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  • Writer's pictureWill Woods - Office Elf

Should you outsource your bookkeeping?

Updated: Jul 4, 2023

To answer this question we should first look at some key differences between an accountant and a bookkeeper, and discuss why it is advantageous to have a regular bookkeeper rather than saving everything until tax time!

At the most basic level, the bookkeeper records and reconciles transactions, issues invoices, processes payroll and handles all the day-to-day essentials. The accountant takes that data, organises, analyses and reports it to the business owner and other stakeholders, who can use those reports to assist them in their decision-making.

There's obviously a good deal of crossover between the two, as most bookkeepers will generate basic standard reports (like the income statement, cash flow statement and balance sheet), and some TPB-registered bookkeepers are also able to file activity statements or offer tax services too.

Some things to consider:

  1. Accountants won't generally do the basic bookkeeping... and if they do, it will be hugely expensive! A bookkeeper will upload primary source documentation, separate GST from non-GST expense items, onboard staff into your payroll system, prepare invoice templates, organize payment schedules for bills, and also assist with basic business compliance.

  2. Many small businesses and sole traders don't have spare time... and whilst it is tempting to do it all yourself, or entrust it to a family member, it is challenging to keep processes consistent and accurate. This can be especially problematic for cash flow, or at the end of the financial year. If you outsource your bookkeeping, your bookkeeper will be aware of all the compliance deadlines (superannuation, FBT return etc.) and will assist in meeting your obligations.

  3. Employing an in-house bookkeeper is pretty expensive... with the employer responsible for paying annual leave, personal leave, long service leave, domestic violence leave, and compassionate leave as well as the cost for someone to cover that person while away. Then there is superannuation rising yearly up to 12% by 2026, and a dozen or so public holidays, and compulsory Workers' Insurance.

  4. Outsourced bookkeepers are usually certified and insured... whilst an employee will likely need training, on your time and at your expense, and if they mess up, you must bear the cost yourself. When looking to contract a bookkeeper it is essential to find someone with at least a Certificate IV in Accounting and Bookkeeping, with Professional Indemnity Insurance, and who is a member of a professional association like the Australian Bookkeeper's Association.

  5. Outsourced services are scalable... so you only pay for what you need, when you need it. You don't need to find office space for an employee, or provide a computer or pay for software licences. An external bookkeeping service can adapt to handle increased demand or can scale back services during quiet times. This scalability provides flexibility, agility, and cost-effectiveness, enabling small businesses to respond to market fluctuations efficiently.

  6. Your accountant is only as good as the data you provide... so if he receives incomplete or erroneous data at the end of the year, there is a good chance that the reports you receive from him will be misleading or you may lodge incorrect activity statements. That's why it's essential to stay on top of the books on a monthly, if not weekly, basis.

Outsourcing offers many advantages for small businesses, making it a compelling option to consider. By choosing a reliable partner, small businesses can offload the burdensome task of bookkeeping, allowing them to focus on what they do best: growing their business, enhancing customer relationships, and achieving long-term success.

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Jane Brennan
Jane Brennan
24 juin 2023
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