Bookkeeping is a necessary part of any business. It keeps track of financial information and helps organise and manage the day-to-day tasks that keep a business running smoothly. Whether you are small or large, bookkeeping is an important tool for success — covering records of assets and liabilities, inventory management and tax preparation.
Plenty of people reach for bookkeeping software and start there. Before you do, it is worth understanding the two ways the work itself gets organised: in-house and outsourced.
In-house bookkeeping
In-house bookkeeping is a common practice. It lets your own people keep track of the finances and keep an eye on company profits, and it helps ensure business records are correct and money is properly budgeted. The work covers bookkeeping itself, data entry and analysis.
Handling it in-house can keep an organisation efficient and organised. By taking care of the books yourself, your financial information stays up to date — which saves time and money in the long run.
Outsourced bookkeeping
Outsourced bookkeeping means the bookkeeping and financial reporting is provided by a third party, such as an accounting firm or a consultant. The main reasons for doing it are cost savings and a reduced time commitment. The work is generally done by someone other than the bookkeeper who created and operates the accounting system.
This can be helpful if your current accounting arrangement is unreliable, or if you simply do not have the time or resources to do the bookkeeping yourself.
Comparison
In-house bookkeeping is a popular option because it can save both time and money. Many businesses prefer it because it removes the need for a separate firm to design and prepare their financial reports, and because it lets them follow their financial position and performance more closely.
Outsourced bookkeeping has grown more popular in recent years as businesses look to save money and stay organised. It does carry risks worth weighing: important financial disclosures can be missed, and reports prepared at a distance from the business can be inaccurate — either of which has serious consequences for the company whose name is on them.
Conclusion
The main difference is one of scope. In-house bookkeeping focuses on the bookkeeping process itself, while outsourced bookkeeping often comes with a wider range of services attached — accounting, financial planning and tax preparation. Knowing the difference is what lets you make the right decision for your business.
Whichever route you take, the billing software underneath matters. For the invoicing side of your bookkeeping, consider Invoice Office.