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Internal vs. Outsourced bookkeeping

Updated: Dec 19, 2023

What is Internal Bookkeeping?

Internal bookkeeping is the process of keeping financial records and managing your business' finances. The internal bookkeeper has the responsibility of recording transactions, reconciling accounts, preparing financial statements and tax returns, monitoring cash flow, and more.

In addition to providing valuable insight into how your business is performing financially, internal bookkeeping can help you avoid costly mistakes by catching errors before they become serious problems. For example: if an invoice isn't paid on time or if an employee doesn't submit their expense report correctly then this could result in late fees or penalties being imposed by suppliers or clients respectively; this would be a lot easier for you as an owner if you had been aware of these issues earlier on rather than finding out about them after they've already happened!

What is Outsourced Bookkeeping?

Outsourced bookkeeping is a service provided by an external company that handles all of your accounting needs. The outsourced bookkeeper will take care of everything from payroll to financial statements, so you don't have to worry about it!

The role of the outsourced bookkeeper is simple: they make sure your books are in order and up-to-date at all times. This means they'll handle everything from entering transactions into your accounting software, reconciling accounts, preparing monthly statements, and paying bills on time. They can also help with tax planning throughout the year so that there won't be any surprises when tax season rolls around again next year!

So, which method is better?

While both methods have their advantages and disadvantages, it's important to understand the differences between them before making a decision. An internal bookkeeper or accounting team is dedicated solely to your company, which means they deeply understand your business and its financial needs. They can provide personalized advice and guidance that an outsourced company may not be able to offer. However, an outsourced bookkeeping company has a wider range of expertise because they work with many different clients across different industries.

In terms of security, internal bookkeeping may be viewed as more secure because sensitive financial information stays in-house. However, outsourced bookkeeping companies typically have robust security measures in place to protect client data.

One advantage of outsourcing bookkeeping is that it allows a business owner to focus more on running their business, rather than spending time on bookkeeping tasks. An outsourced bookkeeping company can provide a business owner with regular financial reports, freeing up time for the owner to focus on growing the business.

One of the biggest differences between internal and outsourced bookkeeping is cost. Internal bookkeeping requires you to hire an employee or team, which might be expensive when you factor in salaries, benefits, and other overhead costs such as office space and equipment. Outsourced bookkeeping, on the other hand, is typically less expensive because you only pay for the services you need.


The decision to use internal or outsourced bookkeeping comes down to the needs and goals of your business. It's important to weigh the pros and cons of each approach and consider factors such as cost, expertise, and security before making a decision.


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