Bookkeeping and tax services seem to be everywhere, but are they worth it?
There was a time not too many years ago that in order to get someone to do bookkeeping or taxes for your company you either had to hire someone full-time on your staff or contract with someone locally.
Those are still valid options, but technology and a fast-growing gig economy have made it possible to outsource your bookkeeping and taxes to a freelancer that you may have never met face-to-face.
In this post, we’ll take a look at what exactly you should expect bookkeeping and tax services to include (regardless of who provides them) and whether or not outsourcing these tasks is a good idea for small business owners. Read on to see if it’s something you need to consider doing.
Bookkeeping and Tax Services
First, some definitions.
According to a Forbes.com article titled “What is Bookkeeping? Everything You Need to Know”:
“Bookkeeping is the practice of organizing, classifying, and maintaining a business’s financial records. It involves recording transactions and storing financial documentation to manage the overall financial health of an organization.”
A bookkeeper could accomplish this for you with a simple spreadsheet or complicated software. Having accurate books is essential to your business since that information is what you use to make other vital decisions like budgeting, pursuing growth opportunities, preparing to file taxes, or talking to potential investors.
Some of the typical tasks of a bookkeeper include:
- Recording transactions
- Entering debits and credits
- Handling Accounts Receivables and Accounts Payable
- Preparing financial reports such as balance sheets, income statements, and cash flows
- Managing the company’s general ledger
- Taking care of bank transactions
- Overseeing payroll processing
- Ensuring proper storage of receipts and records
Smaller companies may have one person doing all of these things (and more). Many owners have to find time to do it themselves! Larger companies, though, often split these roles between multiple people if the workload justifies it. It all depends on how complicated your company’s finances are.
This article from Quickbooks on “What Are Bookkeeping Services and Why Are They Important?” is a good read if you want to learn more.
The title explains the purpose of this position fairly well, but here’s a definition. Indeed.com says, “A tax preparer completes tax forms for submission to the Internal Revenue Service (IRS). Their clients may include both individuals and businesses, although sometimes a tax preparer may decide to work for one dedicated employer.”
Because of how important getting your taxes filed correctly and accurately is, this is another essential role in your company. Whether you do it yourself, hire someone in-house, or outsource it, you want to know that your tax preparation is done well.
Also, because of the amount of sensitive business data and personal information included in tax forms, you want to be sure that the person handling your tax prep is completely trustworthy and reliable.
Several types of individuals do tax preparation:
- Enrolled Agents (EAs) – The IRS licenses them to do tax preparation anywhere in the United States. Because they have passed an IRS exam and certification, they are also able to serve as expert witnesses in court cases involving taxes.
- Certified Public Accountants (CPAs) – These are accounting professionals who are certified at the state level after completing extensive training and passing one of the most difficult professional exams (similar to attorneys passing the bar exam). According to the American Institute of Certified Public Accountants, the annual pass rate of their exam has historically been only around 45-55%.
Having cleared such difficult hurdles, CPAs are equipped to assist clients with tax preparation as well as a wide range of other accounting services. They are often self-employed but may work exclusively for a large corporation as well.
- Tax Attorneys (TAs) – Tax attorneys typically work for larger companies that have to file corporate taxes. They also represent clients in tax-related court cases or when people have issues with the IRS. Hopefully, they aren’t anyone you’ll ever need. But it’s good to know they’re out there if you ever do.
Should You Outsource Bookkeeping and Taxes?
So with those definitions in place, the big question we’re looking at today is “Should you outsource your bookkeeping and tax services?” For most small businesses, especially where the owner is wearing all of the hats, doing all of your bookkeeping and taxes quickly becomes too time-consuming. And hiring someone full-time may not be in the budget just yet.
In those cases, it makes sense to outsource. In fact, we recommend it whenever possible.
Even if your business has grown to the point that it is financially possible to bring on someone to handle those tasks in-house, you might find that it’s a much wiser use of your hard-earned money to hire an outside firm or a freelancer on an “as needed” basis.
By freeing up those dollars and employee hours, you can then focus more on growing other areas of your business. Helping business leaders win by spending less time doing repetitive tasks like bookkeeping is one of the reasons we developed our Part-time CFO Service. (There’s so much more an outsourced CFO can do for you too, so check out the link to discover other ways they can benefit your business!)
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Bookkeeping And Tax Services For Small Businesses
There are many ways you can work with a bookkeeper or tax service. Some business owners prefer face-to-face interactions, so they choose to hire someone locally who can either come to their business or meet with them somewhere in town on a regular basis.
If you’re comfortable working remotely, you have even more options.
- Fully Remote Company – Companies that are already big players in the accounting space offer remote bookkeeping and tax prep services. Quickbooks Live Bookkeeping is one. Pricing for their service is anywhere from $200-400 per month depending on your company’s average monthly expenses.
- Fully Remote Freelancer – Businesses like Upwork make it possible to hire virtual bookkeepers and tax prep people from around the world on an hourly basis. There’s more involved in weeding out the good ones from the not-so-good, but if your budget is tight and you’re willing to put in a lot of due diligence work this could be something to consider.
- Local Firm Working Remotely – A hybrid of the two previous options is to partner with a local accounting firm that has the ability to work for you remotely. That’s the category we fall into at CRS CPAs.
With 6 locations across West Tennessee (Jackson, Dyersburg, Martin, Milan, Paris, and Brownsville – near Ford’s new Blue Oval City), we have offices within a short drive of most of our clients. But we are also able to help manage their monthly bookkeeping electronically without them having to schedule an in-person meeting or take time and expense to drive to where we are.
Regardless of how you choose to work with your bookkeeper make sure you have a clear written contract in place before they begin that spells out details such as deadlines, hourly rates, and other expectations. That way there are no surprises down the road and everyone can be on the same page.
Another bonus of working with an established CPA firm in your area (or with us remotely) is taking advantage of business consulting services.
With decades of experience in business ourselves and having worked with thousands of small business owners across a wide range of industries, we’ve learned a lot about what it takes to successfully run a company that wins.
Our CFO Consulting Service can help you with new business formation, bookkeeping and tax services, cash flow management, bank financing, strategic business planning, succession planning, and internal controls.
We get it. Winning in business isn’t only about having good numbers. Our team can strengthen the “people side” of your business as well by helping you
- Hire great people
- Keep your employees happy
- Develop good employee retention goals
- Maintain a sustainable growth rate
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To experience what it’s like to “expect more from your CPA”, schedule a call with one of our accounting and business pros today!