What Do You Need to Prepare for Your Outsourced Bookkeeper?

Outsourcing bookkeeping can be a highly effective strategy for small and medium enterprises (SMEs) looking to maintain accurate financial records without incurring the costs of hiring full-time, in-house staff. However, to ensure a smooth and efficient relationship with your outsourced bookkeeper, preparation is key. This article outlines the essential steps and documentation needed to set your outsourced bookkeeper up for success.

1. Understand Your Business Needs

Before you even approach an outsourced bookkeeper, it’s important to clarify what your business needs are. This will help you define the scope of work and provide the necessary information to your bookkeeper.

Key Considerations:

Scope of Services: Do you need help with day-to-day transaction recording, monthly reconciliations, payroll, or tax filings?
Frequency: How often do you require bookkeeping updates—daily, weekly, or monthly?
Software Preferences: Are you already using accounting software like Xero, QuickBooks, or MYOB, or do you need advice on selecting one?

2. Prepare Your Financial Documents

Your outsourced bookkeeper will need access to specific financial documents to begin their work. Ensure these are well-organized and up-to-date.

Essential Documents:

Bank Statements: Provide all business bank account statements for the period in question.
Credit Card Statements: If you use business credit cards, these statements are crucial for tracking expenses.
Invoices: Share both issued and received invoices for accurate revenue and expense tracking.
Receipts: Maintain a record of all receipts for business expenses, especially those that may qualify as tax-deductible.
Payroll Records: Include records of employee salaries, benefits, and any tax withholdings.
Tax Documents: Share past tax filings and notices from tax authorities, such as IRAS (Inland Revenue Authority of Singapore) for Singaporean businesses.

3. Provide Access to Accounting Systems

If you’re already using accounting software, grant access to your outsourced bookkeeper. This ensures they can seamlessly manage your accounts.

Action Steps:

User Permissions: Create a dedicated user profile for your bookkeeper with appropriate permissions.
Data Backup: Before granting access, ensure all financial data is backed up to avoid accidental data loss.
System Overview: Provide a brief overview of your accounting system setup, including chart of accounts and any customizations.

4. Grant Secure Access to Financial Platforms

To avoid constant back-and-forth communication, consider providing secure access to financial platforms.

Examples:

Online Banking: Set up read-only access to your business bank accounts.
Payment Gateways: Share access to platforms like PayPal, Stripe, or other payment processors.
Inventory Systems: If applicable, grant access to inventory management systems for accurate cost tracking.

Ensure these accesses are provided securely, using strong passwords and multi-factor authentication where possible.

5. Establish Clear Communication Channels

Good communication is the backbone of any successful business relationship. Set up a structured system for exchanging information.

Key Points:

Point of Contact: Assign someone in your company to liaise with the bookkeeper.
Communication Tools: Decide on the tools you’ll use for communication, such as email, Slack, or project management platforms like Trello or Asana.
Response Times: Agree on expected response times for queries or requests.
Regular Meetings: Schedule regular check-ins to discuss financial reports and any concerns.

6. Define Key Performance Indicators (KPIs)

Setting KPIs helps measure the effectiveness of your outsourced bookkeeper. These indicators will depend on your business priorities.

Examples of KPIs:

Timeliness: Are monthly reports delivered on time?
Accuracy: Are there minimal discrepancies in financial records?
Compliance: Are filings made accurately and on time with local regulations (e.g., IRAS requirements in Singapore)?

7. Ensure Compliance with Regulatory Requirements

In Singapore, businesses must adhere to specific bookkeeping and accounting regulations. Your bookkeeper will need relevant information to ensure compliance.

Requirements to Share:

GST Details: If your business is GST-registered, provide details about GST filings and rates applied.
Business Registration: Share a copy of your business registration certificate.
Work Permits: If applicable, provide documentation of work permits or passes for employees.
Audit Requirements: Let your bookkeeper know if your company is subject to mandatory audits.

8. Organize a Document Management System

Efficient document management ensures that all financial records are easily accessible for your bookkeeper.

Options:

Cloud Storage: Use platforms like Google Drive or Dropbox to share files securely.
Accounting Software Integration: Leverage accounting software features for document uploads and storage.
File Naming Conventions: Establish a consistent system for naming files to avoid confusion.

9. Provide a Detailed Business Overview

Your bookkeeper will perform better if they understand your business’s operations and goals.

Include Information About:

Revenue Streams: Outline your primary and secondary revenue sources.
Cost Structure: Explain your main fixed and variable costs.
Seasonal Trends: Inform them about any seasonal fluctuations in sales or expenses.
Business Goals: Share short- and long-term financial objectives.

10. Prepare for Onboarding

The initial phase of working with an outsourced bookkeeper requires extra attention. A well-structured onboarding process sets the tone for a productive relationship.

Steps for Onboarding:

Kick-Off Meeting: Schedule an introductory meeting to discuss roles, expectations, and timelines.
Process Documentation: Provide documentation on your existing processes and procedures.
Training Sessions: If needed, organize training sessions for software or processes specific to your business.

11. Establish Data Security Protocols

Data security is critical when sharing sensitive financial information. Protect your data and ensure compliance with data protection laws like the PDPA in Singapore.

Best Practices:

Non-Disclosure Agreement (NDA): Have your bookkeeper sign an NDA to safeguard confidential information.
Encryption: Use encrypted methods for transferring financial documents.
Access Control: Limit access to sensitive data based on necessity.

12. Regularly Review and Evaluate the Relationship

Outsourcing bookkeeping is not a set-it-and-forget-it solution. Regular reviews help ensure that the relationship remains beneficial for both parties.

Review Areas:

Performance: Are financial records being managed efficiently?
Cost-Effectiveness: Are you getting value for your investment?
Feedback: Provide constructive feedback to help your bookkeeper improve their services.

Conclusion

Preparation is the key to maximizing the benefits of outsourced bookkeeping. By understanding your business needs, organizing your financial documents, and establishing clear communication and data security protocols, you can create a strong foundation for a successful partnership. With these steps in place, your outsourced bookkeeper can deliver accurate, timely, and compliant financial records, freeing you to focus on growing your business.