Outsourced Bookkeeping: An Alternative to the In-House Bookkeeper?
In the last post I reviewed a real ad, from Craigslist, and determined that a $15 per hour, 6 hours per day, 5 days a week, 52 weeks in a year, potential employee could earn $23,400 annually.
Dividing the annual amount by 12, the number of months in a year, the business would pay the employee approximately $1,950 each month.
Now, I am really oversimplifying the situation by removing factors such as taxes, holidays, and sick days. If I included those factors the employee would make less than $1,950 each month.
I spoke to three colleagues about the $15 per hour bookkeeper because I wanted to know what they thought about the Craigslist ad. My colleagues have small businesses, and they are not accountants or bookkeepers.
From the discussion they came up with three reasons why small businesses would seek a $15 per hour bookkeeper:
That business wants something for nothing.
Other small businesses are doing it (paying a low wage); therefore it must be industry standard.
The budget is small; therefore $15 per hour is what that small business can afford.
These reasons lead me to believe that small businesses often fail to see bookkeeping and accounting as a resource.
They only know of the data entry clerk that does “brainless” tasks, such as copying, printing, and filing. And to the business, the data entry clerk is cheap labor, also referred to as the $15 per hour bookkeeper
Worse, at least to me, these small businesses believe bookkeeping and accounting is ALL ABOUT THE TAXES!! That is great for the EAs and CPAs!
However, small businesses are limiting themselves with that tax thought. There is so much more value to be obtained from a bookkeeper or accountant other than tax related advice.
No offense my EA and CPA friends!
I’ve thought of one way to shift the data entry-tax advice perception held by small businesses.
Outsource the bookkeeping.
Outsourcing the bookkeeping saves the small business money. The business avoids paying full-time or part-time wages to an in-house bookkeeper or accountant. The business also saves on low productivity costs due to employee absences or distractions such as excessive email use.
Another benefit is the ability to scale operations. Outsourcing the bookkeeping gives the small business the opportunity to cut back or grow.
Outsourcing also gives the small business access to a highly skilled, very experienced bookkeeper or bookkeeping team. Remote bookkeepers usually have years of industry experience.
Finally, outsourcing the bookkeeping could build trust. The remote bookkeeper indirectly educates the small business about bookkeeping by using his or her experience and expertise to provide value. And this value helps the small business owner know exactly what is going on in his or her business.
Outsourcing the bookkeeping is one potential solution for the business. However, outsourcing does not work for all businesses.
Another thing to note is outsourcing is not the same as offshoring. Offshoring is often associated with sending work overseas, utilizing cheap labor. With offshoring, the business would deal with time differences, language barriers, and bookkeeping mistakes because US bookkeeping is different from international bookkeeping.
In the next post, I’ll go into more detail on how a remote bookkeeper can help a business by just looking at the financial activity.
Until then stay happy, my friends!