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Business success is dependent on a solid financial foundation & success looks different to everyone & there is a lack of equity of access to resources and information for small business owners and independent contractors & there is a societal narrative making us believe “balance” is our ultimate goal & … There are so many “&”s that impact being your own boss. Let’s have some frank discussions on the basics of business with a holistic focus on everything that helps business owners define and find success.
Molly Beyer: [00:00:08] Welcome to the Ambiguous &: Business Basics and Beyond, the podcast where we have frank discussions on the basics of business with a holistic focus on everything that helps business owners define and find success. Each episode is a reminder that success isn't one thing, it's a whole lot of ambiguous ands. Like subscribe or follow, and let's explore these ambiguous ands.
[00:00:34] Hello and welcome to the Ambiguous &: Business Basics and beyond. I'm your host, Molly Beyer, and I'm here to lead you through frank and holistic conversations on the basics of business. Today I want to talk about outsourcing bookkeeping for small businesses, specifically what to expect, how to budget, and how to measure the ROI of outsourcing. So many small business owners just try to do everything themselves, and bookkeeping often falls into that, 'I'll get to it later' pile. But the truth is, bookkeeping really is the foundation of your business. If it's not accurate and up to date, it really affects everything from cash flow to taxes to strategy. So let's break it down. What do you need to expect when you're outsourcing your bookkeeping? First, just know that outsourcing bookkeeping isn't just about your numbers, because a good bookkeeper does more than enter transactions. They really help you to understand where your money is going, they help you track profitability, identify opportunities to save or reinvest, and provide insights on strategic decision making. So when you hire a bookkeeper, you can expect them to manage your day to day financials, reconcile accounts, and produce reports that give you clarity and confidence.
Molly Beyer: [00:01:40] Some bookkeepers will also help you set up systems and workflows so that you can automate recurring tasks and reduce errors. The key is communication and clarity. We want to really make sure that you know exactly what services are included, what's extra, and how frequently you're going to receive reports and insights. So budgeting for hiring a bookkeeper. This is one of the most common questions that I get is really, how much should I expect to pay? But the answer really depends on several factors. It's really it's volume of transactions. The more sales, expenses, or accounts that you have just mean more work, and so more cost. Complexity is going to fall into it as well. Are you a sole proprietor with simple income expenses, or do you have inventory, multiple revenue streams or employees? And also frequency of services, are you a monthly client, a quarterly client, or just like a tax time cleanup? So here's sort of a general idea, monthly bookkeeping for small, simple businesses. I would say you want to think in the 250 to 700 a month range. More complex businesses with things like payroll, inventory, multiple accounts, probably 700 and above, depending on how small. Like if it's a small business with complexity, it could be less. Again, it depends on a lot of factors. But if you're a more complex business, I would say you want to look at at least a thousand a month.
[00:03:06] Things like annual cleanups, tax prep, things like that, those generally range at least a thousand for super simple accounts, and then several thousand depending on complexity and amount of time for cleanup. But again, it's going to depend on who you're working with. And then also what sort of opportunities they use. Do they do billing and increments for large projects? Do they offer things like financing and things like that? So there's really a lot to it. But those are some basic numbers monthly. If you're small, think at least 250 a month. If you're bigger and more complex, at least 700 to 1000 a month. And then just know that cleanups are typically fairly, fairly expensive, but you want to budget for it like you would any investment of your business. And you also want to think of it not necessarily as an expense, but more like an investment. You're really buying clarity and time and peace of mind. It's also really important to note that there are a lot of different options for bookkeepers in general, and so finding the system that works for you in that space is also going to be super important. There's internal bookkeepers, there's contractors, there's firms.
[00:04:18] So an internal or also you'll hear them called in-house bookkeepers, a full or part time employee who's basically on your business payroll. So their cost would basically be their hourly wage plus taxes and benefits. Budgeting would be what their actual employee cost is times however many hours you intend to have each month. A contractor isn't an employee, but somebody that you hire to do your bookkeeping. They can either be virtual or on site, depending on what works for your business. And generally they're part time. Most generally will charge by the hour as well. Some do, however, use project based pricing based on the scope of work. So that's where getting the scope of what it is that you have will give you a good idea on where to budget for that. But again, going back to some of those earlier amounts is going to be pretty consistent there. We also have firms, so a team of bookkeepers, often they'll offer a wider range of services. Most firms also will use a project based pricing that is going to be fixed each month, which does make it easier to budget. Some do bill by the hour, but I do find that most firms are on that project based space, and many contractors and firms do have sort of specific monthly minimums. So an initial conversation would sort of at least kind of give you that baseline.
[00:05:38] Now let's talk about the ROI, the return on investment, or the real return on investment, because something like this gets maybe a little bit harder to quantify. Outsourcing bookkeeping isn't just about saving that few hours of data entry. That's definitely a benefit, but it really goes a lot farther beyond that. You save, yeah, the time because every hour that you spend on your bookkeeping is an hour you're not growing your business or serving clients. So outsourcing really frees you to focus on that revenue generating work, but it also gives you accuracy and compliance because mistakes are expensive. Fines, taxes, any missed deductions, things like that. Professionals really ensure that your books are accurate and compliant. You also get better decision making ability. If you've got up to date financials that you know are accurate, you can make more informed choices about cash flow investments, business strategies, and it also makes you more scalable, because outsourcing your bookkeeping allows your business to scale and grow without constantly retraining or hiring or taking more time for you to learn what you need to do within that system. So those are some of those financial benefits you get. The non-financial benefits that you get is the peace of mind. Just knowing your books are in good hands reduces your stress and anxiety. It increases your mental bandwidth so you can focus on your creative work, on your client relationships and strategic planning without that constant mental load of the numbers. It gives you more confidence in your growth because when your numbers are accurate and transparent, you can make decisions faster and with more clarity.
Molly Beyer: [00:07:16] It also gives you more team harmony. It reduces friction and miscommunication that often comes from poorly managed financials. So sort of a simple example on the financial space is if outsourcing costs $500 a month but saves you ten hours of time and you value your time at $100 an hour, that's $1,000 return right there, plus the immeasurable value of reduced stress and better focus. So I want to give you some tips for getting started. So here's how to approach this outsourcing bookkeeping space in a way that really sets you up for success. You need to define your needs first. Understand what bookkeeping tasks that it is that you want to outsource. Is it day to day data entry? Is it payroll reporting and tax prep? And then decide what can stay in-House versus what requires that professional support. Then you really need to identify that right 'who'. It's finding someone who aligns with your business values, who communicates clearly and has experience with business like yours. And remember too, that skills can be taught, but personality, reliability, and cultural fit are non-negotiable. So especially this is especially true when you're hiring internally with any though you want to set clear expectations, you need to know the frequency of reports that you need. You want to know what's included versus what's extra, especially if you're working with a contractor or a firm.
Molly Beyer: [00:08:35] You want to know how you're going to be communicated with and share how you want to be communicated with so that you can review progress. You can also start small and scale up. You don't need a full time bookkeeper from day one, so consider part time, project based, virtual firm while sort of testing the fit. And also remember, like with everything, we want to create some reflection touch points. Whenever we start working with somebody new, whether it's an employee or contractor. We want to really reflect on the experience that we're receiving as we're building systems, processes and relationships to make sure that they're working for us. So schedule some monthly or quarterly reviews to discuss progress trends and questions, and then use these touchpoints to evaluate the return on your investment that you're getting in those financial and those non-financial spaces. It's also important to have your processes be documented. So whether it's an internal or an external person, having your financial processes documented and available to you is super important. You need to have standardized workflows and automate any repetitive tasks that you can to help maximize the value of your outsourced bookkeeping, so the pieces that you are handling on your own to make sure that they're getting done and not impeding if you're using an outsourced system. You also really just need to trust the process. You need to let go of micromanaging, micromanaging transactions, the process, anything like that, you need to just start focusing on strategic decisions while your bookkeeper handles all the details for you.
Molly Beyer: [00:10:07] So outsourcing your bookkeeping isn't just a cost. It really is an investment in your business and in your time, and it really frees up a lot of your mental space. It gives you clarity. It frees you to focus on growth. It allows you to make better decisions with confidence. Because if you're still doing it all yourself, you also then need to look at the ROI behind the dollars. It's peace of mind. It's your mental bandwidth. It's your freedom to focus on the parts of the business that you love. So focus on your vision, your values, the who's in your business, and the numbers will follow along with that. Next time, we're going to talk about outsourcing in some other areas, and talk about when it's time, and how to best determine the return on investment in that space. So thanks so much for hanging out with us today. We'd love to hear your feedback on today's episode, as well as any requests for future content. Drop a comment or suggestion and join us next time for more frank and holistic conversations on the basics of business. Please also like, subscribe, or follow so you never miss an episode. And until next time, I'm Molly Beyer and this has been the Ambiguous &: Business Basics and Beyond. Have a wonderful day.