How to outsource your accounting

Accounting is hard and takes time away from running the rest of your business. Finding the right partner can make life a lot easier. Learn about the different tools and search techniques at your disposal, and what to do once you've found a potential match.

You probably have more to worry about than recording and categorizing bills and invoices, and preparing for tax season. If you didn’t, the chances are slim you’d be looking for tips on how to get someone else to do your number crunching for you. Luckily, we have some ideas!

Companies now have more third party options than ever before when it comes to roles outside their wheelhouse. While accounting has traditionally been an industry that drags its feet when it came to embracing new technologies, we’re seeing a lot of great tech-forward, security-minded companies that are looking to bring bookkeeping and accounting services into the 21st century.

We’ve gone over some of the benefits of solid accounting practices in other articles, but they boil down to transparency for the founders, investors, and partners when it comes to when and where the money is flowing, as well as tax compliance, future cost savings, and ease of mind. As important as all these are, many companies just don’t have the overhead to pay for a team dedicated to monitoring every transaction the business makes.

An outsourced solution allows the team to focus on their IPAs (income producing activities) like developing and selling an incredible product or service. Nonetheless, trusting strangers with your financial info is scary, so you want to make sure that if you do decide to outsource, you’re going with a reputable provider that will help you scale your business, rather than drag it down.

So, how do I find the right partner?

The simplest answer, as always, is to Google it. But it’s not necessarily the best.

Slava of Intelli Bookkeeping always recommends getting a referral from a fellow entrepreneur, investor or trusted software partner who works directly with a vetted firm and can vouch for their business practices. If that’s too tall an order for your professional network, Steve Muller of Bookkeeper360 suggests looking into the user communities of software you’re likely already working with.

For example, Gusto, Xero, and QuickBooks all have fantastic tools to identify partners that are already trusted by other users on their platform. If they’ve been consistently reviewed positively by other companies that use similar tools as you, the chance that they can serve your needs is much higher.When you find a partner you’re willing to take a chance on, don’t be afraid to interrogate them and make them earn your business. Are they tech-savvy? Do they have sufficient security protocols in place to protect your sensitive data? Are their SLAs (service level agreements) modern, or is this an old-school accountant that’ll respond in maybe three weeks if they have time? Who are their other customers? You can ask to see their client list, or to speak directly to a paying business.

Most companies will prominently display their positive testimonials and positive user reviews, but make sure to check if there are any skeletons in their closet too. Reading up on the business on the Better Business Bureau, Google reviews, and Yelp is quick and easy, and may save you some big headaches in the future.

They check out, but how can I be sure it’s the right fit?

It’s a valid concern. Just because you found a company that does a good job for some, doesn’t mean they’ll be right for you. Slava suggests breaking it down by the business that you’re in. If you’re running a local pizza shop, you probably want an accounting or bookkeeping service that has experience with small businesses, specifically in the service or retail industry. If you’re running a venture funded startup, you'll want a provider that has experience working with the unique needs and stressors of that world. Leslie Harding at Pilot suggests taking it one step further by asking the potential partner if they have experience using the same tools that you’re using. For example, if you’re a big fan of Shopify or Expensify, find out if the firm is well versed and integrated with those tools. If you’re a die-hard Xero lover, and they only work with QuickBooks, then it’s probably not a match.

You keep on talking about bookkeeping and accounting services. Which do I need?

Oftentimes, the terms “accounting” and “bookkeeping” are used interchangeably, but they don’t always mean the same thing. Bookkeepers take care of the day-to-day tasks so that you have clear insight into the health of your business. They operate the financial back office duties such as payroll, invoicing and billpay. Accountants take the accurately managed information that the bookkeepers have recorded, and interpret it further. They’re also the ones who focus on handling your compliance and tax filing requirements.

The key here is to note that these are two separate services, and setting up good bookkeeping lays the foundation for safe accounting practices. Many companies that offer one will also offer the other, like Intelli Bookkeeping, Bookkeeper360, and Pilot, ensuring a tight integration between the data recorded and the data analyzed. However, you may find that you like having one service managed by one provider, and the other managed by another. There’s no single “right” answer.

Is outsourcing a long-term solution?

It can be! It’s good practice to ask your third party vendor not just if they can handle your needs now, but if they can keep up with the growth that you see for your company in the next few months or years. Some of our favorite accounting and bookkeeping firms are built to scale as you do, reaching hundreds of employees and millions of dollars of revenue per year.

You’ll likely notice if you go far beyond those numbers, you’ll need to rethink most of your solutions, like your accounting software, HR software, etc. At that point, many companies upgrade to enterprise level systems with multiple redundancies. Internal controls become more vital at those stages, and investors may require that financial operations, budgeting, forecasting and reporting be brought in-house.

Pleased with your accounting and bookkeeping solutions, but not convinced that you’re banking with the right institution? Keep a lookout for our next article! We’ll be going over some of the best practices for business owners as they navigate the seemingly endless sea of options.