What Can I Expect from A Bookkeeping Service Provider?

Bookkeeping is the engine that keeps any business running. It informs you of your income versus expenses, and helps you reduce your taxes. Without accurate and organized bookkeeping, business owners won’t be able to make confident decisions, whether they’re considering upgrading service vehicles or taking out a new loan. Companies can’t afford to go wrong in this area, which is why many hire a bookkeeping service provider.

‍

According to a 2023 survey, 71% of organizations in the US are outsourcing their accounting. In addition, 65% need full-time support for tax compliance. The more a business grows, the more these tasks become so complicated that only experts can do them right. In this article, you’ll learn the services you can expect when outsourcing to a bookkeeping service provider. We’ll also give you practical tips in choosing your provider and what to avoid when working with one.

‍

Services Offered by Bookkeeping Providers

Outsourced bookkeeping services are third-party providers that record, store, and reconcile a business’s transactions. They offer cloud-based (or online) platforms and software that will automate these tasks so you don’t have to input your entries or consolidate your worksheets for reports manually. These tools also help you monitor your accounts receivable (payments owed to you by your clients) and accounts payable (payments you owe to your suppliers or vendors).

‍

Here are some features that online bookkeeping services provide:

‍

• Cash and Accrual Accounting are the different methods you can use to record revenue. Cash Accounting records the date when you actually receive cash, while Accrual Accounting records the revenue as soon as you complete the service or send an invoice.
• Transaction Categorization automatically records your transactions based on predefined categories, such as Revenue, Operating Expenses, and Taxes.
• Daily Expense Reconciliation matches your receipts, credit card statements, and expense reports with what’s recorded in your books.
• Bill and Invoice Payment Matching matches your biller’s invoices to your actual payments to ensure accuracy and avoid overlooking due dates.

‍

In addition to these features, bookkeeping service providers offer related services that automate other areas of financial operations.

‍

• Financial Reporting/Analysis: These platforms can generate financial reports anytime, anywhere so you have updated information when you need it. Examples of reports include Profit and Loss (or Income) Statements, Cash Flow Statements, and Job Costing.
• Tax Planning and Preparation: Tax calculations and filing can be tricky because they depend on your business or industry. Bookkeeping service providers have experts who know which of your transactions can be considered a tax deduction or credit.
• Invoicing: Bookkeeping service providers have tools that can automate your invoicing system by creating templates for your particular products or services. They can also track overdue (aging) invoices and can set up schedules for recurring and non-recurring invoices.
• Payroll: Payroll is another area that can be complicated, depending on your state and the types of workers you have. Bookkeeping services can set up a payroll system that’s tailored to your business so you’re always compliant with labor laws.
• Expense Management: Accurate expense tracking and categorization are key to reducing your taxes. Bookkeeping providers can help you create a system that digitizes receipts so you never lose them, and records and categorizes your expenses as they happen.

‍

Three Major Benefits of Hiring a Bookkeeping Service Providers

‍

As your small business grows, you will likely need a service provider that has flexible and convenient tools that automate your bookkeeping. Here are the major advantages of working with one:

‍

1. Integration With Business Software

‍

Most bookkeeping service providers have partnerships with technology companies whose systems are well-integrated into their services, making it easy to connect to popular tools like QuickBooks Online. This means that you don’t have to worry about redoing your existing accounting systems or retraining your staff. In most cases, you won’t need to hire a separate provider for each additional service, either.

‍

2. Customization and Scalability

‍

Bookkeeping service providers analyze your business to determine which solutions would directly address your needs. This includes evaluating your potential for business expansion, such as by accommodating more data, transactions, and analytics tools. For example, you might be struggling with unpaid invoices as your client base grows. In this case, your provider might recommend a bookkeeping system with invoice and billing tracking features.

‍

3. Flexible Cost Structures or Pricing

‍

Bookkeeping service providers have different pricing tiers to suit your needs and budget. You can select which services you want to make use of now, and then add more features when your business needs them. More importantly, you can choose to start or stop their service at any time. This means you save on long-term labor costs, such as maintaining an in-house accounting team.

‍

How to Choose the Right Bookkeeping Service Provider for You

‍

With many bookkeeping providers on the market, it can be overwhelming even to start your search. Here are the characteristics you should look for:

• Professional Certifications such as Certified Public Accountant (CPA), Chartered Accountant (CA), or Certified Management Accountant (CMA)
• Experience with small and medium enterprise clients in your industry
• User-friendly accounting tools that can integrate with your existing software
• Responsive customer service and support (check reviews or reach out to their current clients)

‍

Pitfalls to Avoid When Working with a Bookkeeping Service Provider

‍

While outsourcing brings convenience and flexibility, there are some practices or scenarios that you need to avoid to ensure you’re maximizing these services.

‍

• Infrequent Communication

‍

Most bookkeeping solutions are self-service and operate 24/7. However, you should still talk to your account manager or contact. Schedule at least a monthly meeting with them to go over your concerns or potential services you want to add, and don’t hesitate to ask for additional training if you’re unsure of specific features or functionalities.

‍

• Not Prioritizing Data Security

‍

It’s now common for online platforms to experience a cyber attack, especially for eCommerce and financial service providers. Before you even sign a contract, ask your provider about their cybersecurity measures and how they plan to protect and back up your data in case of a data breach. Contact them immediately as soon as you notice unusual activity or if you think your data has been compromised.

‍

• Not understanding All the Service Fees

‍

We know that reading contracts is as exciting as reading a grocery list, but don’t skip the fine print! Go over all potential fees with your provider so you don’t get surprises when your billing statement comes in. You might also be able to negotiate which of these fees can be reduced or waived.

‍

Optimize Your Bookkeeping With Decimal

‍

Choosing your bookkeeping service provider is not easy, but Decimal can make it stress-free. Our bookkeeping services include invoicing, tax, financial reporting, and payroll support. We also have a network of technology partners who can build the best accounting system for your business.

‍Schedule a meeting with us to start working with a provider that prioritizes your success.