Should I Use a Bookeeping Service or Do My Books In-House?

This is one of the questions that almost all small businesses face. Large businesses have a much easier time deciding -- when there is plenty of work to do and the cash flow to keep somebody employed, it is always cheaper to do your books in house. The issue is not usually about retaining control over your information -- in most cases you can have your Sage accounting software installed on your own computers and have somebody come into your office and do your bookkeeping. The solution is much more dependent on your individual business setup. We look at the advantages and disadvantages on either side.

Cost difference

While bookkeeping services are fairly turnkey for most outsourcing companies, and therefore quite reasonable priced, it will still cost more to have a bookkeeping service take care of you in the long term than hiring an employee. Cost wise, here are some things to consider:

• If you are a sole trader and bookkeeping would detract greatly from your earning time, having a bookkeeping service do the inputs for your Sage accounting software is a wise choice.
• In fact, if you earn more in an hour than you would pay a bookkeeper, you should hire one!
• If your company may not be in existence for very long, you should hire a bookkeeper rather than making the investment in training etc.
• If you are going to run the same accounting software and expect to have a steady client base and income for years, it will be more cost effective to train somebody and have them do the books in-house.

Expertise difference

Unless you are fairly familiar with tax law, you might actually get a few more deductions than otherwise by using a bookkeeping service. They may be able to point out areas where, if you keep financial records, it may have tax implications at the end of the fiscal year.

The in-depth knowledge of what is happening with your money week-to-week can also be very powerful in your business. Knowing where you are at financially empowers you to make decisions in light of what is really happening with your business … no assumptions or guesses.

Peace of mind and reduced stress

If you aren't of the financial persuasion (and there is only a small segment of the population that are!), you probably find doing the books very stressful. There is quite a lot to know; if everything is going well, you'll be right. If a small error in your Sage accounting software crops up, there could be major time lost in trying to fix it. Nobody needs extra stress!