5 Misconceptions About Bookkeeping Services

Myth No. 1: Bookkeeping and accounting are the same.

Fact: Bookkeeping shares some overlap with accounting but is a distinct role. In a perfect world, you should have both—plus a CFO and controller. Here’s how bookkeeping and accounting compare:

Bookkeeping Roles

When we think about bookkeepers, it’s important to remember that they are focused primarily on looking at data instead of crunching numbers. This includes all the moving pieces involved in keeping track of expenses and revenue. As a data entry connoisseur, a bookkeeper looks into historical data to provide context for what’s happening.

Accounting Roles

By contrast, accountants do more to act on the slew of information you have on your business’s finances, keeping you in check along the way. That means they’re in charge of controlling costs and managing compliance with applicable laws. As a numbers person, an accountant reconciles data and creates reports to explain events.

Myth No. 2: Outsourced bookkeeping services are expensive.

Fact: Outsourced bookkeeping is more cost-effective than an in-house hire. Just because you’re investing in something doesn’t mean it’s automatically expensive. In fact, an outsourced relationship provides several cost benefits:

No Overhead

Outsourced bookkeeping services are just that: services. They operate as completely external partners instead of as employees, so you don’t have to worry about paying a full-time salary or benefits. 

Based Around What You Need

Liberty Mutual got it right when it said, “Only pay for what you need.” That’s exactly how outsourced bookkeeping services function, so if you only need someone part-time, that’s all you pay for.

Pays for Itself Over Time

While it's an investment, bookkeeping services pay off. These professionals usually work for multiple businesses at a time—and have likely been full-time bookkeepers before—so they bring a breadth of knowledge from across those experiences. As a result, your business saves both time and money while ensuring more accurate record-keeping.

Myth No. 3: It’s just data entry.

Fact: Yes, data entry is key to the role, but bookkeeping services have more control over the financial system. You can generally lean on bookkeeping services for several key tasks:

Reconciliation 

Does column A on your ledger match your bank account? Bookkeeping services reconcile accounts when discrepancies arise. They check the accuracy of entries and take steps to fix any errors.

Reporting

What does the data have to say? Bookkeeping services create general reports for management, including income statements, balance sheets, and more.

Account Management

The bigger you are, the less you can be hands-on with every bit of financial activity. So bookkeeping services manage the paperwork, including income and expenses, accounts payable and receivable, bills, invoices, and payroll. Need to resolve a problem? They can also work to pursue payments and/or refunds from customers or suppliers.

Myth No. 4: AI will replace bookkeepers.

Fact: Bookkeeping goes far beyond numbers and requires human nuance. The thing AI can’t do—for now, at least—is approach people on their level. Human bookkeepers still have a place because they have empathy and skills to make clients feel at ease about their finances. 

Of course, AI can contribute to bookkeeping and even relieve a headache or two.

AI Can Still Help

While it’s not about to take over bookkeeping entirely, the main benefit of AI right now comes from reducing manual processes. Instead of taking hours trying to decipher data, bookkeepers can use tools to do more, such as turning that data into financial planning and reporting. This way, they don’t have to worry about human error and can manage your books more efficiently.

Myth No. 5: I can do it myself.

Fact: DIY bookkeeping is a significant time investment. You can’t just enter a few numbers in 30 minutes and call it a day. And if you aren’t a data person, taking that on will require sacrifices.  

Takes Time Away from What Matters

You are more than your business and shouldn’t have to choose between priorities. Managing your own bookkeeping takes time away from building the business and from loved ones.

“But QuickBooks!”

Software might help, but don’t forget there’s a learning curve with any platform—not to mention you assume all the burden of ensuring data is entered correctly, which is harder to sustain the bigger the business gets.

Find your bookkeeping partner.

It’s easy to lump accounting and bookkeeping services into one thing when the two are usually referred to interchangeably. But when it comes time to hire a professional, you definitely need to know the difference to fulfill your needs! Ditching popular misconceptions is a solid first step. The next one? Finding the right partner. 

Ignite Spot has helped hundreds of companies get their bookkeeping on track. Get to know our accounting and bookkeeping services, and reach out to discuss your needs.