Which Bookkeeping Tasks do Companies Outsource?

Business owners frequently wrestle with determining which activities should be outsourced to a freelance bookkeeper or accounting company. Budgetary restrictions can limit a company’s ability to outsource financial tasks, as can concerns over delegating duties. In these instances, it often makes sense to offload tasks that will have the greatest ROI first, and then include others later as means allow.  

While the question of what to outsource will certainly vary based on industry and individual company needs, certain types of activities are more likely to be handled by a third-party regardless of company specifics. Busy work like repetitive and manual tasks as well as difficult financial activities related to payroll, state-specific legal requirements, and tax obligations are often outsourced to remove the burden from business owners. Both free up owners to devote more time to the activities that they are best equipped to handle, efficiently driving revenue and encouraging sustainable growth.

Repetitive Tasks

Repetitive financial tasks like AP (accounts payable) and AR (accounts receivable) are commonly outsourced to alleviate the burden of busy work for overtaxed business owners. Bookkeepers are accustomed to using small business accounting software to manage ongoing financial operations and reporting. They are savvy enough to set up recurring AP and AR to save time where business owners may be used to manually adding these items each month. If a company’s accounting system does not provide for this type of type of automation, a bookkeeper may be able to find a way around platform-specific limitations or recommend a new system to manage accounting functions more efficiently.

Businesses that require regular financial reporting to communicate with investors and partners, can use bookkeepers to generate more professional reports. A professional will have the experience needed to set up automatic reports for ongoing financial needs and pull reports on an ad hoc basis to better inform business decisions. 

   Outsource list:

• Accounts payable
• Collections
• Accounts receivable
• Invoicing
• Financial reporting
• Internal reporting

Manual Items

Manual financial entries have a higher likelihood of errors, which creates a valuable opportunity to utilize an experienced bookkeeper. While bookkeepers are not exempt from making mistakes, they are often less prone to making mistakes than business owners because they have more checks built into their process to better identify errors proactively. Additionally, they tend to have more financial acumen to draw on while doing their work, minimizing simple errors of ignorance.

   Outsource list:

• Bank and credit reconciliations
• Customer credit agreements and special payment terms

Payroll-Related Operations

Since all businesses have employees, payroll-related activities are a popular choice for outsourcing. Because business owners frequently do not have the time needed to learn the nuances related to withholdings and benefits calculations this can vastly improve efficiency. Bookkeepers can implement and manage payroll software to make running payroll easier, as well as offer tangible benefits to employees like paycheck direct deposit. Depending on the sophistication of the payroll software, it may also include automatic local, state, and federal tax filing to assist in that area as well. The result is greater accuracy for employers and simplified compensation for employees.

   Outsource list:

• Employee compensation
• Employee tax withholdings
• Wage garnishments
• Child support payments
• PTO approvals and tracking
• Time tracking
• Workers compensation
• Other paid benefits

State-Specific Activities

Sales tax payments are confusing for business owners to track and manage, especially in areas where there are both state taxes and local (city or county) taxes to report. For instance, sales tax in Washington is 6.5% but Seattle has an additional 3.6% sales tax, making the effective sakes tax rate 10.1% on goods. Businesses must report, charge, and pay these fees appropriately to avoid fines and penalties. This process is already difficult for businesses in heavily taxed regions, but it becomes even more complicated when buyers are located elsewhere – necessitating the calculation of use taxes. A bookkeeper can oversee sales and use tax, allowing business owners to focus on selling products and growing the business instead of these details.

   Outsource list:

• Sales tax filings and payments
• Use taxes
• Property taxes

Tax Functions

Business owners dread preparing and filing their taxes because there are so many opportunities for errors. Even when taxes are done correctly, there is always a nagging question over whether money was left on the table due to unutilized tax write-offs. A bookkeeper can ensure that taxes are error-free and may also be able to identify tax incentives to utilize. While bookkeepers are not as beneficial as certified accountants in this area, they still bring a level of experience to the role that many business owners (especially those that are new to the role) lack.

   Outsource list:

• Local and state tax filing
• Issuing W-2 and 1099 forms
• New hire filing with the state
• Sending charitable giving receipts to donors

We are ready to help you with your bookkeeping needs! We are dedicated to providing small and mid-size businesses with experienced accounting professionals to handle day-to-day bookkeeping, accounting, required governmental reporting, and special accounting projects.

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