How Does Outsourced Bookkeeping Work?

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How Does Outsourced Bookkeeping Work?

Small businesses have limited resources.  When the business owners are heavily involved in the day to day running of the company, oftentimes they simply do not have the time to worry about non-core (but business-critical) functions. Bookkeeping is one of those functions. 

Running a business, your focus should be on building and growing your business, not worrying about documenting every single transaction or struggling to understand small business accounting software. Let an outsourced bookkeeper take that off your plate. 

You’ll benefit from:

  1. More time. Outsourcing your bookkeeping means you can focus your time and energy on what excites you and use that time to grow your business. 
  2. Lower expenses. Outsourcing your bookkeeping means only paying for services needed, which is usually more cost-effective than having a full-time in-house bookkeeper. Many outsourced bookkeeping services offer flat rate packages rather than billing hourly, taking away the stress of running up the bill every time you need to ask a question. 
  3. Flexibility. As your business scales up or down, so too can your outsourced bookkeeping services. 
  4. Professional support. The transition to an outsourced bookkeeper is much easier than you think. We do everything we can to create a smooth transition.

What services do outsourced bookkeepers offer?

It’s important to note that bookkeeping and accounting are not the same

A business accountant is employed to perform audits, prepare tax returns, income statements and balance sheets etc. 

Bookkeepers, on the other hand, are responsible for ensuring the day to day upkeep of a business's financial data in their accounting software.

Bookkeepers reconcile bank and credit card transactions, track bills and income yet to be recognized, and in some cases, they are also responsible for payroll. Ultimately, the role of the bookkeeper is to provide accurate financial reporting, including Profit & Loss (Income) Statements, statements of cash flows, and a balance sheet on a monthly or quarterly basis.

How does outsourcing your bookkeeping work? 

1. Onboarding

Before any work is conducted, there is a critical onboarding period. Aligning expectations between all parties is one of the most important steps in the onboarding process. Even something as small as over or under communicating can make or break the relationship.

During the onboarding stage, your outsourced bookkeeping team will do the following:

1. Conduct a deep dive into your current accounting process and books.

Before getting started, the outsourced bookkeepers must garner a full understanding of the business’s current financial processes and documentation. This is done to ensure that all historical records are in compliance with reporting standards and to facilitate a smooth transition from in-house bookkeeping to outsourced. 

This includes:

  • learning the main sources of revenue, 
  • detailing the current invoicing process, 
  • reviewing the chart of accounts to ensure it is optimized for your record-keeping needs, and more. 

This is the time that any gaps in the current accounting system are identified where your outsourced bookkeeping service provider can help implement new tools to fill those gaps. 

2. Create a customized process map and communication plan.

At Enkel, we use process maps to outline what will happen, when and by whom during the month in order for us to deliver the month-end reporting on time. We customize these process maps based on the client’s business needs and the services to be provided. 

3. Request access to your records and accounting software.

With a thorough understanding of current processes and a new process map in place, the next stage of the onboarding process is for the outsourced bookkeeper to get access to your financial information.

They will need access to your current accounting software such as QuickBooks or Xero, and other tools such as Shopify, PayPal, Stripe, Dext Prepare, Expensify, etc. Most accounting platforms and apps allow you to provide read-only access to a third party without giving them full permissions.

4. Request access to your banking institutions and CRA account

CRA access allows your bookkeeper to help with your sales tax filings. As with apps and accounting platforms, most banks allow you to provide read-only access to a third party, meaning the bookkeeper has access to view your account transactions without having access to your funds. Most cloud accounting software can pull bank feeds directly from banks, automating the bank reconciliation process. 

5. Transition you to cloud-based accounting software (if you aren’t already on one) & set up your new tools

Outsourced bookkeeping teams will usually transition your books to a digital platform, which makes it easier for them to do their job. For any processes that are not online  — paper invoices, receipts, expense tracking, etc — your bookkeeper will likely encourage (and help) you to digitize and set up integrations with accounting tools like Dext Prepare, which will allow you to take a photo of your invoices and receipts and share them with your outsourced team.

6. Train your team on the new process and new tools.

With all the onboarding preparation work complete, the final step is for the outsourced bookkeeper to train those involved in the new processes and any new tools that have been implemented. 

Go-live. It’s time for the remote bookkeeper to actually start working on your books! 

2. Going live!

With onboarding complete, the bookkeeper can go live and start taking the major parts of the process off your plate. It’s important to note that hiring someone else to do your books, whether that’s an in-house bookkeeper or outsourcing to a service provider, doesn't mean you can be completely hands-off. 

They still need your involvement in order to be successful. Outsourcing your bookkeeping simply means that the time you have to spend on bookkeeping is minimized, allowing you to reallocate that time to other tasks while getting accurate financials that you can rely on. 

What does the outsourced bookkeeping process look like?

Different service providers have different processes, but at Enkel, our bookkeeping process typically looks like this:

Step 1.  Getting your receipts and invoices to us

During the month, you’ll send us your invoices and receipts using Dext Prepare. Simply take a photo or email us the document via your custom Dext email address. Your documents will be stored digitally in your Dext account for up to 10 years so in the event of an audit, the CRA will accept your digital documents stored in your Dext account. 

Step 2. Reviewing your transactions for accuracy and unknown transactions. 

We will review your expenses on Dext Prepare to ensure they are coded correctly before importing them into your online bookkeeping software. Next, we reconcile your bank transactions and identify any unknown transactions. We work with you to determine the appropriate coding for these unknown transactions.

Step 3. Complete bank reconciliation and receive your financial statement package

After month-end, we will complete the bank reconciliations and send you the financial statement package which includes your profit and loss statement, balance sheet, statement of cash flow etc. 

There comes a turning point in the growth of almost every small business when certain, non-core, functions of the business must be taken off the business owner’s plate. For some businesses, the best solution is to hire an in-house bookkeeper, whereas for others, the benefits of an outsourced bookkeeping service outweighs the in-house approach. Whichever solution you choose, we know you will feel nothing but relief once you no longer have to worry about day to day bookkeeping. 

At Enkel, we like to think of ourselves as an extension of your team. When you choose Enkel for your outsourced bookkeeping services, you can rest assured you are placing your finances in the hands of detail-oriented, thorough and professional bookkeepers who will take the time to get to know you and your business.

Contact us today for a better bookkeeping solution! 

Gracia Chua
About Gracia Chua
Gracia Chua is the Marketing Specialist at Enkel Backoffice Solutions, a Vancouver based accounting firm that provides day-to-day bookkeeping services for small to medium-sized businesses and non-profit organizations.