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As a business owner, you are required to make smart decisions that would not only cut down unnecessary costs but would also increase the profits and, you are responsible for overseeing all the operations of the business.
If you have just started up a business, one of the best ways to eliminate those unnecessary costs is to outsource your work. Now, you cannot outsource all your work; you have employees for a reason. But, some functions such as manufacturing, accounting or bookkeeping, etc. can be performed by external parties.
What is Outsourcing, and What Are its Benefits?
Outsourcing is when a company sends a particular function (such as of accounting, manufacturing, marketing etc.) outside. It means that the work is not done by company employees by external organizations or individuals. Over the years, many businesses, big or small, have had a lot of their work outsourced since it helps to get the work done efficiently and with minimum costs. Here is how outsourcing work can benefit the business:
- Cost-Effective (in terms of employees): By sending your task outside of the company, you do away with having to pay employees a fixed salary for the same work. You just need to compare different outsourcing contractors to find out one that would offer the best services at a lower cost. You would only need to pay a contractor when you need to have the work done so you end up saving money.
- Professionals: You should take the time to compare and then choose a contractor, so you have an experienced professional doing the job. A professional will do the work as per your needs and at reasonable costs so you have excellent results at a much lower price than what you would have paid if you had employees doing the same work.
- Concentrate on Other Areas: When you outsource a particular task, you know that a professional is doing it. You can then focus on other areas of work, ones who need urgent attention and would not need to worry about having to constantly supervise your employees as they do the work. For instance, if you wish to build a better image of your company, you can divert your attention towards marketing or advertising while a professional contractor can do other work such as managing taxes etc.
- Cost-Effective (in terms of equipment or technology): Not only do you save money by having a contractor and not an employee do a particular task, but you also save on any machines or technology you would need to buy. The outsourcing contractor would have all the necessary equipment or facilities to do the task required. Hence, it eliminates the need for you to make additional investments.
What is Bookkeeping?
A bookkeeper is responsible for systematically recording all the financial transactions made by the company. This creates a proper record of such transactions which comes in use when determining the taxes the company would need to pay, assessing profits or losses, making future business decisions, etc. Having a bookkeeper is very important for a business since it is on the basis of such records that the company would properly understand its financial situation. Bookkeeping comes under the wider category of accounting; an accountant can be a bookkeeper, but a bookkeeper cannot be an accountant.
If you have just set up your business and are looking to cut down on some costs to increase your profits, one of the best ways to do so is by outsourcing your bookkeeping. Until you can afford to hire a full-time accountant, a bookkeeper can perform the basic task of documenting and organizing the company’s financial transactions. This way, you would not be running your business illegally, would be able to have a clear picture of your business’ fiscal state, and can make further decisions to boost profits.
Factors to Keep in Mind When Outsourcing Your Bookkeeping
Since keeping track of transactions is a key factor in how the business should be run, it is important that there is someone to make these records. Every business, whether new or not, should have an accountant, but if you can’t hire one at the moment, it is best to at least outsource the bookkeeping work. Here are some points to be considered before outsourcing said work:
- The Costs of Outsourcing: You need to take the time to research different bookkeeping services or contractors so that you can get a general idea of what the average cost is so that you can ensure that you won’t end up paying more. Hiring a contractor to do bookkeeping for your business overpaying your own employees for the same task makes sense only when you actually save money. If you end up paying the contractor more or almost the same as what you have had to pay your employees, outsourcing the work serves no purpose then. Hence, when outsourcing, you need to make sure that it is actually cost-effective.
- Reliability: An important thing to keep in mind when having an external contractor do the bookkeeping is whether they would actually be able to deliver results. If you partner with an individual or a company for bookkeeping, you need to ensure that they do the job well and on time. One way to know if they would be able to meet your expectations is to refer to a lot of reviews and, if possible, to go over their previous work. They would be handling your business’ finances and thus, it is important that you choose a very reliable outsourcing service.
- Choosing the Right Contractor or Company: Again, an external outsourcing service (a contractor or a company) would have access to your company’s financial records, so it is imperative that you choose only the best. You must conduct thorough research of various services available before you actually select one. Compare the services they offer, their costs and try to review any work they have previously done.
- Communication is Key: Since it is not a company employee doing the bookkeeping work but a contractor or external company, you must make sure to have proper communication with them. Before you pick such a service, make sure you would be available to get in touch with them at any given point of time to check the progress of their work etc. Not being able to do so could mean you would have no idea how the work is being done and would also not be able to suggest any changes or modifications.
Bookkeeping is a very important operation in a company, and care must be taken to ensure that only the best contractor or firm is enlisted to handle and record your business’ financial transactions.