Outsourced bookkeeping explained in easy terms

Wondering what it means to outsource bookkeeping?

I’ll start by defining the words “outsourced” and “bookkeeping” (as it relates to bookkeeping).

Outsource: Is the decision of hiring an “external” company or individual to take on (handle) a task, project, etc.

Side note: The opposite of external is “internal”. Internal would be someone that you have hired to work directly for your company, such as employees. An independent contractor or freelancer, for example, would be considered “external.”

Bookkeeping: Is the process of keeping a record of financial transactions made by a business or individual. This includes tracking money coming into the business (which is called “income”) and money going out (being spent) of the business (which is called “expenses”) in an organized and accurate manner.

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Now that the words are defined, let’s talk about what the words mean when they are combined.

Outsourced bookkeeping is when a business decides to hire someone who is not a part of their company to take on the responsibility of managing the financial records, rather than hiring an employee to handle the bookkeeping tasks internally.

Outsourced bookkeeping can be done by specialized bookkeeping firms or freelance bookkeepers.