You can’t run a business without managing its finances. That doesn’t mean you have to enjoy the work, and plenty of business owners don’t.
About half of the companies that outsource anything include financial services in what they hand off. So if you’re looking for outsourced bookkeeping services, you’ll find a large market with a lot of options. This article covers what those services include, what they cost, and how to pick one.
Key takeaways
Bookkeeping takes a lot of hours, and it’s one of the easier functions to hand to someone outside your company. Cloud accounting software lets a remote bookkeeper work on your records securely.
Freelancers, specialist agencies, and outsourcing companies all offer bookkeeping, at very different price points and levels of support.
Outsourced bookkeeping covers day-to-day record keeping plus the admin work that sits around it, like chasing late payments and tidying up spreadsheets.
What Do You Get When Outsourcing Bookkeeping?
Bookkeeping means tracking and recording a company’s day-to-day finances. A bookkeeper maintains your ledgers and keeps records of other financial activity. Most outsourced bookkeepers will also prepare regular reports and help you read your financial statements.
Outsourced bookkeeping takes the daily finance admin off your desk. Cloud bookkeeping tools are good enough now that a virtual bookkeeper can do all of it remotely, without ever touching a paper file in your office.
Does It Cover Accounting?
Don’t conflate the two. An outsourced bookkeeper isn’t necessarily an outsourced accountant, and the reverse is also true.
Outsourced bookkeeping services focus on granular, day-to-day data. Accounting uses that data to analyze the bigger picture. Accountants handle tax preparation, audits, compliance, and high-level account analysis, which takes expertise a bookkeeper may not have.
There’s some overlap, of course. Some bookkeepers can fill an accountant’s role, and many accountants have hands-on bookkeeping experience. If you’re shopping for outsourced accounting and bookkeeping services, be specific about which one you actually need.
| Role | What they handle | When you need one |
|---|---|---|
| Bookkeeper | Recording transactions, maintaining ledgers, reconciling accounts, invoicing, payroll records | From day one, as soon as money starts moving |
| Accountant | Tax filing, audits, compliance, financial analysis, statutory reporting | At tax time, and whenever a filing or audit is due |
| Controller | Oversight of the whole finance function, closing the books each month, internal controls, budgets and forecasts | Once the volume of transactions outgrows a single bookkeeper |
What About Controller Services?
Some providers sell outsourced bookkeeping and controller services together. The bookkeeper records the transactions, and the controller reviews the output, closes the books each month, and builds the reports you use to make decisions.
That combination usually makes sense for a growing company that has more than one person touching the finances. If you’re a small business with one bookkeeper and a straightforward set of accounts, a controller is probably more oversight than you need right now.
What About Taxes?
An outsourced bookkeeper can help with tax preparation and with filings for industry-specific requirements, but there are limits. They can organize your data ahead of time or complete certain forms so the submission goes more smoothly.
Most outsourced bookkeepers won’t be able to advise you on the finer points of legal compliance, especially if your industry carries complex government regulations. For those processes you’ll want a compliance consultant, a tax preparation specialist, or a provider with proven experience in the procedure you’re facing.
Before tax season, ask your bookkeeper to reconcile every bank and credit card account, chase any missing receipts, confirm that contractor payment records are complete, and separate personal expenses from business ones. That prep work is what your accountant charges the most to clean up.
The Benefits of Outsourced Bookkeeping
Outsourcing your bookkeeping saves you time. It can also cut your costs and improve how your financial data is stored.
How Much Can You Save?
An in-house bookkeeper’s salary runs from about $37,000 to $49,000 a year, which works out to roughly $18.50 to $24.50 an hour. That figure doesn’t include the equipment they’ll need, and it doesn’t include whatever extra you’d have to pay to win over a strong candidate.
Offshore bookkeeping services often charge as low as $10 an hour. Remote bookkeepers bring their own equipment, and some agencies can get you a discount on cloud bookkeeping software. Add up salary and overhead and you could save about $34,000 a year.
| Cost | In-house bookkeeper | Outsourced bookkeeper |
|---|---|---|
| Hourly rate | $18.50 to $24.50 | From about $10 offshore |
| Annual salary | $37,000 to $49,000 | You pay for hours worked, not a salary |
| Equipment | You buy the computer and the desk | The bookkeeper supplies their own |
| Software | You pay full price per seat | Some agencies pass on a partner discount |
| Scaling up or down | Hiring or letting someone go | Change your hours with the provider |
Does It Really Improve Data Security?
Outsourced bookkeeping companies and freelancers can help you get more out of cloud accounting software, which protects you from cyber-attacks and gives you a backup if physical records or a hard drive are damaged.
You can set all of that up yourself. Working with someone who does it every day saves you the time and makes it more likely you follow current best practice for handling and storing financial data.
What Do You Save Time On?
If you do your own bookkeeping, it takes a while to get to the speed and reliability an outside service already has.
Recording transactions as they happen sounds simple. First you have to learn the software you’re using and the basics of keeping good records, and both take time.
Then there’s the compiling. Every time you need to review your records or use them somewhere else, you’re pulling numbers together by hand. If you’re splitting your attention between bookkeeping and running the business, you’re also more likely to make mistakes, and double-checking your own work eats into the day.
Basic bookkeeping for a small business adds up quickly once you count all of that. Outsourcing it can save you hours every week.
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3 Different Ways to Outsource Bookkeeping
There are a few places to find an outsourced bookkeeper, so you can cast a wide net if you want to.
You can also work out what kind of service you need, or what you want outsourcing to achieve, and narrow the search from there. Here are the three routes.
| Option | Best for | Watch out for |
|---|---|---|
| Freelancer | Tight budgets, low hours, flexible schedules | You screen candidates yourself, and you arrange your own cover and data security |
| Bookkeeping or financial services agency | Complex compliance requirements and specialist software | Higher cost, and often a contract of up to a year |
| Dedicated outsourcing company | Businesses that want the hiring handled and room to change scope later | Match the provider’s screening process to the level of finance experience you need |
Freelance Bookkeepers
Online gig markets like Fiverr and Upwork make freelancers easy to find, and bookkeeping is one of the most widely offered services on them.
A freelance virtual bookkeeper suits a tight budget. The lowest bookkeeping rates sit here, and freelancers are more likely to offer flexible hours with low project minimums.
Finding a reliable one takes more work than the other two options. You’ll screen every candidate yourself to check their qualifications, and onboarding usually runs longer than it would with a dedicated outsourcing partner. As with any freelance arrangement, cover and data security are your responsibility to organize.
Bookkeeping or Financial Service Agencies
Outsourcing to an agency buys you specialization. Bookkeeping agencies and broader financial services firms are set up to offer a full service, so there’s less onboarding and less management on your side.
Agencies are also more likely to have specialist tools. Cloud-based bookkeeping platforms come with data privacy and backup features built in. An agency is worth considering if your industry has complicated compliance requirements.
The trade-off is cost. Agencies are generally more expensive, and most will ask you to sign a long-term contract, sometimes for a full year. That leaves you less room to change your bookkeeping arrangement as your needs shift.
Dedicated Outsourcing Companies
The third option is a dedicated outsourcing company like Magic. This works well if you want the hiring handled for you. The provider sources and screens candidates so you’re not reading resumes, and support continues after the assistant starts. You can also bring on people for other parts of the business under the same arrangement, like an executive assistant or a remote SDR.
What Can You Delegate to a Virtual Bookkeeper?
Outsourced bookkeepers handle a range of record-keeping work, plus some related admin depending on how you set things up. Here’s what most of them cover.
| Task | What it involves |
|---|---|
| Managing ledgers | Filling out, updating, cleaning, and double-checking your ledgers |
| Payment reminders | Chasing delinquent accounts before the losses add up |
| Excel and cloud accounting | Building and organizing spreadsheets, moving data between platforms |
| Payroll monitoring | Tracking payroll, timesheets, and commissions |
| Reading financial statements | Explaining terms and adding context to your reports |
| Auxiliary admin | Data entry, email automation, and scheduling reminders tied to your records |
Managing Ledgers
This is a bookkeeper’s core work. They fill out, update, clean, and double-check your ledgers so the financial records stay accurate.
Between specialized bookkeeping SaaS and optical character recognition, remote bookkeepers can work from physical receipts and documents too.
Payment Reminders
Clients forget to pay their bills, and losses from delinquent accounts add up fast. A bookkeeper can send the reminders. They’re already watching your finances, so they’re the first to spot a payment that hasn’t landed.
Excel and Cloud Accounting
Bookkeeping software like Excel and QuickBooks is built to be easy to use. An outsourced expert will still get your records into better shape than you would on your own.
Remote bookkeepers who know these tools can build spreadsheets and databases that are quick to pull data from. They can also move your data from one platform to another when you switch.
Payroll Monitoring
Payroll affects your finances, so a remote bookkeeper can track it along with related records like timesheets and commissions.
With payroll outsourcing, your staff get paid correctly and on schedule, and you can see exactly how the money went out.
Interpreting Financial Statements
If your background isn’t in finance, a virtual financial assistant can help you make sense of your documents and reports. They won’t give you the analysis a consultant or accountant would, but they can explain the terms and add context.
Auxiliary Tasks
Outsourced bookkeeping services often stretch into basic admin work connected to your records. That covers data entry, automated email, and scheduled reminders.
When Should You Outsource Bookkeeping?
It comes down to one question. Does your team have the time and the skills to keep your books at the standard your business needs? By standard, we mean a clear enough view of your finances to make decisions with.
Here are three situations where limited bookkeeping capacity tends to cause problems.
Growth and Expansion
You need to know where your money is going before you can plan for growth. If you can’t say where your revenue is coming from, what it’s being spent on, or how cash is moving through the business, your bookkeeping needs work.
Seasonal Fluctuations
If your capacity gets stretched thin during busy periods, look for a service you can scale up on short notice, or one that will handle retrospective bookkeeping after the rush.
Reporting or Compliance
Complex financial reporting and compliance documentation take a lot of hours and leave little room for error. Mistakes can bring hefty fines. If you’re working late on filings or paying penalties, that’s a strong sign to outsource.
Choosing the Right Service Provider
There are a lot of outsourced bookkeeping firms out there, and the best one overall may not be the best one for you. Here’s what to check.
Experience and Expertise
Bookkeeping isn’t a regulated profession, but it does take training. Several bodies accredit bookkeepers, including the National Association of Certified Public Bookkeepers in the US, alongside various institutes and private firms.
Ask what kind of books a candidate has worked on before. Someone who has handled a business your size in your industry will need less hand-holding than someone who hasn’t.
Security Measures
Information security matters a lot when finances are involved, so check that any bookkeeper you’re considering knows how to handle your data.
With firms, you can judge this on the security of the tools they use or on an accreditation like ISO 27001. With freelancers, you’re relying on the interview and on social proof.
Scalability and Flexibility
Not every business needs a full-time bookkeeper. If you’re looking at outsourced bookkeeping services for small businesses, there’s a fair chance you don’t need one yet. Ask each provider how you’d scale the service up later, whether that means more hours or extra coverage you don’t need today.
Four questions worth asking before you sign anything: who owns the data in the accounting software, what happens to your books if your bookkeeper leaves, how long the contract runs, and who reviews the work for errors. Providers that answer these clearly tend to be the ones with a process behind them. You can read what other businesses have said about working with Magic on our reviews page.
Simplify Your Finances with Magic
Take control of your finances with Magic. Download our bookkeeping eBook to see what outsourcing this work looks like in practice.
A Magic assistant can take the bookkeeping tasks off your plate, from maintaining records to tracking payroll and running the data entry that sits behind both. You can start with one virtual assistant part-time and add more hours as the work grows.
Tell us what you need and we’ll line up candidates for you. Every assistant is screened for ability and attitude before you meet them, and you can add or replace people as your needs change. Our pricing is a fixed weekly rate with no long-term contract.
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