Why Outsource Bookkeeping? The Pros and Cons of Outsourcing vs. Hiring an In-House Bookkeeper
There comes a point in a growing business when doing the books after a long day stops working. The receipts pile up faster than you can enter them, and catching up starts eating into your evenings.
So you start weighing your options, and one question keeps coming up: why outsource bookkeeping when you could hire someone in-house?
For many small and medium businesses, outsourcing gives you a team of trained bookkeepers at what is often a lower cost than an employee, with coverage that continues when one person is away. The main trade-off is that nobody from that team is physically in your office.
Whether that trade-off matters depends on how your business runs. A few of the biggest differences between the two options only become obvious in the middle of a busy season, which is why we’ve laid them out side by side below.
The Pros of Outsourcing Your Bookkeeping
Weighing the pros and cons of outsourcing bookkeeping starts with what you no longer have to handle as an employer. Your books still get done, while much of the work of managing a bookkeeper shifts to the provider. Here’s how each pro compares with hiring someone in-house.
1. You Get a Professional Service
When you outsource, you get a bookkeeping service that already knows how the work should be done, so you don’t have to manage a bookkeeper the way you would with an in-house hire. You don’t have to design a process or check someone’s work when bookkeeping isn’t your background.
At eGO Bookkeeping, for example, your books follow a steady monthly rhythm, with review built into our process. By the time your books reach you, we’ve already checked them, so you can focus on what the numbers are telling you.
2. A Team of Bookkeepers Keeps Your Books Moving
Think about what happens when your in-house bookkeeper takes a well-earned two-week vacation right as your HST filing comes due. Your books wait until they’re back. If they leave the job altogether, the wait gets longer while you hire and train a replacement.
Outsourcing to a team takes that pressure off one person, because someone else can step in. On our team, more than one bookkeeper knows each client’s file, so a vacation on our end won’t hold up your books.
3. Outsourced Bookkeeping Often Costs Less Than Hiring an Employee
Outsourcing often costs less than hiring an employee because you pay only for the bookkeeping work your business needs.
Hiring in-house works differently. An employee’s salary is just the starting point. Once a bookkeeper joins your payroll, you also pay employer costs on top of their wages, and those costs stay the same whether your books are busy that month or quiet.
When you outsource, those employer costs are off the table. As an eGO Bookkeeping client, you won’t pay any of the Mandatory Employer Related Costs (MERCs) you’d have with an employee, including:
- Employer CPP contributions, which match what an employee contributes
- Employer EI premiums, which are generally 1.4 times the employee’s amount
- WSIB premiums (if your business is required to have coverage)
- Vacation pay
- Benefit costs
If you’d like to see how the numbers compare for your business, our Bookkeeper Costs Calculator can give you a starting point.
4. You Work With Certified, Trained Bookkeepers
Hiring a bookkeeper means judging their skills from a résumé and an interview. Finding someone who holds both bookkeeping and payroll designations can also take a while.
When you outsource, the service provider has already done that screening. A bookkeeping firm hires and trains its team before your file ever reaches them, so you can start working with qualified people right away.
Here at eGO Bookkeeping, for example, our team includes Certified Professional Bookkeepers (CPB) and Payroll Compliance Practitioners (PCP), with formal training in Canadian bookkeeping and payroll. You can hand over your books and payroll knowing the people behind them have met a recognized professional standard.
5. You Benefit From Years of Industry Experience
Every industry has its own bookkeeping quirks. An outsourced firm that has worked with many businesses has usually run into yours before, while an in-house bookkeeper’s experience depends on the few places they’ve worked.
In our 15+ years, much of it spent with retail and construction businesses, we’ve seen how often the same issues come up. A POS feed that doesn’t line up with the bank deposit is a good example. Having seen it many times, we know where to look first, which saves time and frustration for everyone involved.
6. You Have Guidance for Day-to-Day Bookkeeping Needs
Say a customer pays a deposit for a job that won’t start until next month, and you’re not sure how it should show in your books. It seems like a small question, but recording it the wrong way can turn into a correction someone has to untangle later.
Outsourcing gives you someone to check with when questions like this come up in the middle of your week. Our clients can bring everyday bookkeeping and payroll questions to us as they come up, so they can get back to running the business.
7. You Have a Team That Knows Compliance
Compliance for a small business covers both the bookkeeping side and the payroll side, and each has its own filings and deadlines. A good in-house bookkeeper can handle both, but you’re relying on one person to be equally comfortable with HST filings and with payroll remittances, and those are two different areas of expertise.
When you outsource to a provider that offers both bookkeeping and payroll, both sides come with the service. Each one is handled by people who work with those filings and remittances regularly, which makes deadlines far less likely to sneak up on you.
8. You Don’t Need Office Space
Picture where an in-house bookkeeper would actually sit. They’d need a workspace of their own and a secure place to store paper records, and for a smaller business that can mean giving up space you’d rather use for something else. Additionally, you will need to provide an in-house bookkeeper with either a laptop, or desktop (ideally one from this century) which is an additional cost. There may also be additional costs related to virus protection, Microsoft/email fees, and general IT fees.
What Is the Downside of Outsourcing Bookkeeping?
The main downside is that nobody from your bookkeeping team is physically in your office. There’s no one down the hall to hand a receipt to, and for some owners, that takes a little getting used to.
We’ve built our process to make that distance easy to manage. With Dext, you can snap a photo of a receipt or invoice on your phone and upload it straight to us. Your books live in the cloud, so you can check on them whenever you like, and our team is a phone call away when you need to talk something through.
If your business also needs someone on-site for broader office admin, factor that into your decision. For the bookkeeping itself, a cloud-based process handles the day-to-day work well.
Ready to Outsource Your Bookkeeping?
If the pros above line up with what your business needs, outsourcing is worth a closer look. For many growing incorporated businesses in Ontario, it offers an experienced team at a cost that’s often lower than hiring an employee.
Still weighing a hire? Our guide to the key questions to ask when hiring a bookkeeper can help you compare your options.
At eGO Bookkeeping, we would love to find out about your business and partner with you to set you up for success. Book your call here to get a quote.