I can usually tell how a new client’s books are going before I open their Xero file. If they ring in the last fortnight of a BAS quarter sounding a bit sheepish, it’s bad. If they tell me it’s “mostly up to date”, it’s worse.
Nobody starts a business to do bookkeeping. Sparkies want to wire houses and physios want to treat patients. So the books get done at the kitchen table after the kids are in bed, or they don’t get done at all. Then the BAS is due, and someone’s up at 1am trying to work out what $3,400 at Bunnings was actually for.
That’s the case for outsourcing in a nutshell. It’s not right for every business, though, and I’ll get to who shouldn’t bother.
What you’re actually paying for
Outsourced bookkeeping means someone outside your business keeps your financial records. That might be a sole bookkeeper or a firm. They’re not on your payroll and they don’t sit in your office. They log in to your accounting file, usually Xero, MYOB or QuickBooks, and do the work remotely.
What that covers depends on the package, but a decent setup usually includes:
- coding transactions and reconciling your bank accounts and cards
- raising invoices and chasing the people who haven’t paid them
- entering and scheduling supplier bills
- running payroll, reporting it through Single Touch Payroll and paying super
- preparing and lodging your BAS
- a monthly set of numbers you can actually read
Your bookkeeper isn’t your accountant, by the way. The bookkeeper keeps things clean week to week. The accountant does your tax return, the tax planning and the bigger structural advice. Hand your accountant tidy books and the year-end bill drops. Hand them a mess and they’ll fix it, but you’ll pay accountant rates for what’s basically data entry.
One more thing, and it matters. Only a registered BAS agent or tax agent can legally charge you to prepare or lodge your BAS. Plenty of people doing cheap bookkeeping aren’t registered. Look them up on the Tax Practitioners Board register before you hand over the keys.
The money side
This is the first thing everyone asks about, so let’s get it out of the way.
A full-time in-house bookkeeper in most Australian cities will cost you somewhere around $65,000 to $80,000 in salary. Add 12 per cent super, leave loading, workers’ comp, a desk and a software licence. Then add the weeks of chaos when they resign and you have to replace them. You’re well past $85,000 before they’ve reconciled a thing.
Most small businesses don’t need that. A business with a handful of staff and quarterly BAS might need two or three days of bookkeeping a month. Hiring a full-timer for that means you’re paying for someone to look busy. Part-time sounds like the fix, but good part-time bookkeepers are hard to find. You’ve still got no cover when they’re sick or on holidays, either.
Outsourced, that same business is often looking at somewhere between $300 and $900 a month. Bigger transaction volumes, multiple entities or weekly payroll push it higher. Still, you’re paying for the work, not the chair.
And DIY isn’t free. I had a plumber come to me who was losing a full day a month to his books. He bills $130 an hour. That’s over $1,000 a month of his time, spent doing a job he hated and, honestly, wasn’t very good at. He now pays less than half that for us to do it, and he books in another day of work instead.
BAS, GST and staying on the right side of the ATO
This is where DIY books really come unstuck. The ATO doesn’t care that you were busy.
The GST mistakes I see over and over are pretty predictable:
- claiming GST on stuff that never had GST in it, like bank fees, most insurance stamp duty and some overseas subscriptions
- claiming credits without a proper tax invoice
- personal spending going through the business card and getting claimed
- capital purchases coded as everyday expenses, or the other way round
None of these feel like a big deal on the day. Over a few quarters they add up. Then you get a review, an amended BAS, a shortfall and interest on top.
Late lodgement brings its own penalties, and once you’re behind, the ATO gets a lot less patient. Payment plans are possible, but they’re not fun.
Super is the one that keeps me up at night for clients. With payday super now in, super has to land in your employees’ funds within days of each pay run, not once a quarter. Miss it and you’re into the super guarantee charge, which costs a lot more than the super itself ever would have.
If you’re a company director, there’s another risk. Unpaid PAYG withholding, GST and super can follow you personally through Director Penalty Notices. That’s your house, not just the company’s bank account.
A good outsourced bookkeeper lives inside these deadlines. They know when BAS is due, they run STP every pay, and they’ll flag when something looks off. They won’t replace an IR lawyer on award interpretation, but they’ll usually spot when a casual’s been on the wrong rate for six months.
Getting your nights and weekends back
People underestimate the time the books take. Data entry is the small part. Most of it goes on hunting for receipts and figuring out what that $89 charge from a company you’ve never heard of was. Then there’s trying to remember whether the Hendersons ever paid that invoice.
Once that’s off your plate, you can spend the time quoting jobs, training staff, or just being at your kid’s footy on a Saturday. I don’t think that last one gets enough credit.
Actually knowing where your cash is
Plenty of profitable businesses go broke. Profit and cash are different things. A bank balance tells you what happened, not what’s coming.
I took on a café a few years back with strong takings and a constant cash squeeze. The owner couldn’t work out why. Turned out every quarter the BAS hit and he had to find twelve grand he’d already spent. That money was never really his; it was GST he’d collected on the ATO’s behalf. We set up a separate account, moved a chunk across every week, and the panic stopped.
That’s the kind of thing you see when the books are current. Monthly reports from a decent bookkeeper should give you a profit and loss, a balance sheet and an aged debtors list. That last one shows who owes you money and how late they are.
The debtors report is boring, and it’s also gold. A builder I work with had about $60,000 sitting in invoices over 60 days old and genuinely didn’t know. Sales were good, so he never looked. Once it was in front of him every month, he got firm with payment terms and most of it came in within a couple of months.
Banks like current numbers too. If you want a loan or an overdraft, you’ll get a far better hearing with up-to-date financials than with last year’s tax return and a smile.
Growing without hiring
Your bookkeeping gets more complicated as you grow, usually faster than you expect. Put on a few more staff and payroll gets fiddly. Add a second site, start selling online or bring in a business partner, and the volume jumps.
An outsourced service just adjusts. You go from monthly to weekly reconciliations, add payroll, add bill pay, and eventually get proper management reporting or a part-time CFO when you need forecasting. Seasonal businesses in tourism or ag can scale back in the quiet months instead of carrying a wage all year.
More than one person’s experience
Hire one in-house bookkeeper and you get one person’s background. If they came from retail, they might have no idea how to handle progress claims for a builder, or stock for an online store.
A good firm has seen your industry before, probably dozens of times. When your bookkeeper’s on leave, someone else picks up your file and the pays still go out on Thursday.
They’ll also set up the systems most small businesses never get around to. That means bank feeds so nobody’s typing in transactions, receipt apps like Dext or Hubdoc so you snap a photo and bin the paper, and approval tools so bills get paid on time without you signing off on every one at 10pm.
Fewer mistakes, and less chance of getting ripped off
Nobody likes this topic, but it’s real. In a lot of small businesses, the one person who handles the money is also the only one who ever looks at it. That’s how a trusted long-term bookkeeper ends up paying herself an extra few hundred a week for five years before anyone notices. I’ve seen it more than once.
An outside bookkeeper adds separation. Someone independent is reconciling the accounts and asking awkward questions when a new supplier pops up with round-number invoices.
It also catches the boring stuff, like paying the same supplier bill twice, a refund that never came through, or that software subscription you cancelled in 2023 that’s somehow still charging you.
When it makes sense, and when it doesn’t
Outsourcing is usually a good call if your books are behind and you keep saying you’ll catch up. It’s also worth it if you’re registered for GST, have staff on the payroll, and dread every BAS quarter. And if you couldn’t tell me right now roughly what cash you’ll have in the bank at the end of next month, that’s a strong sign too.
It’s probably not worth it if:
- you’re a sole trader under the GST threshold with 20 transactions a month and a simple app does the job
- you need someone on-site every day, counting cash or running stock takes
- you’ve grown big enough that an in-house finance team actually costs less than the outsourced fees
- you won’t send stuff when it’s asked for
That last one’s not a joke. Outsourcing only works if you answer emails, upload receipts and give access when it’s needed. Hand it off and go quiet, and you’ll still end up with messy books. You’ll just be paying for them.
Before you sign up with anyone
Ask if they’re a registered BAS agent. Ask who’ll actually be working on your file, what you’ll get each month, and by what date. Ask whether they’ve worked with businesses like yours. If the answers are vague, keep looking.
Where to from here
Clean books won’t make you money on their own. They’ll stop you losing it, though, and they’ll keep the ATO off your back and let you make decisions on real numbers instead of hope.
If you’re behind, don’t wait for the next BAS to force the issue. Get someone onto it now, while it’s still a tidy-up and not a rescue job.
