If you are a small business owner, you know that managing your finances is crucial to your operations.
Bookkeeping involves keeping track of all your financial transactions, such as sales, expenses, and asset acquisitions. Accurate bookkeeping is essential for financial stability and growth but can be time-consuming and complicated.
Outsourcing bookkeeping can be an excellent solution for small businesses to save time, reduce costs, and ensure accurate financial records. In this article, Unloop will explore why outsourcing bookkeeping can benefit small businesses and provide a guide on how to outsource bookkeeping.
Why Outsource Bookkeeping?
You might be asking yourself why you must change your bookkeeping and accounting practices. These processes have been working for you for most of your time doing business and will likely continue to do so. Yet, there's no denying that there are plenty of benefits when you cross over the virtual bookkeeping and accounting fence. Here's what you can look forward to.
Speeding Up Accounting
One of the essential benefits of outsourcing bookkeeping is efficiency. If your books are done entirely online using cloud-based software, it becomes more efficient. Things such as bank reconciliation, locating transaction errors, and preparing financial statements will speed up. This results in a more efficient accounting system.
Focusing on Core Business Activities
As a small business owner, time is your most important investment, and it's limited. Outsourcing bookkeeping buys you time and lets you focus on your business activities that truly matter while leaving the financial recordkeeping to professionals. Doing so will let you spend time growing your business, developing new products and services, and expanding your customer base.
Saving Effort and Resources
Outsourcing bookkeeping can reduce effort and retain resources. By hiring a professional bookkeeper, you eliminate the need to train an in-house employee, buy software and hardware, and maintain office space. Professional bookkeepers can also complete the work faster and more accurately, saving you valuable time and reducing the risk of errors.
More Accurate Financial Records
Keeping accurate financial records is crucial for small businesses. That's because bookkeeping errors can lead to inaccurate financial statements, tax penalties, and even legal problems. Outsourcing bookkeeping ensures that your financial records are in excellent shape.
Professional bookkeepers are experts in their field and have the knowledge and experience to ensure compliance with accounting standards and regulations.
Access to Expertise
Outsourcing bookkeeping provides access to expert knowledge and skills. Professional bookkeepers stay up-to-date with the current changes in the accounting world and other important matters, such as tax laws and regulations, to ensure their practices are up to par with what's currently accepted.
Ecommerce accountants and bookkeepers also keep up with the latest updates in the industry so they can understand how these changes will affect their recordkeeping and accounting processes and ensure your business remains compliant and keeps accurate records.
Access to Accounting Technology
Outsourcing your accounting, especially if you come from a traditional business, will expose you to a new and better way of doing things in your business's accounting wing. A lot of virtual bookkeeping and accounting professionals are adept at bookkeeping software and applications. If your financial records need to be digitized, they can help you transition.
If you're an ecommerce business owner who invested in accounting software, the transition from in-house to outsourcing your accounting will be easy due to the experts’ familiarity with the tools you use.
Being Ready for Tax Filing
Tax season is one of the busiest times for entrepreneurs, and for most who already have a lot to juggle, tax preparation and filing can be too much. This causes penalties for missed tax payments.
Outsourcing makes business owners ready for the tax filing season. By passing the weight of the work to qualified bookkeepers and accountants, they can continue with their core business activities and take on a monitoring capacity when filing taxes.
Adapting to Growth
With cloud-based accounting software run by experts, you can be sure that your bookkeeping and accounting system will be agile and ready for growth. Every abrupt demand shift will keep the system steady, allowing every growth strategy you formulate to be smooth because your adaptable accounting system is prepared to take on the challenges.
You can scale your business knowing that your bookkeeping and accounting team can handle the data load. As your revenue soars, you will continue to have accurate reports, seamless payment processes, and timely payments.
How To Outsource Bookkeeping
Now that you know why outsourcing bookkeeping can be beneficial, let's explore how to do it. Here are some tips you can apply.
Identify Your Needs
Before you start looking for a bookkeeping service, you need to identify your needs. What specific services do you require? Do you need help with accounts payable, accounts receivable, payroll, or all of the above? Knowing these things will help you identify the services that can meet them.
Research Your Options
Once you've identified your needs, you can start researching your options. Look for bookkeeping services that specialize in working with small ecommerce businesses. Read testimonials from other clients that can vouch for their experience. You may also ask for recommendations from your network of business owners and vendors, too.
Evaluate Your Options
Once you've narrowed your list of potential bookkeeping services, it's time to evaluate them. Schedule a consultation with each service to discuss your needs and get a sense of their qualifications, experience, and expertise.
What Outsourced Bookkeeping Services Should Offer
To find the right service provider for your business, you must know what accounting services they offer. This way, you can get familiar with the options for your business. Here's what you should look for.
Virtual Bookkeeping
What makes outsourced bookkeeping valuable for ecommerce business owners is the remote feature. They can have their entire bookkeeping and accounting process done by a team of experts from another location.
Documents and receipts become electronic files at a snap of a camera lens, so all the necessary information to substantiate every transaction is converted online, making remote bookkeeping services a viable option.
Virtual bookkeeping services must have a roster of skilled accountants that can record transactions accurately, generate financial statements, and, on top of that, know the tools and software to make their work efficient.
Accounts Payable Assistance
Ecommerce businesses are prone to rapid growth because of their wider reach. As sales increase, so do expenses and the complexity of transactions. This poses a challenge to cash flow management, and if the ball drops on a growing ecommerce business, it can cause damage such as an unpaid obligation or, worse, insolvency.
It boils down to managing accounts payable. For your business to continue running smoothly, you have to control the frequency and amount of cash disbursement according to the business's obligations. So, the team of experts must know how to set up an excellent payment approval and processing system for you to take control of how you spend your business's cash.
Revenue Forecasting
Outsourced accounting and bookkeeping services must understand how to accurately record and manage financial data from different cost centers online. Doing this will be crucial in recording one of the most important accounts in ecommerce businesses—the Cost of Goods Sold (COGS).
COGS is an essential account in many ways. It can give you insight to your production or purchase efficiency, but it also serves as a data point to forecast potential revenue your business will have. Experts must know how to accurately calculate COGS and forecast revenue as important activities such as planning growth strategies or selling a company rely on it.
Payroll Management
Every business has employees. Even if you own a one-person ecommerce business operation, it can grow big enough to employ many people, which the business has to pay.
Accuracy and promptness of payment are crucial to keep a growing business's gears running. Doing this requires a team of accountants and bookkeepers who are adept in payroll accounting and taxation.
Tax Support and Assistance
Another thing that all earning entities are bound to pay is taxes. In the ecommerce realm, sellers face two tax challenges: sales tax and income tax. Both these obligations require different tax preparation and assistance.
When outsourcing accounting services, the experts must know how to support each type of tax. For sales taxes, they should offer assistance and guidance in setting up tax collection systems in your online store to deduct customer purchases automatically.
If it's income tax, they should be able to provide tax information and financial reports and collaborate with CPAs during the tax filing process, so you don't have to stress about filing on time.
Outsourced Bookkeeping and Accounting Services on Autopilot
Outsourcing to an accounting firm or agency should feel like your financial system is on autopilot. It should run like a machine on its own, needing only periodic checking and maintenance from you. That's the value Unloop offers with its bookkeeping and accounting services.Unloop has a team of experts who can do all the abovementioned services. They are more than just accountants and bookkeepers. They are ecommerce-specialized and act as your business partners invested in your growth. If you want to know more about how outsourcing can improve your business, book a call.