The Top 10 Ways to Outsource Bookkeeping for CPA Firms

outsourced bookkeeping for cpas

It’s rare these days to have the stereotypical client walk in with a shoebox full of receipts (although it still happens from time-to-time). 

A much more common scenario is a client walking into your office with a stack of bank and credit card statements detailing a year (or more!) of activity that includes every one of their Starbuck trips and fast food purchases for the last year. 

As more clients move to online systems, the stack of paperwork being delivered to your office has become a less common occurrence - but it still happens. The question you should ask is how much of your team’s time and expertise do you want to devote to bookkeeping? While bookkeeping is an essential part of the accounting lifecycle, it’s also the easiest part to outsource.

How to Decide if You Should Outsource Your Firm's Bookkeeping

There are several questions you should consider when trying to determine whether you should outsource your firm’s books. 

Do you have the staff available to handle in-house bookkeeping?

From the outset, you need to determine whether your team can handle the time-intense job of bookkeeping. While some of the aspects of bookkeeping can be automated through bank feeds and downloaded statements, a lot of time can be consumed by categorizing transactions, tracking down check recipients, and questioning whether expenses are personal or business.

If you do not have the staff in place, you need to consider whether you can onboard a new staff member with the necessary skill set to take on the additional work. Additionally, in bookkeeping, having a consistent team member responsible for managing a client’s books can be more efficient as the bookkeeper learns each client’s quirks.

Does the profit margin on bookkeeping align with your firm’s goals?

Though bookkeeping can be a highly profitable endeavor, you need to consider your firm holistically and see if bookkeeping fits in with your goals for revenue and profit. Bookkeeping is often performed at a lower hourly rate than tax or consulting services. If your bookkeeper is out of the office unexpectedly, will you have to pull resources away from other, more profitable tasks to fill in for the missing bookkeeper?  

If your clients are looking for a single firm that can handle all of their accounting needs, having bookkeepers on staff will make your accounting services package more attractive.  

Does the benefit of having granular knowledge of your clients’ books outweigh the cost?

There is much to be said for doing the data entry yourself, categorizing the transactions, and meeting with the client to discuss any questions that arise during bookkeeping. Regular check-ins with the client will mean that there aren’t any (or at least fewer) surprises at the end of the year.  

But could the same intimate knowledge of your client’s books be accomplished in a less time-intensive manner through regular reviews? Perhaps. That will depend on the client and the thoroughness of your reviews.  

It’s possible that frequent review of the general ledger could yield the same level of knowledge without having to trudge through data entry and reconciliations on a regular basis.

Are your clients comfortable with you outsourcing the bookkeeping?

Though some clients have their own bookkeeper that they have sourced themselves, they may ask for recommendations of bookkeeping services. If the clients believe that you are providing the bookkeeper services, but you have decided to outsource those services to a third-party, you should disclose the relationship to your client. 

If you are sending your client's sensitive financial information to a third-party, you need to ensure that the client is aware that the information is being transmitted and that they are comfortable with the arrangement.

Does having in-house bookkeeping allow you to offer other services such as payroll or accounts receivable management?

Are your clients looking for assistance with more than just monthly bank reconciliations? If they want you to be responsible for their accounts payable and accounts receivable, you will already be doing most of the bookkeeping work and it probably makes sense to handle all of the bookkeeping in-house.  

Having an idea of which services your firm can, and will, provide will help you determine whether outsource bookkeeping makes sense for your firm.

Should you outsource your firm’s bookkeeping?

The answer to this question will depend on your answers to the previous questions. Whether you should outsource your firm’s bookkeeping will depend on the size of your team, expectations of your clients, goals for client management, and firm’s profitability targets. There’s no one size fits all answer to this question.

If you’ve decided that outsourcing bookkeeping is the right move for your firm, below is a list of 10 options for how to do it.

The Top 10 Options for Outsourced Bookkeeping

Bench.co

Bench.co is a large, virtual bookkeeping and accounting firm that has worked remotely with clients from the very beginning. They are able to seamlessly integrate their bookkeeping into your accounting workflows. Bench.co is best for very small businesses that need basic bookkeeping services.

Pros

  • Bench.co has a system of internal reviews to ensure that the bookkeeper’s work is accurate.
  • The web-based interface is intuitive.
  • Financial information is encrypted and secure.

Cons

  • The response time from your bookkeeper may be slower than you like without any way to elevate your questions.
  • Bench.co is known for high turnover rates so you may not have your bookkeeper for very long.
  • There is limited customization available in the reporting and categorization of transactions.

Upwork

Though not specifically designed for bookkeepers, Upwork is a freelance marketplace that matches eager freelancers with customers who post jobs. 

Pros

  • A very large number of freelancers are available for jobs.
  • You get to pick your freelancer and can interact with them prior to hiring.
  • A surprising number of professionals are on the site and provide high-quality services. 

Cons

  • Unless you conduct a background check on your own, you will not be 100% sure that the freelancer is who they say they are.
  • Freelancers may drop off the site or become non-responsive.
  • Upwork fees for new contracts are 20% of each invoice and are taken out of the freelancer’s pay which may cause the rates to be higher than working directly with a freelancer.

Xendoo

Xendoo is a U.S.-based company that works in Gusto to provide outsourced bookkeeping solutions. Their services include accounting and tax preparation. They might be considered a direct competitor depending on which services your firm provides.

Pros

  • Reports and accounting are regularly updated depending on which service level you select.
  • Accounts are reconciled weekly meaning that your client’s books will always be up-to-date.
  • Clients are matched with a dedicated team of bookkeepers.

Cons

  • Xendoo’s payroll solution is run through Gusto which has limited reporting capability.
  • Plans start at nearly $200/mont. This is a pricey option for most small businesses.

Pilot

Pilot can be used as a standalone web application for accounting or with the support of a dedicated bookkeeping team. The system allows for the direct import of bank transactions and digital statements.  

Pros

  • The software is easy to use and customer support can be reached by phone, email, or chat.
  • Bookkeepers are well-trained in their craft and provide high-quality bookkeeping services.
  • The flat-rate pricing means that you won’t be surprised by unexpected overages.

Cons

  • The flat-rate pricing for Pilot starts at $400/month putting this out of reach for many small businesses. 
  • Some users report trouble getting ahold of their bookkeeper occasionally and delayed financial statements. 

Fiverr

Like Upwork, Fiverr was not designed with bookkeeping in mind but has become a leading contender when it comes to finding freelancers.  

Unlike Upwork where the client posts the job, freelancers on Fiverr post their gigs and you seek out a freelancer who has a gig that meets your needs. From there, bookkeeping services can be provided through any accounting system based on your conversation with the freelancer.

Pros

  • There are a large number of freelancers to choose from and you establish the pricing for the gig prior to commencing. 
  • The customer is in control of approving deadline extensions.
  • There is a wide-variety of experienced freelancers so you can find someone that fits your needs and your budget.

Cons

  • Fiverr does not require users to use their real names as their username. You may not know who you are working with.
  • Credentials are not verified. You will need to do some legwork yourself.
  • Fiverr takes 20% of the payments to the freelancers and charges the purchaser a fee. The end price may be higher than with other services.

QuickBooks Live

Intuit is a leader in accounting software. It makes sense that they have ventured into bookkeeping services as well. Through the QuickBooks Live system, Intuit will pair you up with a bookkeeper who can answer your questions, suggest process improvements, and help you categorize transactions.  

Pros

  • With a large team of bookkeepers available, there is always someone available to assist you with your accounting questions.
  • Integrates seamlessly in the QuickBooks online experience.
  • Does not require any contracts and can be used on an as-needed basis.

Cons

  • You won’t be dealing with the same bookkeeper each time meaning you may get different answers from different people.
  • Surprisingly, they do not support clients using the accrual basis of accounting.
  • The convenience comes at a high hourly price.

SmartBooks

SmartBooks allows small businesses to outsource bookkeeping, payroll, and accounting.  

Their system includes various metrics tailored to different industries to give small business owners a clear picture of how they are doing financially and how they stack up against the competition. SmartBooks also provides one time set up consulting options for businesses that just need a little help getting started.

Pros

  • They offer a variety of services and plans.
  • Having both payroll processing and bookkeeping provided by a single company is convenient.
  • Customers are provided with a dedicated point of contact.

Cons

  • As with any larger company, there is turnover and your point of contact might change regularly.
  • SmartBooks has expanded into accounting, tax, and partial CFO services. They are likely a direct competitor.

Bookkeeper360

Bookkeeper360 is a Xero-based bookkeeping firm that provides a dedicated accountant for each client. They work in a cloud-based environment with a secure and provide upfront pricing based on your monthly expenses.

Pros

  • They have both contract and hourly options for accounting support.
  • They are one of the few companies focused on Xero accounting.
  • Bookkeeper360 also provides back office support, if needed.

Cons

  • Because they work primarily in Xero, they’re not a good fit for QuickBooks devotees.
  • This is a medium-sized firm. Your dedicated accountant may not be in your time-zone making response times slower.

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