When should you start outsourcing your bookkeeping?

One of the most important criteria for what makes a good leader is the ability to effectively delegate responsibilities. Accounting is one of the most important aspects for businesses in any industry and tends to be the responsibility of the MD in any small business. As the business grows, gains revenue, and acquires additional staff, accounting responsibilities will increase as well, leading to more and more of the MD’s time being dedicated to accounting responsibilities. The MD may choose to increase their workday or work weekends to keep up. While that may be beneficial in the short term, they may see that the other aspects of their job will fall in quality. To avoid this, the business owner may choose to delegate the responsibilities of accounting by outsourcing to a professional.

This is a natural progression for businesses, however, some small business owners may not know when it is the best time to begin outsourcing accountancy duties. Many circumstances may indicate it is time:

As a business expands and more staff are being employed, payroll becomes more difficult to manage. Usually, when a business reaches around ten employees, outsourcing payroll duties becomes an efficient option for the business. Especially considering the unique situation of each employee. 

Most people who start their own business aren’t necessarily doing so for the Accounting responsibilities, though as their business expands, more of the workday becomes dedicated to Accounting duties rather than tasks they originally started the business to do. It should be remembered that Accounting Duties increase heavily as a business develops, requiring more of their time, further straining their creativity.

Many small businesses simply cannot justify dedicating a significant portion of their resources to Accounting duties, This is even more significant for businesses in the creative industries due to their specific resources not being suited to the responsibilities of Accounting. This can lead to resources being used inefficiently.  

Outsourcing Accounting duties may seem daunting to the small business owner, but the benefits are doing so become more visible as we enter a Post-Covid world. It is now more important than ever to have not only efficient accounting but accurate accounting. VAT and Corporation tax rates are likely to fluctuate over the coming years, and how well a business can ride that wave will be a determining factor on how successful that business will be, and having a professional be in charge of a companies’ finance can prove helpful for the business and its owner.

Here's a handly decision tree to help you decide when to start outsourcing your bookkeeping: