If you’re a small business owner, you would have very likely contemplated the idea of outsourcing your bookkeeping work.
Hiring your own bookkeeping and administrative team to handle year-round bookkeeping takes A LOT of work. And this can be incredibly costly.
For example, the average hourly wage in BC to hire a bookkeeper is roughly $21 an hour. according to Payscale. As a full-time employee at 40 hours per week, you’re looking at $3,300 per month, or $40,000 a year.
On the most conservative level, this is at least 50% more expensive than outsourcing it to a bookkeeping firm – and that’s only from a cost perspective.
Below, we lay out three compelling reasons for you should outsource your bookkeeping to a bookkeeping firm:
1. Outsourcing your bookkeeping does the job at a cheaper price
As we mentioned above, outsourcing your bookkeeping can still help you accomplish what needs to be accomplished, albeit at a lower cost.
Hiring one in-house bookkeeper would cost a business roughly $40,000 per year, and that’s before any employee benefits and payroll costs like CPP & EI.
If we compare this cost to outsourcing it to an online bookkeeping firm like Rooks, you’ll see the huge difference in cost savings:
Looking at Rook’s tiered pricing model, we can see that the ‘Essential’s’ tier goes for $199 USD/month, while the highest pricing tier costs only $899 USD/month, making out to be $2,400 USD and $10,800 per annum respectively.
That means the average small business owner saves between $19,000 – $30,000 per year by outsourcing their bookkeeping!
The reason as to why bookkeeping firms are so much cheaper is simple.
As bookkeeping firms are doing the same work for hundreds of clients, they are able to build a streamlined work-flow and process that allows the bookkeeping firm to work at a much more efficient rate, an advantage called the economies of scale.
Furthermore, an in-house bookkeeper’s work is often redundant: their job often entails reconciling the books once per day, while most bookkeeping firms do it once a month (although it can be shorter depending on what the scope of work is).
This drastically increases the inefficiency rate for an in-house bookkeeper, as they have to go through the same reconciliation process thirty times more often than a bookkeeping firm that would otherwise do it once per month.
Obviously, the benefit for the small business owner here for hiring an in-house bookkeeper is that it’d then be possible to get financial data that is updated daily – but the argument is whether the additional $19K-$30K cost is worth having the daily financial data. The answer, generally, is that it’s not worth the cost for a small business owner because daily financial data is a LOT less actionable for a small business than it’d be for an enterprise.
As a small business, your opportunity cost with money is too high. The $19K-$30K cost savings could instead go into other aspects of expanding your business operations, which is probably a much better use of your money!
2. Advisory and Peace of Mind
One of the biggest advantages of outsourcing your bookkeeping work is that you’ve essentially hired a whole firm of financial experts who oftentimes know more about the numbers than you do!
Personally, at our own firm, we offer a free half-hour meeting each month, where we sit down with our clients to go over their financial statements and KPIs, as well as areas for improvement.
Our clients often bring their own financial questions which we would provide advice for, such as, “What can I do to improve my net income”, or “Why does the income statement say I have a net income for June, but my bank account has less money this month?”.
If you had to hire a financial consultant to answer these questions for you at $50-$100/hour, you would’ve already got your $200/mo money’s worth by having us answer those questions instead!
I probably don’t have to tell you why it’s important to have an advisory board for your business, but if you don’t already have one, reaching out to a bookkeeping firm for advice is already a good start. They’ll have the experience and financial expertise in different business matters that your in-house bookkeeper often wouldn’t have.
As your business grows, your bookkeeping team will need to grow along with it.
Having one in-house bookkeeper may be sufficient for now when you’re handling $10,000 in monthly revenues, but what about at $100,000 monthly revenues or $1,000,000?
Imagine the work it’d take to manage a team of in-house bookkeepers, and the risk you entail by doing so.
And not only that – but what if your bookkeeper suddenly decides to quit one day?
As you can see, there are a lot of risks and headaches involved with having an in-house bookkeeper, especially as your business scales.
By hiring a bookkeeping firm, you’re essentially letting them handle all that hassle and responsibility.
More often than not, it just doesn’t make sense for a small business owner to hire their own bookkeeper.
There’s too much work involved, too much responsibility, and too expensive.
While there are some benefits to hiring your own bookkeeper, such as daily financials, the costs and efforts of doing so are simply too high.
At Rooks, we have a team of expert bookkeepers who are able to handle your books in Quickbooks Online. We’ll take away the headache of managing your books, at a lower cost! Try Rooks now.