Outsourced Bookkeeping Services: A Complete Guide for Small Business Owners

At some point, every small business owner faces a decision: Should I keep doing bookkeeping myself, hire an employee, or outsource to a professional service?

For most small businesses, outsourcing wins. But understanding what outsourced bookkeeping actually involves, what it costs, and what to look for in a provider can be confusing.

This guide will give you everything you need to make an informed decision about outsourcing your bookkeeping.

What Is Outsourced Bookkeeping?

Outsourced bookkeeping means hiring an external firm or professional to handle your financial record-keeping instead of doing it yourself or hiring an in-house employee.

Your outsourced bookkeeper typically:

• Records and categorizes your transactions
• Reconciles your bank and credit card accounts
• Manages accounts receivable and payable
• Produces financial reports
• Prepares your records for tax time
• Answers your financial questions

They work remotely, accessing your accounting software from their location and communicating via email, phone, or video calls.

Why Small Businesses Outsource Bookkeeping

The trend toward outsourced bookkeeping has accelerated dramatically. Here’s why:

1. Cost Efficiency

Hiring a full-time, in-house bookkeeper involves:

• Salary: $35,000-$55,000+ per year
• Benefits: Health insurance, retirement contributions
• Payroll taxes: 7.65% employer portion
• Training and software
• Management time
• Backup coverage for vacations/sick days

Total cost of an in-house bookkeeper: Often $50,000-$75,000+ annually.

Outsourced bookkeeping: Typically $300-$1,500 per month, or $3,600-$18,000 per year.

For most small businesses, the math is clear.

2. Access to Expertise

A solo in-house bookkeeper knows what they know. An outsourced firm brings:

• Exposure to many businesses and situations
• Multiple team members with different expertise
• Ongoing professional development
• Experience with your industry (if you choose well)

You get more knowledge depth than any single hire could provide.

3. Reliability and Continuity

What happens when your in-house bookkeeper:

• Gets sick?
• Takes vacation?
• Quits suddenly?

With an outsourced firm, someone always covers your account. You never have a bookkeeping gap.

4. Scalability

Outsourced services flex with your business:

• Slow month? Your cost might decrease
• Rapid growth? They scale up coverage
• Big project? Add temporary support

You’re not locked into a fixed employee regardless of need.

5. Technology and Tools

Professional bookkeeping firms invest in:

• Best-in-class accounting software
• Receipt scanning and management tools
• Workflow automation
• Security infrastructure

You benefit from tools you’d never buy for yourself.

6. Focus on Your Core Business

Every hour you spend on bookkeeping is an hour not spent on:

• Serving customers
• Developing new products
• Marketing and sales
• Strategic planning

Your time has value. Use it where it matters most.

What Outsourced Bookkeeping Includes

Services vary by provider, but here’s what comprehensive outsourced bookkeeping typically includes:

Core Services

Transaction Recording and Categorization All income and expenses categorized to the correct accounts. This is the foundation of bookkeeping.

Bank and Credit Card Reconciliation Monthly (or more frequent) reconciliation of all financial accounts to ensure accuracy.

Accounts Receivable Management Tracking who owes you money, sending invoices, following up on overdue payments.

Accounts Payable Management Tracking what you owe, scheduling payments, ensuring nothing falls through cracks.

Financial Reporting Regular reports including:

• Profit and Loss Statement
• Balance Sheet
• Cash Flow Statement
• Custom reports based on your needs

Year-End Preparation Getting your books ready for tax filing, providing what your CPA needs.

Additional Services (Often Available)

Payroll Processing Running payroll, calculating taxes, filing payroll tax returns.

Inventory Tracking For product-based businesses, tracking inventory levels and costs.

Job Costing For project-based businesses, tracking costs and profitability by job.

Cash Flow Forecasting Projecting future cash position based on expected inflows and outflows.

Advisory and Analysis Beyond recording, helping you understand and act on your numbers.

Profit First Implementation Setting up and managing the Profit First cash management system.

Types of Outsourced Bookkeeping Providers

Not all outsourced bookkeeping looks the same. Here are the main types:

Virtual Bookkeeping Companies

Large-scale operations that serve many small businesses with standardized processes.

Pros:

• Often lower cost
• Established systems
• Available nationwide

Cons:

• Less personalized attention
• May not understand your specific industry
• Communication can feel impersonal

Examples: Bench, Pilot, inDinero

Local Bookkeeping Firms

Regional firms serving businesses in their geographic area.

Pros:

• Relationship-based service
• Understand local business environment
• Can meet in person if needed

Cons:

• May be slightly higher cost
• Limited by local talent pool
• Might have capacity constraints

Independent Bookkeepers

Solo practitioners or small teams working with a limited number of clients.

Pros:

• Highly personalized attention
• Often deep expertise in specific industries
• Relationship continuity

Cons:

• Coverage dependent on one person
• May have limited capacity
• Quality varies widely

Accounting Firms with Bookkeeping Services

CPA firms or accounting practices that offer bookkeeping alongside tax and advisory services.

Pros:

• Integration between bookkeeping, tax, and advisory
• Access to CPA expertise
• One relationship for multiple needs

Cons:

• Often higher cost
• Bookkeeping may not be their focus
• May be overqualified for basic needs

Which Type Is Right for You?

If you need…	Consider…
Lowest cost, basic services	Virtual bookkeeping company
Personalized attention, local connection	Local bookkeeping firm
Deep industry expertise	Independent bookkeeper with your industry focus
Integrated bookkeeping + tax	Accounting firm with bookkeeping services

How Much Does Outsourced Bookkeeping Cost?

Pricing varies based on several factors:

Pricing Models

Monthly Flat Fee Most common. You pay a fixed amount regardless of transaction volume (within reason). Good for predictable budgeting.

Per Transaction Pay based on the number of transactions processed. Varies month to month.

Hourly Pay for actual time spent. Less predictable, but may be economical for very simple needs.

Tiered Packages Pre-defined service levels (Basic, Standard, Premium) with different features and prices.

Typical Price Ranges

Business Size	Monthly Range	What’s Included
Very small (0-50 transactions)	$150-$300	Basic categorization, monthly reconciliation
Small (50-200 transactions)	$300-$600	Full bookkeeping, standard reports
Medium (200-500 transactions)	$600-$1,200	Comprehensive services, A/R, A/P
Larger/Complex	$1,200-$2,500+	Full-service including advisory

What Affects Pricing?

Transaction Volume: More transactions = more work = higher cost

Complexity: Multiple entities, inventory, job costing add complexity

Service Level: Basic recording vs. full advisory services

Industry: Some industries require specialized knowledge

Software: Some providers charge for software access

Add-ons: Payroll, inventory, specialized reporting

Understanding Value vs. Price

The cheapest option isn’t always the best value. Consider:

• Will they catch errors and missing deductions?
• How much of your time will they save?
• Will you get insights that improve your business?
• What’s the cost of fixing problems from poor bookkeeping?

A $600/month bookkeeper who saves you $200/month in missed deductions and 10 hours of your time is a better deal than a $300/month bookkeeper who misses things and requires your constant involvement.

What to Look for in a Bookkeeping Service

When evaluating providers, assess these factors:

1. Industry Experience

Does the bookkeeper understand your type of business?

Why it matters:

• They know which expenses are deductible
• They understand industry-specific chart of accounts
• They can benchmark you against similar businesses
• Fewer questions and less training required

How to assess:

• Ask about other clients in your industry
• Ask industry-specific questions to test knowledge
• Request references from similar businesses

2. Software Proficiency

What accounting software do they use and support?

Why it matters:

• You want expertise in your software
• Migration headaches if they don’t support your system
• Integration capabilities affect efficiency

How to assess:

• Ask about certifications (QuickBooks ProAdvisor, Xero Certified)
• Ask how they handle software updates
• Understand who pays for software licenses

3. Communication and Responsiveness

How will you interact with your bookkeeper?

Why it matters:

• You’ll have questions throughout the year
• Response time affects your ability to make decisions
• Poor communication creates frustration

How to assess:

• Ask about typical response times
• Understand their communication channels
• Pay attention to their responsiveness during sales process

4. Reporting and Insights

What information will you receive and how often?

Why it matters:

• Reports are how you benefit from bookkeeping
• Frequency affects your ability to spot issues
• Insights go beyond basic reports

How to assess:

• Ask to see sample reports
• Understand standard delivery schedule
• Ask about custom reporting capabilities

5. Security and Confidentiality

How do they protect your financial data?

Why it matters:

• Financial data is sensitive
• Data breaches can be devastating
• Trust is essential

How to assess:

• Ask about security protocols
• Understand who has access to your data
• Check for professional liability insurance

6. Scalability

Can they grow with your business?

Why it matters:

• Switching providers is painful
• Growth creates new bookkeeping needs
• You want a long-term relationship

How to assess:

• Ask about their largest clients
• Understand capacity for additional services
• Ask how pricing changes with growth

7. Integration with Tax Professional

How will they work with your CPA or tax preparer?

Why it matters:

• Year-end coordination affects tax filing
• Good integration prevents duplicate work
• Poor handoff creates errors

How to assess:

• Ask about their year-end process
• Understand what they provide to your CPA
• Ask if they have relationships with tax professionals

Questions to Ask Before Hiring

Use these questions to evaluate potential providers:

About Their Services

1. What’s included in your monthly fee?
2. How do you handle transactions outside normal volume?
3. What software do you use, and who pays for it?
4. How often will I receive financial reports?
5. What’s your process for year-end tax preparation?

About Their Experience

1. How many clients do you have in my industry?
2. What’s your average client tenure?
3. Can you provide references from similar businesses?
4. What certifications do your team members hold?

About Working Together

1. Who will be my primary point of contact?
2. What’s your typical response time for questions?
3. How do we communicate (email, phone, portal)?
4. How often will we have check-in meetings?

About Pricing and Terms

1. What’s your pricing structure?
2. What would cause my price to increase?
3. What’s your contract term and cancellation policy?
4. Are there setup or onboarding fees?

Making the Transition to Outsourced Bookkeeping

Once you’ve chosen a provider, here’s how to ensure a smooth transition:

Before You Start

1. Gather your financial records: Bank statements, credit card statements, previous financial reports
2. Grant software access: Add them to your accounting system
3. Provide business context: Help them understand your business operations
4. Introduce key contacts: Who handles invoicing, who approves expenses?

During Onboarding

1. Be available for questions: The first few weeks require your input
2. Review initial work carefully: Catch any misunderstandings early
3. Provide feedback: Help them learn your preferences
4. Establish routines: When will you provide receipts? When will they deliver reports?

After Onboarding

1. Review reports regularly: Actually look at what they send you
2. Ask questions: Don’t be shy about asking for clarification
3. Provide updates: Tell them about business changes that affect bookkeeping
4. Build the relationship: A good bookkeeper becomes a valuable business partner

Red Flags to Watch For

Be cautious if you see these warning signs:

During the Sales Process:

• Can’t explain their process clearly
• Quotes without understanding your business
• Pushy about long-term contracts
• Can’t provide references

After You Start:

• Consistently late on reports
• High error rate
• Poor communication
• Frequent staff turnover on your account
• Inability to answer basic questions

In Their Work:

• Bank accounts don’t reconcile
• Reports don’t make sense
• They don’t seem to understand your industry
• You find errors they should have caught

If you see these red flags, address them immediately. If they persist, find a new provider.

DIY vs. Outsource: Making the Decision

Still not sure? Consider these questions:

Outsource if:

• Bookkeeping takes you more than 2-3 hours per week
• You’re not confident in your bookkeeping accuracy
• You’d rather spend time on revenue-generating activities
• Your books are behind or disorganized
• You’re growing and bookkeeping is becoming a bottleneck

DIY might work if:

• You have very few transactions (under 30/month)
• You genuinely enjoy the work
• Your business is very simple
• You have accounting background or training
• You’re committed to staying current

The hybrid approach: Some business owners handle daily transaction entry while outsourcing reconciliation, reporting, and year-end preparation. This can be a good middle ground.

Your Next Step

If you’re considering outsourced bookkeeping, here’s what to do:

1. Assess your current state: How much time are you spending? Are your books accurate and current?

2. Define your needs: What services do you actually need? What’s your budget?

3. Talk to 2-3 providers: Get quotes, ask questions, evaluate fit

4. Check references: Actually call their other clients

5. Start with a trial period: Many providers offer this; take advantage of it

The right outsourced bookkeeper becomes a trusted partner in your business’s financial health—saving you time, reducing stress, and giving you clarity about your numbers.

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Looking for bookkeeping services in Utah? At Profit Path Books, we provide comprehensive bookkeeping services tailored to small businesses—plus we implement the Profit First system to help you actually keep more of what you earn. Learn about our services or book a consultation to discuss what you need.