Bookkeeping is an essential component of any company, including nonprofits. Quality bookkeeping services keep financial records up to date, accurate, and useful. For many businesses, the question of how to approach the need for bookkeeping services is a daunting one. Is it better to have in-house bookkeeping, or to outsource? To answer this, organizations must evaluate the costs and benefits of the two options and make an informed decision on which approach better suits the organization’s specific needs and concerns.
The budget allocated to bookkeeping will vary from business to business, depending on the time and resources each organization has available. For nonprofits, overall budgeting for such services might be more limited.
Outsourcing can be less expensive than hiring an in-house bookkeeper. The size of an organization and the complexity of its transactions will be a significant factor in this determination. Hourly rates for outsourcing may be higher than the hourly rate of a staff member, but in-house staff come with additional overhead costs. Non-profit accounting also has unique complexities related to grant and donor restriction tracking, and other considerations that differ from a corporate business. Outsourcing bookkeeping to professionals with specific nonprofit experiences is often key for effective and accurate bookkeeping for nonprofit organizations.
Nonprofits might consider the following practical questions when evaluating whether to outsource bookkeeping services:
- Does bookkeeping take up too much time, or more time than can be afforded?
- Despite best efforts, are the books not usually accurate or up to date?
- Do current staff possess the expertise required for adequate bookkeeping services?
- Would outsourced bookkeeping lead to greater overall benefits for the organization?
Nonprofits might also consider the following operational questions:
- Are sources of income varied and/or complex (e.g. restricted, grants, etc.)?
- Do specific reporting requirements or stipulations exist?
- Are donor classifications in net assets properly managed?
- Is compliance being met to retain current statuses (i.e. tax-exempt)?
In summary, some of the key potential benefits gained from outsourcing bookkeeping are listed below:
- Lower overall cost for bookkeeping services
- High-level advisory (and/or specialty) assistance
- Increased knowledge of business opportunities and growth
- Greater availability
- Reduced fraud and error attributed to increased separation of duties
Please contact the professionals at Gilliam Bell Moser if you have any questions.