Bookkeeping services, when should you outsource? This is a common question or issue that many small businesses encounter. Many small business owners are doing there own bookkeeping/ accounting utilizing software like Quickbooks or Xero. As a trusted business advisor, I certainly understand the need to keep administrative costs down. The issue is what is being sacrificed in order to make the time to do the bookkeeping work.
I have sat down with a number of small businesses and quantified the alternative cost incurred by the business, or business owner, for doing their own bookkeeping, or accounting, versus using that time to do other services such as marketing, operations management or direct production work. Frequently, the alternative cost was greater than the cost of outsourcing the service to an accounting firm such as ours, Joseph F. Fragnoli, CPA, PC in Nashville, TN. Whether it pertains to bookkeeping services or other services such as IT maintenance, payroll services, janitorial or what have you, I frequently advise business owners to stick to what they do and know and try to outsource these other services unless the company is large enough to hire a staff person to perform those tasks.
The number one piece of advise that I can offer a business owner is to determine, that is, quantify the value of your time and the time of your key personnel. Place an hourly dollar value on your/ their time. Then, determine the amount of time it takes to perform certain services that can be outsourced to a respective service provider. Once you do this, get a quote for the service to be performed by an outsource firm. Many times the cost of outsourcing the accounting, bookkeeping and payroll services is less costly than the alternative cost of the business owner’s time or the wage cost to paying an employee to perform the same service.
Lastly, the business owner needs to consider the quality of the service being performed internally versus the quality of the work generated by the outsourced firm. In my practice, we almost always have to go through the books of clients who perform their own bookkeeping and clean up general accounting errors and we have to book a number of entries to generate a complete set of books for accurate and complete financial statement preparation and for generating accurate trial balances for tax return preparation. As a result there are costs incurred that could be absorbed in outsourcing the bookkeeping services to our Firm. As a result, a number of them have come to the conclusion it is more cost effective to outsource the accounting services.
If your business is at a crossroads where you need to consider outsourcing your accounting or bookkeeping services, please contact us directly, Joseph F. Fragnoli, CPA, PC, at (615) 678-4751 or firstname.lastname@example.org. We utilize both desktop accounting software as well as cloud based software so we can services clients anywhere in the continental United States and we perform face to face conferences, at our clients’ place of business, at least four times a year.