The Complete Guide to Choosing a Bookkeeping Service Provider

Introduction

If you’ve been on the search for the perfect bookkeeping service, you know how noisy the marketplace can be. There are loads of bookkeeping services available and it can be challenging to pick the right one out of the clutter.

Therefore, we have created this guide for you that talks in detail about what to look for in a bookkeeping service provider and the red flags to watch out for.

Whether you’re outsourcing bookkeeping due to errors in financial records, tax season stress, or limited time to manage books properly, our guide lays out a detailed plan to help you make a better decision.

What’s Included in Bookkeeping Services

A good bookkeeping service provider is crucial for any size of business, as they help you understand your finances better. Improved financial reporting isn’t just for tax season or audit purposes, it shows you how you are growing and what steps you need to take to scale faster.

So, let’s look at what a good bookkeeping service should include so you can choose the best option to help your business grow.

Core services

• Transaction recording and categorization: A fundamental service that a bookkeeping solution should provide is accurate transaction recording and categorization. The platform should be able to record your daily, weekly, and monthly transactions such as sales, expenses, and payments to keep your books up to date. Additionally, it should be capable of accurately categorizing all these transactions for financial reporting.

Also read: What is Transaction Auto-Categorization? How Does Fincent’s Auto-Categorization Feature Work?

• Reconciliation: Account reconciliation, bank reconciliation, and credit card reconciliation are incredibly important to generate accurate financial reports at the end of each accounting period. Therefore, the bookkeeping service you choose should provide enhanced reconciliation services.
• Accounts receivable (AR) and accounts payable (AP) management: Another service that’s a non-negotiable for a bookkeeping solution to have is AR/AP management. You should easily be able to track customer invoices and what you owe your vendors. A good-to-have service is also the ability to send invoice reminders to your customers through the platform.
• Financial reporting: One of the most important reasons you are looking for a bookkeeping service is to get up to date and error-free financial reports. A good bookkeeping platform then should be able to generate detailed financial statements, so you don’t have to worry about reporting during tax season or in case of an audit.

Add-on services

• Tax filing: A lot of bookkeeping services also provide tax filing services. If you don’t want a stressful tax season, it’s a good idea to opt for a solution that handles your business taxes.
• Expense management: Expense tracking and invoice processing is another add-on service that can make your life easy.
• Payroll management: If you have a considerable team size, you might want to choose a bookkeeping service that manages payroll for your company.
• Cash flow management: Tracking cash inflows and outflows can help you manage your business better. So, if you’re planning to scale your business, a platform providing increased visibility into your cash flow will be a good choice.

Want to make the switch to bookkeeping services seamless? Download our bookkeeping migration checklist.

Types of Bookkeeping Service Providers

Apart from the different solutions that vendors offer, there are multiple types of bookkeeping services out there. The choice of what kind of solution you want to eventually go with depends on what your business needs.

1. Freelance bookkeepers: These are independent professionals who manage bookkeeping for a few clients and are ideal for very small businesses, solopreneurs, startups with minimal transactions. Basically, if you are just getting started with your business and don’t want to handle bookkeeping, a freelancer can help you out.

Freelance bookkeepers are a cost-effective solution and offer personalized services. However, they have limited capacity and won’t be able to keep up with a rapidly growing business.

2. In-house bookkeepers (full-time or part-time): These are employees dedicated to managing the company’s books and can be a good solution for medium to large businesses with complex finances or specific industry needs.

An in-house bookkeeper will have deep knowledge of your business, but their cost will be higher as they will be a salaried employee with benefits. You will need to manage an in-house bookkeeper just like any other employee.

3. Bookkeeping firms: These are companies that offer bookkeeping services with a team of trained professionals. SMBs looking for scalable and structured support can opt for such firms.

You will get expert bookkeeping support from such a service however, their services might not be personalized. They also can potentially have a slow turnaround time depending on their workload.

4. Virtual/online bookkeeping services: Online bookkeeping services are cloud-based platforms offering remote bookkeeping (like Fincent). If you’re looking for a tech-savvy option that offer automated bookkeeping solutions, these vendors are you best bet.

Online bookkeeping platforms have AI-powered services in addition to human support. You can access your books any time from any device. Moreover, with such platforms, you get deeper visibility into your finances as they often include dashboards and real-time insights.

5. Specialized or industry-specific bookkeepers: These are providers with expertise in specific industries (e.g., eCommerce, construction, healthcare, law) and are ideal for businesses with unique financial requirements or compliance needs.

They will have deep knowledge of industry norms and tools and will provide tailored advice; however, they may charge a premium for specialization.

Key Factors to Consider When Choosing a Bookkeeping Service

Now that we have covered the basics, let’s get to the meat of the matter – factors you need to consider while choosing a bookkeeping service.

1. Expertise & credentials

When you’re looking for a bookkeeping service provider, you need to consider their expertise in your specific industry. Other than this, make sure to verify their credentials to ensure they are trustworthy (after all, we are talking about a third party handling your finances, can’t be too careful).

Questions to consider:

• Do they understand the nuances of your business type or industry?
• Do they work with businesses of your size and complexity?
• Do their bookkeepers have the right expertise & certifications to conduct business well?
• Do they cover everything you need? (e.g., AP/AR, reconciliations, payroll, tax filing support)
• Do they have strong client testimonials, case studies, or online reviews?
• Are they known for accuracy, responsiveness, and compliance?

2. Technology & tools

Depending on what your business needs, the right bookkeeping service provider should solve your specific bookkeeping challenges. This includes the type of technology they leverage to maintain accurate books and the integrations they provide with other tools in your tech stack.

Questions to consider:

• What accounting software do they use? (e.g., QuickBooks, Xero, Zoho)
• Do they offer automation or integration with your existing tools (e.g., payroll, invoicing, CRM, inventory)?
• Is there a client dashboard or portal?

3. Customization & scalability

Your ideal bookkeeping solution will be the one that provide a customized solution for your business needs. The other thing you need to keep in mind is that the vendor should offer scalable services. Your business is bound to grow with time, which means more transactions and increased financial complexity. The bookkeeping service should have the resources to adapt as and when your business grows so you don't have to change providers due to unmet needs.

Questions to consider:

• Do they provide flexible plans?
• Do they have the ability to grow with your business?
• Do they offer CFO-level insights or add-on services if you need them later?

4. Communication & support

Another thing you need to know about how you’ll communicate with the vendor. They need to be available on mediums that you prefer for communication. Also, take a close look at the kind of support the bookkeeping service provides, as your need to communicate with them will be based on your business needs.

Questions to consider:

• Are they proactive or reactive?
• Can they explain financial information in simple terms?
• Will they offer insights or just reports?
• Is support available via phone, chat, or email?
• Will you have a dedicated bookkeeper or a team?
• What’s the turnaround time on queries and reports?

5. Pricing models

A key challenge business owners face while looking for a bookkeeping service is the pricing model. A lot of firms have hidden or add-on charges that are revealed after you’ve made a commitment to the vendor. We strongly recommend asking detailed questions about the pricing from all bookkeeping services you talk to. Furthermore, ensure that they have pricing models that suit your needs.

Questions to consider:

• Is the pricing flat-rate, hourly, or based on transaction volume?
• Are there hidden fees for additional services or reporting?
• What’s included in specific plans and what’s not?
• Do they offer a trial period or satisfaction guarantee?
• What’s the cancellation or contract policy?

6. Security & compliance

Last, but not least, you should be assured the data protection protocols of the bookkeeping service you want to onboard. They should have all the necessary certifications that are required for your area or country. Ensure to do meticulous research about how the vendor handles sensitive financial information. Apart from this, make sure they are equipped to ensure your business’ compliance with accounting regulations.

Questions to consider:

• How is your financial data protected?
• Do they follow secure login, encryption, and backup practices?
• How do they ensure your books are tax-ready and audit-proof?
• Are they familiar with local tax laws and reporting requirements?

If you take the time to evaluate bookkeeping services based on these criteria, you’re bound to end up with a good provider.

Need more help? Checkout our bookkeeping services evaluation checklist to find the right vendor.

Red Flags to Watch Out For

There are always things to watch out for whenever you are making a big decision. The same goes for choosing a bookkeeping service.

Here are some of common red flags you should keep an eye out for:

1. Lack of transparency in pricing: Something we’ve already touched upon but it’s worth mentioning again. If a vendor has vague pricing structures, hidden fees, no clear breakdown of what’s included in each plan, or extra charges for every minor service or report, you’d be better off without them.
2. No clear process or onboarding plan: A good onboarding plan sets the tone of how you’ll conduct business. If a service provider can’t explain how they’ll transition your books or how they’ll handle historical data cleanup and catch-up work, feel free to look at other options. A good platform should have a timeline, checklist, or onboarding support.
3. No references or reviews: No client testimonials, case studies, or online reviews can suggest a problem. On top of this, if the service provider refuses to give any references from current or past clients, there could be something fishy about their business.
4. Overpromising without clarity: If a bookkeeping service provider claims to "do everything" but doesn’t give specifics or gives vague commitments, you are well within your right to ditch them.

Why Fincent Could Be a Great Fit

Hundreds of SMBs and startups trust Fincent’s bookkeeping platform. Our bookkeeping services and platform experience are particularly curated for founders and business owners, so they can finally focus on growing their business. Moreover, our special blend of AI and human expertise ensure that our customers’ books stay up to date and provide them with actionable financial insights.

Read our latest case study with Metropolis Tours’ to learn more.

Here’s why customers love working with Fincent:

1. White-glove onboarding: We take care of everything for you – from financial data review and clean-up to syncing your accounts with our platform. Your books go live in 2–4 weeks, not 2–4 months.
2. Dedicated customer success manager and bookkeeper: Fincent provides you with your own customer success POC to hold your hand throughout the transition process. Once the switch is completed, you get a dedicated bookkeeper who stays on top of your bookkeeping, always.
3. Simple integrations with your tools: Our platform integrates seamlessly with all your favourite tools so there’s never a broken link that disrupts the flow of financial information processing.
4. Real-time collaboration and visibility: With a dedicated bookkeeper, our customers always have the option of getting on a quick call and getting visibility into their financials.
5. No disruption to cash flow or payroll: Fincent’s team is adept at ensuring that transition to our bookkeeping platform doesn’t affect your cash flow or payroll in any way.