3 reasons why start-up founders should outsource their bookkeeping

When most people think about starting a new business, one of the first things that come to mind is how they’re going to manage their finances. The reality is that many start-ups don’t have any experience in this area and will need to find someone who can help them out.

In this blog post, we’ll discuss why should you consider outsourcing your bookkeeping; How much can you expect it to cost; And 3 benefits of outsourcing your bookkeeping needs for start-up founders.

Table of contents

Why should start-ups consider outsourcing bookkeeping?

There are probably more valuable things you can be doing in the start-up phase of your business than learning the difference between a debit and a credit. Generally, a founder juggling the responsibility of sales, product, cashflow, human resources, compliance and more – many of these things can drain the enthusiasm they had for their business. By outsourcing key specialist roles to professionals, you will have more time for growing your business. If you are ready to scale your business, you will want to draw on the skills and experience of an experienced bookkeeper or accountant who has been on this journey with a business before.

Financial record keeping and reporting are critical in creating a solid foundation for your company’s future success. Your financial reports (and forecasts) will form an integral part of conversations with any shareholders. For many start-ups and early-stage companies, the “accounting and finance department” may initially consist of the founder – with the assistance of a good bookkeeper like iKeep and a tool like Xero. This is a great place to start, but it may not be enough for your growing company. When you’re in the early stages and still working with limited resources, you need all hands-on deck to keep things running smoothly and efficiently. That means focusing more time on building relationships within your community and securing new customers rather than spending hours behind the desk.

How much does it cost?

The costs a start-up incurs for bookkeeping will depend upon many variables. Company size and lifecycle, number of monthly transactions, number of employees and how payroll is processed, number of expense accounts, credit cards, invoices to send out, bills to pay, number of balances to reconcile, etc.

In addition to these basic bookkeeping activities, your costs will be impacted by how your accounting systems, policies, and procedures, and reporting needs are set up and administered. The typical cost of outsourcing your accounting and bookkeeping can range from $400 to $5,000 per month for a small business.

An outsourced bookkeeper provides several benefits

One of the biggest benefits of outsourcing your bookkeeping needs is that you’ll be able to get it done at a lower cost than hiring someone internally, whilst also having the confidence that it is done correctly – which will often save money on tax, and can make a big difference to your profit if you are in a low margin business.

Even from the early stages of a business, there are so many things for a founder to focus on so this is a relatively easy way to free up more of your time for important tasks. One of the allures of owning a business is that you get to choose your schedule. But when it comes time to do bookkeeping, it’s easy for this task to take up valuable hours in your day (or more often, night). By outsourcing these tasks, you’ll be freeing up more time for other important activities, allowing you to focus on growing your company.

Having an expert staying on top of your finances also makes it much easier to monitor your KPIs and stay on top of your Cashflow. Whatever your type of business, it’s essential to know your company’s financial standing. You need three major reports to determine this: cash flow statement, income statement, and cash disbursement schedule. With the help of a professional bookkeeper, monitoring your business’s KPIs becomes so much easier. Also, a good bookkeeper will check, update, and follow up on payments – a job many people don’t like doing! They can also track receipts, note accounts payables and receivables, balance your accounts, and give you an accurate picture of your cash flow.

Outsourcing if also a quicker and easier way to get started, rather than having to hire someone, who will likely work part-time and require health insurance, training, benefits and the equipment that a regular employee is entitled to.

All the best with your next venture!

Article written by Simon Allsop, founder of iKeep