How to Outsource Bookkeeping Services

How to Outsource Bookkeeping Services

Small business owners and professionals are discovering that outsourcing your bookkeeping saves payroll, overhead cost and it’s a giant step in freeing up valuable time. For many owners, just the effort of hiring, training and managing a bookkeeper can take as much as 5 hours a week and if you’re doing the books yourself the numbers are even worse. As a business owner your time is best spent doing what you do well — working with customers.

Maintaining Control in Outsourced Bookkeeping

There is a common misconception that an owner will lose control if they outsource the bookkeeping. In a properly designed system a local accountant only takes over the process of tracking transactions such as sales, accounts payable and balancing the books, but only the business owner makes management decisions. Using online bill paying, the owner is the final word on who gets paid and when.

If you have great books or pretty sloppy books for the most part your customers never know. A generally accepted rule in business is to focus resources on tasks that add value to the customer relationship. Time spent on bookkeeping problems add little or no value to your customer relationship. Yet, books that are inaccurate or do not reflect the true health of your business provide no clue to managing your business.

Being clueless at any level about where you are making money or who is a good customer is not being in control. Cash flow is never a problem in business, it is a symptom of other problems, an outsourced bookkeeper can provide the answers and you will end up with more control of your business.

Professional Bookkeeper Certification

The Professional Bookkeeper™ certification by the Universal Accounting Center represents proficiency in applying accounting practices tailored for small to mid-sized businesses. It highlights the accountant’s dedication to their craft and their capability to deliver top-notch services to employers or clients. Whether you aspire to specialize in bookkeeping for small to mid-sized businesses or pursue credentials for career progression, consider enrolling in the Professional Bookkeeper Certification Program. 

This program caters to the growing need for skilled professionals in small business bookkeeping and accounting, through online bookkeeping and accounting classes offering a pathway to meet industry demands and excel in your field.

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Solving Hiring Challenges through Outsourcing

By outsourcing you solve the problem of hiring. Good bookkeepers with knowledge of accounting software are hard to hire, expensive to keep and in some cases difficult to manage. Your accountant controls the hiring process and your work is shared with a team so that if one person leaves you will not suffer an interruption of service. Because of new technology advances you now have the same alternative as Fortune 500 firms. Thirty five percent of America’s largest businesses outsource their bookkeeping.

Leveraging Technology for Efficient Bookkeeping

New technology makes this possible. The acceptance of the ASP (application service provider) technology allows the outsourced bookkeeper to ‘reach’ into your network and do the accounting tasks from their office. The owner uses the ASP to look at their books at any time from any connected laptop or computer. This allows the business owner to review in real time the progress of their operation at home or on the road. Some owners log onto their ASP and review the business health and progress daily rather than waiting a month for financials.

In most cases outsourcing will save you money as well. The most common pricing structure for outsourced bookkeeping is to charge 10% to 20% less than the current bookkeepers salary. Not only do you save on salary but also you have no overhead, management, hiring or training cost when using an outsourced service. The overall annual savings can be up to 50%.

The Role of Leverage in Outsourcing Success

The reason a trained business accountant is able to take over an existing process and deliver it back more cheaply is due to leverage, the most common of which is economy of scale. If the supplier does not have to significantly alter the way its current business function is set up and standardization has occurred, the opportunity for both supplier and buyer to benefit is great.

Technological advances have taken the cycle times in a business from several months to several hours, and our competitors no longer have geological restrictions or the hindrance of large bureaucracies. To remain competitive, it is imperative that a company rethink its strategies, take a hard look at where they are creating value for their customers, then focus on those processes. The most successful businesses of today have gone to outsourcing and now have time and money to spend on differentiating themselves in the marketplace.

The most common reasons management chooses to outsource certain business processes are

  • to reduce operating costs
  • improve company focus, improve quality
  • free up capital
  • increase capabilities not otherwise available and to reduce cycle time. 

If a buyer cannot receive an improved economic position as a result, then it should not outsource.

Tailored Solutions for Business Optimization

Universal Accounting Centre offers tailored business running solutions and business accelerators, empowering individuals with tools and strategies to optimize operations and accelerate growth in their newly formed businesses.

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Conclusion

The decision to outsource can be an easy one. If there is a company or individual that can do it better, faster, and cheaper than you, then you do not want to keep the work in house. Outsourcing has become an accepted business tool worldwide. By turning over business processes to companies that consider these tasks their core competency, organizations now have the ability to become more profitable, more efficient and far more competitive by focusing on the tasks that are most important.

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Listen: What Are Your Clients Really Saying?

When you put your ear to a seashell, you could swear that the rushing sound you hear is the very ocean from which the shell originated. Of course, you know it’s not really the ocean!

Hearing the voice of the client can be equally deceiving. You might think you know what your clients are saying, but how can you be sure? For example, when a client says “I’m disappointed with this tax return,” you might think the client is saying “I don’t think I should pay you!” or “I’ll never do business with you again!” In truth, however, your client just doesn’t like to pay taxes. Most unhappy clients are simply saying

“I want my problem to be heard.”

Solution:  Listen

“I want an apology.”

Solution:  Find out specifically what they don’t feel is right and apologize for any errors.

“I want reassurance that some action will be taken to fix my problem and to prevent it from recurring.”

Solution:  Offer to help them plan better for next year and set up an appointment to meet with them later in the year.

So listen carefully to your clients. Reassure them that you will resolve the problem to their satisfaction. Finally, follow up to make sure that you’ve fulfilled their needs — both voiced and unvoiced.

Tax Simplification: “Yeah, Right!”

This article goes into more detail about the reasons businesses will always have a legitimate need for accounting and bookkeeping services.

A recent student asked me how to respond to a well-meaning relative who felt that accounting was a dying occupation because of tax simplification. I’m often asked if a simpler tax code, meaning flat-tax or federal sales tax, would eliminate the need for accountants. Those who ask this question obviously don’t understand what an accountant does.

First of all, I don’t think such a tax bill could ever pass. Too many special interest organizations with powerful lobbying groups will lose too much to let any such bill pass without a fight.

  • Religious organizations will argue that their funding from contributions will dry up.
  • National homeowners’ associations will argue (and rightfully so) that homes will drop in value as mortgage interest will no longer be deductible.
  • Medical organizations will buy TV ads telling stories about people with debilitating diseases and high medical bills going to ‘tax prison’ because they lost their medical deduction.
  • And, those are just the obvious ones.

Plus, most tax simplification plans will tax the poor heavier and the wealthy lighter than they do now. That’s a hot-potato that neither political party will support.

No, the public will never let such a thing happen.

Even if we were to assume that such a tax program will be adopted, accountants will remain in high demand. Certainly simpler tax laws may eliminate tax preparers. But most tax preparers aren’t accountants.

The primary and most beneficial roles accountants perform are in the area of management controls, and cash management. A company stands to gain much more through staying on top of these areas than saving on lower taxes. Let’s face it, companies don’t go out of business because they are paying too much in taxes, but they will if they have poor controls, or poor cash management.

Big businesses certainly understand this. A large company I once worked for had four thousand accountants. Less than 1% of these accountants worked in the tax department. In other words, 99% of the accountants with this company were working on providing management with crucial information regarding profitability, while monitoring the company’s financial position. This company understood that income taxes are a necessary evil that require some attention, but the potential for business improvement is much greater in other areas.

So, do we ignore taxes? Certainly not! Taxes must be completed, and done correctly according to law. Besides, a good tax preparer may save a tax payer hundreds of dollars, if not thousands in taxes — sometimes many times the cost to have the taxes prepared.

Tax preparation will always be needed. And, my guess is that it will become even more complicated before becoming any easier.

Regardless of the tax law, however, accountants will always be a critical part of the business world.

Also, see the article entitled “Why are Businesses Begging for Your Services?” This is “must reading” for every freelance accountant.

Tax Tips – A Simple Estate-Planning Tip

This article shows you a great and somewhat unknown estate tax shelter and tax planning tip. This is something you can share with your accounting and bookkeeping service clients.

Many people have provided for their favorite charity in their wills. But not many people know about a simple technique that can accomplish their charitable giving goals — and pass more of their wealth on to their loved ones.

Here it is:  Instead of making an outright bequest in a will for charity, the individual should name the charity as a beneficiary of their company retirement plan or IRA. When they die, the charity will still get the amount they want it to — but their heirs will get a lot more.

This strategy is brought to you by a little concept known as “IRD.” This stands for “income in respect of a decedent.” When someone with a retirement plan dies and the proceeds of the plan are paid out, the money flows into the individual’s estate as IRD income. This money is taxable to the estate — and it may also be taxed as income to the person who ultimately receives it. When all of the taxing authorities get finished with IRD income, they can take around 80 percent of it. The individual’s heirs may see only 20 cents of every dollar the plan pays out.

Example:  Wilson has $300,000 in his 401(k) plan. In his will, he gives his retirement plan to his kids and he gives $100,000 to his favorite charity.
Result:  At death, the charity gets its $100,000 and the kids get their $300,000. But the kids also get this: a Form 1099-R. This form is sent to them by the retirement plan administrator because the $300,000 is taxable income to the kids.

In order for Wilson to leave more to his kids, all he has to do is eliminate the $100,000 to charity in his will. He also has to go to his employer to instruct it to send the first $100,000 from his 401(k) plan to charity when he dies.

New result:  The charity still gets its $100,000. And the kids still get their $300,000 — but $100,000 of it is a tax-free inheritance. They still get a 1099-R, but it’s for only $200,000 from the plan. The charity gets a 1099-R for the remaining $100,000 from the plan that it received. But the charity can rip it up because, as a tax-exempt organization, it pays no tax on this money.

This technique can also be used in conjunction with other assets that trigger heavily taxed IRD income. This includes savings bonds, unpaid bonuses, lottery winnings, unpaid rental income, and installment sales obligations.

The Power of Public Relations

As I have said to you in the past, the media – newspapers, radio, television and magazines are always searching for stories and angles. The key to good public relations is to determine who will be interested in your particular story or angle.

Just two of the many techniques which you can use to succeed with your long term public relations strategy are:

Provide news — Position yourself as an expert.

If you can do one or more of the following four things in a way which affects enough people — you can turn almost anything into news:

Solve a problem or create an opportunity

  • Identify a trend. Journalists love trends — especially those which affect a lot of people in their audience
  • Provide advice to the readers, listeners or viewers
  • Help the community

Patience is the name of the public relations game — it’s an activity in which there are few overnight successes. You really need to persevere and things will begin to fit into place. Harassing a journalist to publish your story is not a recommended practice.

Let’s focus on just one aspect — providing advice.

The sort of press releases which you can write and distribute which provide advice could include the following:

  • 7 Tips to Reduce Your Income Tax
  • Throw Away the Shoe Box — 10 Commandments for Good Record Keeping
  • 8 Often Overlooked Tax Deductions for Property Investors
  • How to Get the Most out of Your Computerised Accounting System
  • 9 Ways to Reduce your Taxes Which Won’t See You in Jail

It should be noted that these are snappy headlines which should guarantee that you capture the attention of the journalist, presenter or producer to whom you are forwarding your press release. You should always include the major theme of the press release in your first paragraph or you will guarantee only one thing — you will lose the interest of the recipient and you will not achieve publication.

Another strategy worthy of consideration is to add your own story or angle to a popular news item. This can often lead to substantial media coverage. It’s a good idea to keep your eyes and ears open for any tax changes to which you can add a local flavor or personal comment — you are most likely to gain some coverage and enhance your image in the process.
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