Should You Outsource Your Bookkeeping

bookkeepingAdvice and top tips on whether you should outsource your bookkeeping or do it yourself.

Bookkeeping In The First Year

We often encourage new business owners to attempt their bookkeeping themselves in their first year. There are various reasons for this:

  • Encourages business owners to understand their numbers and implement financial controls.
  • If they do wish to employ a bookkeeper in the future or outsource then they will understand the complexities and amount of time it takes to complete the books well.
  • If they have time to do this it could save some money when cash could be scarce at the start of a venture.
  • Gives them an understanding of the system they are using, so that they can use it for management information in the future, and also check that their future bookkeepers are doing a good job.

Considerations For Being Your Own Bookkeeper

If you are considering preparing your own bookkeeping then I would recommend the following:

  • Consider what system would be best for your business, and future proof it, as it can be expensive to change later.
    • Think about what you need from the records, what your accountants require and what are statutory requirements.
    • Do you need an integrated system with your CRM (customer record management) system, an online sales system etc?
    • Do you want to use a software package (on or off-line), customised spreadsheets or manual ledgers.
  • Ensure that you get training if required for whichever system you use, and also an introduction to the basics of bookkeeping.
  • It is essential to have a bank account reconciliation procedure.
  • Check whether the records are easily understandable of others, e.g. your accountant or if you had an HMRC records check.

Considerations For Getting A Professional Bookkeeper

If any of the following apply to you, you should seriously consider getting a professional to do the bookkeeping:

  • You don’t have the patience for software systems, spreadsheets etc.
  • You have a shortage of time, running your business should be your priority, and if you are at maximum capacity outsource anything that you can to relieve you.
  • You don’t consider yourself numerate, otherwise your bookkeeping could take an inordinate amount of time.
  • You aren’t organised and hate administration.

Advantages Of Outsourcing Your Bookkeeping

There are various advantages of outsourcing your bookkeeping, or employing an in-house bookkeeper:

  • Allows you to view the reports at a management level and not get bogged down in minutiae.
  • Can go hand in hand with good financial controls, such as cash forecasting, debtor management and budgeting.
  • If you have excellent records you should find that your accountancy bill will be significantly less than if you have poor records.
  • Ensures high quality records, so that you can take appropriate management action, e.g. understanding if certain clients are constantly late paying you.

Finding a Good Bookkeeper

What to do when looking for in a bookkeeper:

  • Ensure that they are highly organised, numerate and communicate well.
  • Ask for references or referrals.
  • There are a lot of substandard bookkeepers so ensure that you get references and referrals.
  • Check that they have relevant qualifications, e.g. AAT (Association of Accounting Technicians) and ICB (Institute of Certified Bookkeepers).

Other Outsourced Bookkeeping Considerations

Other tips if outsourcing:

  • Ask your accountant to feedback their view of the standard of bookkeeping.
  • Ask your bookkeeper to give you reports, if using a software package there will be numerous reports available.
  • If using a self-employed bookkeeper make sure that you have a service contract with them, so that HMRC don’t view you as their employer.

If you need any guidance with outsourcing your bookkeeping or setting up your own bookkeeping system please do not hesitate to contact the team at Goringe Accountants.

2016-10-23T17:07:31+00:00 January 6th, 2012|Accountancy|6 Comments

About the Author:

Nicky Larkin
Nicky Goringe Larkin is a Chartered Management Accountant who founded Goringe Accountants Ltd. - British Accountancy Awards 2013 Runners Up and awarded 'Highly Commended' accolade. Nicky is also Chair of the regional Federation of Small Businesses (FSB) as she is passionate about ensuring that Small Business issues are heard at the local and national level.
  • That is so true Nicky. As an author and business man, I can relate to how you said “Ensure that you get training if required for whichever system you use, and also an introduction to the basics of bookkeeping”. I hope more people discover your blog because you really know what you’re talking about. Can’t wait to read more from you!

  • Daniel, thank you for your comments. Thanks for highlighting the training element, as sometimes it easier to produce accounts from scratch then trying to sort out badly prepared books. I am aiming to write one blog a week, so there should be lots more to read!

  • Start like what I did! Initially I outsourced it and then I started doing it on my own. After Inc Magazine voted my company as one of the fastest growing companies, I have become very busy, but I still mange to do it on my own.

  • Excellently said Nicky. I like how you have highlighted both the sides. But on a personal note I would like to outsource bookkeeping services. This way I get a professional final result and I am free to focus on core business administration.

  • alicesharma

    Please keep posting these type of articles. Excellent blog design also. Thanks.

  • Hello Nicky, I completely agree with your view that the business owners / business stakeholders may try managing their finances themselves in the initial year (or initial few months) as that would bring into light the real challenges that as a outsourced bookkeeper and accountant we face when managing the accounts of businesses.

    As a accountants and running a practice in India, Its been immensely difficult to make the business owners understand the complexities involves in accounting and that a proper record keeping consumes time!
    Off late, I have been also part of an outsourcing bookkeeping initiative and am managing the accounts of start up businesses across the globe including UK – US and Australia.

    Please notify me again when you write more articles. It is great to be in touch with you