bookkeepers also usually have several clients, so during tax season, their time becomes very limited.
It would be a good idea to ask your potential freelance bookkeeper how they handle these situations.
A freelancer’s experience can vary widely. Industry specific experience and certifications should be taken into consideration when deciding on a bookkeeper. Completing the bookkeeping duties for a law office is going to be different that completing bookkeeping for an ecommerce business.
Another important reason to confirm your potential bookkeeper is experienced is even if the bookkeeper is insured against errors and omissions, the person who actually has to deal with the consequences of it is you and your business. Incorrect books can cause misinformed business decisions, or even issues with the IRS, if that misinformation was reported on your taxes.
So, how do you find a good freelance bookkeeper?
You can search online for a quality freelance bookkeeper. Websites such as Upwork.com provide a variety of freelancers and offer reviews from previous customers. Just do your homework before hiring to make sure the match is right for you.
A bookkeeping firm has a number of bookkeepers working together in one building. This allows for consistent availability, so if that is what your business needs, and the extra cost is in your budget, you should look into a bookkeeping firm.
Typical Cost for Hiring a Firm
A firm is going to cost more than a freelancer, specifically because of overhead costs.
A firm may charge hourly or offer a flat fee. As with any bookkeeper you choose, the amount of time it takes to complete your bookkeeping and any catch-up work needed will affect the total price you are going to pay.
Many bookkeeping firms tend to work remotely with clients, and you may have to become familiar with the bookkeeping software that they utilize. It may also help you work towards becoming a paperless business.
Alternatively, some firms may offer to come into your business to physically pick up any paperwork needed for the bookkeeping process, or have you drop it off at the firm yourself.
A lot of bookkeeping firms also have accountants working in the office. This means it would be an easy transition from year-end bookkeeping to the tax season duties. If the bookkeeping firm you are considering does not have their own in-house accountant, they may be able to suggest local accountants that they have worked with before.
A Firm’s Availability
As discussed earlier, a firm has numerous bookkeepers working together in one building, this allows for maximum availability. If one bookkeeper is sick or goes on a holiday, another bookkeeper in the office can take over anything that needs to be done.
The Experience Within a Firm
The bookkeepers that work in a firm can have a wide variety of experience. Some may be brand new to the field, while others are very experienced. It is important to ask your potential bookkeeping firm what quality of work they guarantee.
Finding a Firm For Your Business
Just like when searching for a freelance bookkeeper, using the internet is a great source for finding firms that have good reviews and testimonies. Look for customers that the firm already has that are in your same industry. Don’t be afraid to take your time and do your homework, having a reliable bookkeeping solution is important for your business’s success.
While a freelance bookkeeper or a bookkeeping firm may be local and prefer to work remotely, there are also fully virtual bookkeeping solutions you can look into. While remote bookkeeping solutions can be considered similar to firms, they are usually more affordable. Many small businesses choose to use virtual bookkeepers.
Virtual Bookkeeping Costs
Most remote bookkeeping services charge a flat monthly fee, based on how intricate your company’s bookkeeping needs are. They will look at how many accounts they will need to track for you and the frequency of your transactions. This may include loans, and credit lines as well.
For a small business, with relatively simple finances, selecting a remote bookkeeping service (like Remote Books Online), tends to be the most affordable option.
Virtual Bookkeeper Information
One perk some online bookkeeping services offer is the option to automatically import your financial information. This means your bank and credit card accounts, for example, will quickly and easily be available to your bookkeeper. However, if you have physical paperwork that needs to be sent to your bookkeeper, you will have to scan it to make a digital copy first.
When looking for a potential remote bookkeeping service, always make sure they are capable of collaborating with accountants. Remote Books Online is a service that has bookkeepers that will work directly with your accountant to provide everything necessary for filing your taxes. They also offer to provide a CPA, if you do not already have one.
Virtual Bookkeeping Services Availability
Just like bookkeeping firms, remote bookkeeping services employ multiple bookkeepers to be available to complete your bookkeeping tasks. This allows you to be confident there will always be someone that can be working on your books, even if sickness or vacations occur.
Having a team of bookkeepers also ensures that even during the busiest season, tax time, your books will be completed, closed, and ready for the accountant.
Virtual Bookkeepers Experience Level
Again, similarly to firms, you should also find out what quality level is guaranteed when it comes to your books. Remote Books Online, for example, provides in-house training and continuing education on bookkeeping for all of their bookkeepers. They also have multiple full-time staff members that focus solely on quality and standards.
How Important are Bookkeeping Certifications?
Since there are no legal requirements to becoming a bookkeeper, earning any type of certificate is optional. This does not apply to accountants, who have specific degrees and licenses that are required. Having a bookkeeping certificate can be valuable and should be taken into consideration in the hiring process.
Certified Public Bookkeeper
This license is certified by the National Association of Certified Public Bookkeepers (NACPB). This certification is more accessible to earn.
To receive this certification, you must have at least one year/2,000 hours of bookkeeping experience, complete the certification exam, and agree to follow the CPB Professional Code of Conduct.
The American Institute of Professional Bookkeepers (AIPB) certifies this designation.
To become a CB, you must have two years of full-time bookkeeping experience, sign a code of ethics, and pass the four-part exam.
Both the CPB and CB credentials are widely accepted and respected in the United States.
After finding the right bookkeeper for your company, you will be able to understand your business better and can start making plans for future growth. Next, you will need to find an accountant, if you do not already have one. Remember, the bookkeeper and accountant work together to complete the accounting process as a whole.