A common misconception about outsourcing your bookkeeping is that you outsource in order to pay less in salary and benefits. Although this can sometimes be the case, there is a lot more to the picture. If you do it right, you can outsource your bookkeeping and it can pay for itself in extra and continuing profits! It all has to do with the bookkeeping system, the tools, and to whom you outsource. When you are going to outsource this task, ask yourself, “why you do need outsourced bookkeeping and what is lacking at the current time?”
Bookkeeping is done to accurately record all financial transactions of a business and to present them in an understandable manner. In order to pay taxes, your books need to be in order. And, if you need to establish a line of credit the bank will want to see evidence of how your business makes money and how well you handle your cash flow. In short, good bookkeeping is necessary for your business.
But, once all of the numbers are dutifully recorded, can you make sense of them? Or, are you missing both details and the big picture? What your bookkeeping should do for you is accurately record all transactions and then present them in such a manner as to help you make the critical decisions that grow your business and increase profits.
When this is not happening, that is when you need to outsource your bookkeeping to someone that can help you understand your true financial picture.
Bookkeeping is an expense of doing business. However, when done right, bookkeeping helps you effectively budget, manage cash flow, and have a steady stream of profits. So, when you are considering outsourcing, look for someone who will not just be another item in the expense column. Look for someone who will work with you to improve how your business operates, help you reduce expenses, and ensure that you take a profit each and every bookkeeping cycle.
A common reason that small business owners outsource their bookkeeping is that they are always a step behind the expenses and cannot see a way to make that situation any better. Part of the problem can be caused by how standard bookkeeping is done.
Sales minus expenses equals profit (loss) is the usual way that bookkeepers look at your small business. This can be totally accurate and also very misleading.
The Profit First system looks at the same numbers but simply make one critical change. Sales minus profit equals expenses is the Profit First formula. All the numbers are the same but the approach makes all the difference in the world and ends up creating a healthier and more profitable business. In this case, you outsource your bookkeeping and it can pay for itself. How does this happen?
At Exigo Business Solutions we are certified Profit First professionals. We work with our clients to improve the financial health of their company. Using the Profit First method we create multiple different accounts including business expenses, taxes, salary for the owner, and an account for profits. This approach improves budgeting, cash management, and accumulation of profits.
By creating a “profit” account you are budgeting and putting profits aside each and every month. This creates a reserve for emergencies and is proof of business solvency from day one. Because Profit First allocates cash flow to profit right away, you will need to look at all of your expenses. We work with our clients to help decide which expenses are unnecessary, which can be delayed, which can be handled more effectively, and which can be gotten rid of. It is often with this improved budgeting and cash management that true and enduring profits are found.
The word bookkeeping comes from the fact that originally all financial accounts were written in ledgers. In today’s computerized world, bookkeeping consists of spreadsheets and databases with the occasional printed report. In the world of computerized bookkeeping, leading software is QuickBooks. It is designed expressly for small and medium-sized businesses and gives you the full picture of your accounting with accurate reporting.
At Exigo Business Solutions we offer QuickBooks Pro Advisor Services. We will help convert and transfer data from your current bookkeeping system to QuickBooks. Then you will have QuickBooks custom reports for a clearer and deeper understanding of the financial aspects of your business.
The reports are customized because not every business is the same. Insurance businesses need slightly different reports than a healthcare practice, for example. Our experienced team will set up reports that work the best for you and your business.
The end result is that when you outsource your bookkeeping it can pay for itself with a clearer knowledge of your company, better budgeting, smarter cash flow management, and routine profits.
What is necessary for this to happen? Make the decision to outsource your bookkeeping. Then consider who you can trust and work with. Pick a bookkeeper with experience in the Profit First system and someone who uses the best tool for small businesses, QuickBooks.
Then ask for an analysis of your bookkeeping needs. This should be free! At Exigo Business Solutions we offer a 30-minute analysis of your business and bookkeeping requirements, without charge. When you outsource your bookkeeping, you should get a clearer picture of your business and not just another expense. When you outsource, you should go with professionals who will add value to your business and in whom you can place your trust. After all, your small business is your life and its success is your dream.