Outsourced Bookkeeping vs. DIY: Which Is Better?
Compare outsourced bookkeeping vs. doing it yourself. Learn about costs, time savings, accuracy, and which option is best for your small business.
Andrew Kim
10/13/20266 min read
Outsourced Bookkeeping vs. Doing It Yourself: Which Is Better?
When you run a small business, keeping track of your finances is part of the job. You need to record income and expenses, reconcile bank accounts, organize receipts, and understand how your business is performing financially.
But should you handle all of this yourself, or is it worth hiring a bookkeeper?
Both options have advantages. Doing your own bookkeeping can save money, especially when your business is small. Outsourcing your bookkeeping can free up time, improve consistency, and help you maintain accurate financial records.
The right choice depends on your business, the number of transactions you handle, your accounting knowledge, and how much time you can dedicate to managing your books.
What Is DIY Bookkeeping?
DIY bookkeeping means managing your own business financial records rather than paying someone else to do it.
Many small business owners use accounting software such as QuickBooks Online to record transactions, categorize expenses, reconcile accounts, and prepare financial reports.
If your business has relatively few transactions, keeping your own books may be manageable. You can work on your records when it suits your schedule and maintain direct control over your finances.
However, bookkeeping still requires time and attention. Transactions need to be categorized correctly, bank accounts need to be reconciled, and financial reports need to be reviewed regularly.
When bookkeeping gets pushed aside because of other business responsibilities, records can quickly fall behind.
What Is Outsourced Bookkeeping?
Outsourced bookkeeping means hiring an external bookkeeper or bookkeeping service to manage some or all of your routine bookkeeping tasks.
Depending on the services you choose, this may include:
Recording and categorizing business transactions
Reconciling bank and credit card accounts
Tracking accounts payable and accounts receivable
Maintaining organized financial records
Preparing monthly financial reports
Catching up on overdue bookkeeping or cleaning up existing records
Some businesses outsource their entire bookkeeping function, while others hire a bookkeeper to handle specific tasks.
For example, a business owner might continue issuing customer invoices and paying bills while outsourcing transaction categorization, reconciliations, and monthly reporting.
This flexibility allows you to choose a level of support that fits your business.
1. Cost: Which Option Is Cheaper?
Cost is often the first consideration for small business owners.
Doing your own bookkeeping may appear to be the cheaper option because you do not have to pay for an external service. However, you may still have accounting software subscription fees and the cost of your own time.
Outsourced bookkeeping involves an additional expense, but the cost depends on the volume of transactions, the complexity of your books, and the services included.
Consider a business owner who spends five hours each month managing their bookkeeping. If those five hours could instead be spent on billable work or activities that generate revenue, the time spent on bookkeeping has an opportunity cost.
That does not automatically mean outsourcing is cheaper. It means you should consider both the direct cost of bookkeeping and the value of your time.
For a very small business with few transactions, DIY bookkeeping may make the most financial sense. For a growing business with more transactions and reporting requirements, outsourcing may provide better overall value.
2. Time: How Much Is Your Time Worth?
Small business owners already have plenty of responsibilities. Depending on your business, you may be managing customers, marketing, scheduling, purchasing, sales, and daily operations.
Bookkeeping adds another set of tasks to that workload.
If you manage your own books, you need to set aside time to review transactions, resolve discrepancies, and keep your records current. You also need to learn how to use your accounting software properly.
Outsourcing can reduce the time you spend on these routine tasks, allowing you to focus on running your business.
However, outsourcing does not mean you can ignore your finances entirely. You will still need to provide documents, answer questions, review reports, and approve payments where applicable.
The main benefit is that you spend less time maintaining the records yourself.
3. Accuracy: Can You Keep Your Books Up to Date?
Accurate bookkeeping requires consistency. Transactions need to be recorded correctly, expenses need to be categorized appropriately, and bank and credit card accounts need to be reconciled.
If you have the knowledge and discipline to maintain your books, DIY bookkeeping can work well.
The challenge is that mistakes can be easy to overlook, particularly when you are unfamiliar with accounting principles or leave several months of transactions unfinished.
An experienced bookkeeper can help establish a consistent process, identify discrepancies, and maintain organized records. However, outsourcing does not guarantee error-free bookkeeping. The quality of the service, communication, and review process still matter.
Whichever option you choose, regular reconciliations and periodic reviews are important.
4. Financial Reports: Do You Understand Your Business Performance?
Bookkeeping is not just about recording what happened. It also helps you understand your business's financial position.
Reports such as the income statement and balance sheet provide different information about your business. A cash flow statement can also help you understand movements in cash.
When you manage your own books, you are responsible for ensuring the underlying records are accurate and interpreting the reports correctly.
An outsourced bookkeeper can help maintain the records and prepare regular financial reports, depending on your service agreement. These reports can make it easier to review revenue, expenses, profitability, and outstanding balances.
Keep in mind that bookkeeping reports are only as reliable as the information behind them. You still need to review the results and ask questions when something does not look right.
5. Flexibility and Control
DIY bookkeeping gives you direct control over your records. You can access your accounting software, review transactions, and make routine updates whenever you need to.
This can be appealing if you enjoy working with numbers or want to understand every aspect of your business finances.
Outsourcing requires you to share relevant financial information and coordinate with another person. You will need to provide access to the appropriate records, establish responsibilities, and communicate when questions arise.
The advantage is that you can delegate routine work without giving up ownership of your business finances.
You should retain control over your bank accounts, financial decisions, and payment approvals. A bookkeeper's role is to maintain and organize your records according to the agreed scope of work.
6. What Happens When Your Business Grows?
DIY bookkeeping may be manageable when your business has a handful of monthly transactions. As your business grows, the volume and complexity of your financial activity may increase.
You might begin handling more customer invoices, supplier bills, payment processors, credit card transactions, or employees.
At that point, the time required to maintain your books may become more difficult to manage.
Outsourcing can help you maintain a consistent bookkeeping routine as your business grows. You can also adjust the services you receive as your needs change.
There is no single transaction count at which every business should outsource. The important question is whether you can maintain accurate records without taking too much time away from other responsibilities.
When Should You Do Your Own Bookkeeping?
DIY bookkeeping may be a good fit if:
Your business has relatively few transactions.
Your finances are straightforward.
You are comfortable using accounting software.
You understand basic bookkeeping principles.
You can consistently set aside time to maintain your records.
You are willing to review your financial reports and resolve discrepancies.
If these conditions describe your business, managing your own books may be a reasonable way to control costs.
You can also handle basic bookkeeping yourself and consult an accountant or bookkeeper when you need additional guidance.
When Should You Outsource Your Bookkeeping?
Outsourced bookkeeping may be worth considering if:
You regularly fall behind on recording transactions.
You spend too much time managing receipts and financial records.
You are unsure whether your accounts are reconciled correctly.
You struggle to understand your financial reports.
Your business has grown more complicated.
You need consistent monthly reporting.
You want to focus more of your time on customers and business operations.
You do not need to wait until your books are months behind before seeking help. Outsourcing ongoing bookkeeping can help you maintain organized records from the beginning.
If your existing records are already behind, a catch-up or clean-up service may be needed before regular monthly bookkeeping begins.
Can You Combine DIY and Outsourced Bookkeeping?
Absolutely. You do not necessarily have to choose between doing everything yourself and outsourcing everything.
A hybrid approach can work well for small businesses.
For example, you could issue customer invoices, pay your bills, and upload receipts yourself while a bookkeeper handles transaction categorization, bank reconciliations, and monthly financial reports.
This arrangement allows you to stay involved in your finances while delegating the tasks that consume the most time or require additional expertise.
The key is to establish clear responsibilities so transactions are not missed or recorded twice.
So, Which Option Is Better?
Neither DIY bookkeeping nor outsourced bookkeeping is automatically better for every small business.
If your business is small, your transactions are straightforward, and you have the time and knowledge to maintain your records, doing your own bookkeeping may be sufficient.
If bookkeeping is taking time away from running your business, your records are falling behind, or you need more consistent financial reporting, outsourcing may be the better choice.
The goal is to maintain accurate, organized financial records that help you understand your business and make informed decisions.
Looking for Outsourced Bookkeeping in Edmonton?
YEG Bookkeeping provides remote bookkeeping services for small businesses in Edmonton and surrounding Alberta communities.
Our services include transaction categorization, bank and credit card reconciliations, monthly financial reports, and bookkeeping catch-up and clean-up.
Whether you need ongoing monthly support or help organizing overdue records, we can help you keep your books organized so you can focus on running your business.
Visit YEG Bookkeeping to learn more about our bookkeeping services.
