Benefits of Outsourcing Your Bookkeeping
Benefits to Outsourcing Your Bookkeeping Services
Most small and medium sized business owners struggle with trying to be all things to all people. As a result, there is no time or energy left over to spend on their key strengths and growing the business.
Perhaps it is time to conduct a cost-benefit analysis and see what the adage “it’s cheaper to do it myself” is really costing you. We are not disputing the fact that you can’t do your bookkeeping, but are asking the question should you be doing it?
Typically, outsourcing bookkeeping costs are lower than the costs of hiring an employee. When you work with AIS Solutions, you will realize all the benefits of outsourcing your bookkeeping services to help make running your business much smoother.
Cost-Benefit Analysis of Outsourcing Your Bookkeeping Services
Would your outsourced bookkeeping costs be less than hiring an employee? Try this cost-benefit analysis to find out.
Compile a list of the tasks that you don’t do well – remember, be honest, as this exercise is for you.
Estimate the number of hours that you spend on each of these tasks on a weekly basis.
Calculate how much this is costing your business (# of hours x hourly rate)*
Does this represent value to your business?
Make a list of the things you would like to do in your business “if only I had more time”
* Remember when calculating your hourly rate to not use the rate at which you pay yourself, but the rate at which you bill yourself out. If you are a consultant who bills yourself out at $1000/day your hourly rate is $125/hr. This is the real cost of your time to your business.
The Real Cost of hiring a Full Time Bookkeeper
Now you need to determine the cost of hiring an employee to do your bookkeeping compared to the cost of doing it yourself or outsourcing your bookkeeping.
Below is a sample case study to outline the areas of expenses which must be considered:
Base Salary. This is normally quoted as the amount of gross pay being paid to an employee. For our example, we will use a base of $40,000 per annum. (Current Canadian average for a bookkeeper is between $40,000 – $60,000 per year)
Annual Vacation is normally a minimum of 2 weeks per year or 4% of the base salary. In our example, this is $1,600.
Statutory Holidays. There are usually 10 stat holidays in Canada each year (this varies slightly from one province to another). This is another 2.78% added to the total cost or $1,112 for our case study.
Sick Leave. The sick leave policy usually varies a great deal in Canada as it isn’t legislated unless you are unionized or a federal/provincial employee. To be conservative, we will estimate 5 sick days throughout a single calendar year. For our example, this represents $556 in additional cost.
Workers Compensation Insurance. Again, this can vary broadly depending on the risk of the industry. The rate is fixed each year by statute and cannot be negotiated. We have clients that pay up to 12% of the total of their annual wages. For our example, let’s use 3%, so that’s another $1,200 to our employment costs.
Payroll Tax. These are federal government taxes that are levied on a business who have employees. In 2021 the employer portion of CPP was 5.45% and EI was 2.21%. In our example, this amounts to $3064.
Health Benefits: Medical, Dental, Vision etc are typically $2000 per employee per year
Now add up all of the numbers we’ve calculated above – the cost of employing someone on a base of $40,000/annum is actually $51,916. This is an extra 29% over their base salary.
Advantages of Outsourcing Your Bookkeeping Services to a Bookkeeping Firm
Beyond reducing your costs there are many advantages of outsourcing the non-core functions of your business. These advantages can generally be grouped into the following categories:
Benefits of a Professional and Specialized Bookkeeping Team
All of our team members attend multiple conferences each year to make sure we are staying on top of all the latest trends and technology so we can help our clients take advantage of them – this doesn’t just include bookkeeping but also the latest tools being used in your industry – things such as scheduling, inventory control, job or project costing, removing or minimizing paper from your workflows, collecting payments onsite, offering online payment options, GPS tracking, etc.
A firm like AIS Solutions is not just providing you with a bookkeeper. We are your outsourced accounting team which means you have the benefit of a team of professional specialists and every one of our clients is supported by at least two people so there are always at least two people familiar with your account. No more concerns about vacations or illness.
You never need to worry about going through the process of hiring a new person – that is our responsibility.
The Cost Benefit Analysis above has shown you what you can save just from your time
Rather than paying for full-time staff, you only pay for the hours that you need and with little to no overhead and no infrastructure expenses.
No pension plan contributions, employer expenses like EI, CPP or WSIB, employee medical benefit costs are ever needed
If an activity that you don’t excel at takes you 10 hours, someone who does excel at the task can likely perform it in half the time
You Stay Focused on Your Core Business
By not spending time on the details, you can focus on the reasons you went into business for yourself, and the key strengths you and your staff can be put to best use.
Increase Your Flexibility and Efficiency
As your business grows, or your needs change, an outsourced partner can adapt the services being provided with no infrastructure costs incurred by you.
* While this example applies to all aspects of employment within your company, it demonstrates why it is worth looking at areas within your company which may be suited to outsourcing to a specialist provider.
Outsourced bookkeeping costs will be lower and you’ll benefit in numerous other ways. You have your business goals… we have solutions and ideas. Let’s talk.
Call 1 888 575 5385 or click here now.
When Is The Right Time to Seek Our Help?
- You’re looking for change from your current bookkeeper
- You realize your financial system and internal controls need more attention
- You’re a growth company wanting to formalize workflows and track growth
- You’re preparing for a strategic business transaction that requires due diligence scrutiny on your Accounting
- You’re looking for an effective change to your accounting or bookkeeping systems
Call 1 888 575 5385 or click here now.