Keeping proper bookkeeping records is not only necessary for filing state and federal tax returns but also the only way to thoroughly analyze your business operations and cash flow so that you can make intelligent financial decisions.
However, not all businesses have the expertise or bandwidth to manage bookkeeping and accounting operations, resulting in poor financial structure and, sometimes, business failure.
This is why hiring an online bookkeeping service provider is popular among small-mid scale businesses. Although it’s a great option, many small business owners make mistakes while finding the right online bookkeeping service provider.
This article focuses on helping you find the right bookkeeping service provider. So, without further ado, let’s get started with the first doubt you’d have while outsourcing your accounting operations.
Freelance Bookkeeper vs. Online Bookkeeping Agency - Which One to Go With?
Whether you prefer working with someone down the street or online in a different city, outsourced accounting services come in two varieties: employing a local accountant or a virtual accountant.
Here are both approaches:
Hiring a Freelance Bookkeeper
Businesses with small budgets often hire a certified public accountant to handle their bookkeeping and accounting operations. These individuals work alone as a freelancer, hence, called freelance bookkeepers.
Working with you directly, the freelance bookkeeper completes your accounts. The freelance accountant can work either online or in person, based on your choice.
Pros of Freelance Bookkeepers
Freelance bookkeepers are a great choice when:
- Your budget for accounting operations is low
- You don’t intend to find insights from your business accounts
- You only keep your financial information in physical records
- You’re looking for someone on an ad hoc basis
Cons of Freelance Bookkeepers
Still, experts forbid businesses from working with freelance bookkeepers. The reasons are:
- It’s hard to know exactly what qualifications or experience level a freelancer will bring to the job, especially without personal recommendations
- Despite having the necessary skills, freelancers have a smaller client base, which makes it harder to determine which areas they specialize in, providing financial services and advice
- An accounting firm employs numerous financial professionals, whereas a freelancer is a one-person operation, so a difference in method or purpose can terminate the association.
- Lastly, you cannot expect corporate-level data security from freelance bookkeepers
Still, it is your choice whether or not to hire a freelance bookkeeper. However, as accounting and bookkeeping tasks take place online nowadays, most businesses prefer online bookkeeping because it is more accurate, cost-effective, and simple.
Hiring an Online Bookkeeping Agency
Choosing an outsourced accounting team to assist with books is the most popular option among businesses because it has many benefits for businesses such as. Looking online will give you a variety of options – You can simply find a firm that provides small business accounting services to match your firm’s requirements.
Pros of Online Bookkeeping Agency
- Online bookkeeping service providers have an in-depth understanding of accounting systems, tax considerations, and cash flow challenges, making them the best choice for any organization with complicated finances.
- An experienced bookkeeping service provider can help you decide on the best structure for your business, as well as set up financial management accounting software.
- Having several accountants and bookkeepers working under the same roof, online accounting firms are able to provide more specialized services like bookkeeping for eCommerce, healthcare, restaurants, and more.
- Businesses that use accounting firms are provided with better continuity than solo operations, which ensures better continuity for businesses utilizing their services.
- Lastly, the online bookkeeping agency can help you get your accounting and bookkeeping operations online, ensuring data security.
Alright, you get the point. The best choice is to go with an agency that provides online bookkeeping services. But given hundreds of options out there, how can you make sure you hire the right agency?
How to Choose the Right Online Bookkeeping Agency?
It is crucial to entrust your business’ finances to a credible accounting firm, and finding the right match begins with recognizing that some attributes are non-negotiable.
Here are some traits you should look for in an online bookkeeping service provider before hiring them:
1. Relevant Experience
Before outsourcing in the United States or elsewhere, you should check the accounting firm’s history in terms of work experience and positive reputation in the market. Ask their clients (particularly from your industry vertical) for references so that you can verify. This will also help you better understand the firm’s working style and quality of work, and moreover, you can ask for case studies.
Having a grasp of industry trends and operations will enable the accounting firm to identify mistakes and patterns in your data. This can not only safeguard against reporting mistakes but also help you take advantage of tax savings opportunities.
2. Cost to Hire
There is no doubt that outsourcing is a cost-saving strategy. However, before outsourcing to a bookkeeping service provider, you must evaluate several options to minimize the overall cost of hiring. You can begin by evaluating the costs of outsourcing and the opportunity costs of employing in-house staff.
Here are the median hourly rates charged by online bookkeeping assistants on Upwork:
To keep costs down, you should select a firm that provides accounting services at a price that matches your budget. Ideally, it’ll be less than the cost of hiring dedicated accountants in your area. It will confirm the cost-effectiveness of the service if its quality matches the amount you spend.
3. Reliability
Although a quality bookkeeping firm may have the right certifications, that doesn’t guarantee reliability. You should find long-established firms in the market that consistently demonstrate their integrity.
Prior to hiring an outsourcing company, you should read through their past client reviews and browse through independent online platform assessments to determine reliability. Also, ask them about their current clients who can provide honest assessments of the timeliness, efficiency, and confidentiality of their services.
4. Staff Training
It’s true that most accountants devote time to staying up to date on the ever-changing tax and business regulations that could affect your company and enterprise. However, it shouldn’t end there.
You should make sure that the company you hire invests in upskilling its employees. This will make sure that your business stays at the forefront of your industry.
Corporate training institutes like Corporate Finance Institute help these companies upskill their employees. You can ask the company you’re considering to provide certifications of corporate training. If you need, you can test their expertise via accounting assessment tests. Here is one from the Corporate Finance Institute – Accounting Test
5. Communication
Some bookkeepers are much better at dealing with numbers than they are with people. Still, the agency you pick for your business must be competent at dealing with both people and numbers. They should be capable of communicating properly and explaining things in a manner that makes sense to you.
Although this factor doesn’t seem critical, your business is as unique as you are, and a bookkeeper who adopts a one-size-fits-all approach to communication will be unlikely to meet your needs or expectations.
6. Flexibility
The right outsourcing companion will provide a variety of engagement options to ensure that the job gets done on time without any downtime. Because of this, a flexible working approach is the most effective way to finish the job on time.Â
The outsourcing provider should be willing to adjust their working style to suit your demands. As an example, if the outsourcing company has different pricing and working styles, both parties will benefit.
7. Transparency
It’s critical to maintain transparency throughout the outsourced accounting process. Your company might be affected by any scam or malevolent intent of the outsourcing firm if you are not careful. Hence, you should examine the method of communication between the firm and its clients.
An outsourcing firm that hides critical data and doesn’t provide pertinent job updates is one you would rather not handle. All critical decisions should be reviewed by you. This is the type of transparency you should seek.
8. Data Security
Any breach of financial data security or privacy can result in serious consequences. There were cases in the past when financial data breaches resulted in catastrophes for organizations. Be it ransomware hit at BST & Co. or a spyware attack on Chinese tax software, data security breaches have always hit hard.
Hence, when hiring an outsourcing firm, you should ensure that it adheres to worldwide security standards and security techniques.
Non-disclosure agreements are binding against unauthorized communication of company information; you should get that signed before handing over your data to the outsourced company.
Make sure the company has the following certifications:
- Cyber Essentials
- ISO 27001
There must also be constant data safeguarding whenever two-way communication is required. We’re a renowned company that strictly adheres to all security measures. You can connect with our business consultants to know more.
Hiring Professional Online Bookkeeping Agency
Keeping track of your financials early on in your business may seem inconsequential — something you just have to tick off your to-do list to ensure everything is in order.
However, it’s actually a crucial business operation. Your finances will have a significant impact on your future growth and smoothness if you manage them properly early on. There are many alternatives if you don’t want to do finances by yourself, and they all have pros and cons.
You can hire a freelance bookkeeper, but it comes with a risk of service unavailability, unreliability, and data security.
Hiring an online bookkeeping company for small businesses or mid-size companies is the best foot forward for organizations of all scales. These companies tend to have expertise in several domains and are reliable to work with.
You can consider IBN Tech for your accounting and bookkeeping operations outsourcing. We’ve years of experience in several industries, and our team of bookkeepers and accountants is always updated with the latest industry trends.
Get in touch with our team to understand how our partnership can bring you fortunes.
