Why Outsourcing Bookkeeping to AI is an Easy Way to Make Your Business More Profitable

AI bookkeeping software can automate tedious but essential tasks, giving you more time to focus on what’s important.

For two years, Lisa Dini’s accounting practices consisted of a folder in her email, a basic invoice tracker in Excel, and hopes that she had stashed enough money in savings to cover her tax bills. 

A marketing consultant based in the San Francisco Bay Area, Dini experienced what many solo business owners do when it comes to taxes and accounting. Whether you’re a writer, programmer, or another type of solo business owner, keeping up with the books can be a pain — and sometimes an afterthought. 

Dini turned to a powerful solution: AI bookkeeping. It can automate tedious but essential tasks, giving you more time to focus on what’s important. The best AI bookkeeping software can also use machine learning to give you deeper insights into your finances and help you save thousands of dollars on your taxes. 

Here’s everything you need to know about AI bookkeeping tools — and how outsourcing your books to artificial intelligence can save you time and money.

How AI Bookkeeping Can Save You Time, Money, and More

When you’re starting out as a business owner, it might seem easy to handle your own books. But as you take on more clients and encounter more expenses — from insurance to office space — the complexity of your finances and tax obligations can balloon. On average, small businesses spend 15 hours a week on accounting-related work, according to a 2020 report from Starling Bank. And the smaller your firm, the more time you’re likely to have to spend on financial admin. 

Those who opt for traditional bookkeeping software can get help with the basics. But these tools still require you to enter and organize your data. That takes time, and it’s easy to make mistakes. Traditional software also won’t help you use the tax system to your advantage or give you insights into your financial health.

AI bookkeeping tools are much more efficient, powerful, and accurate than traditional tax software. And they can save you time and money in a number of ways.

• They give you data in real-time: These tools offer real-time insights into your finances, and help you make better, more informed decisions all-year-long. So you don’t wind up overwhelmed and stuck in a bad place come tax time.  
• They automatically categorize your transactions: AI bookkeeping tools scan your linked bank accounts to record and automatically organize every transaction in real-time. They can recognize the difference between payments for software plans, Uber bills, and invoice payments, then sort them into groups, like “work subscriptions,” “travel expenses,” and “client income.”
• They help you with tax planning: Beyond giving you an accurate view of your finances, AI bookkeeping tools can identify trends, like which time of year you tend to earn more, how much you’re on track to make, and how much you should set aside for taxes. With this up-to-date data, you can take advantage of opportunities to save money on taxes and plan for liabilities. 
• They provide accurate compliance: These AI tools let you know if they find something unusual. They keep accurate records and estimated payments, plus they make sure your filings are timely and in accordance with tax laws. 
• They reduce your risk of an audit: Audits are time-consuming and expensive. But if your financial records are accurate and well-organized, that will lessen the chances of your attracting the attention of the IRS. It also makes it easier for you to deal with an audit if one occurs.

Dini chose an AI bookkeeping tool created by Lettuce,  a software company dedicated to help businesses-of-one keep more of what they earn. It went a step further than other tools by offering services that freelancers likely couldn’t access on their own, like setting up and running an S-Corp, a type of business that can save solopreneurs thousands of dollars on taxes each year. 

Helpful, right? Dini — a Lettuce client who became the company’s head of community and public relations — certainly thought so. Having a simple, AI-based solution that automated her bookkeeping and accounting gave her a new sense of confidence. Plus it saved her time and money, allowing her to focus more on her clients. 

Why Bookkeeping and Taxes are Perfect Jobs for AI

These days, there’s a lot of buzz about using artificial intelligence to help us write. But companies have been using AI to automate repetitive tasks for over a decade. Machine learning is a type of AI that trains software to surface underlying rules, detect patterns, and predict outcomes. This technology is the backbone of AI bookkeeping software, and it’s one of the most developed, tested, and reliable areas of AI.

Tax prep, bookkeeping, accounting, and auditing involve the type of repetitive, formulaic tasks that machine learning excels at. And accounting firms are leaning into the technology at a time when the accounting profession is struggling to attract new talent and many licensed CPAs plan to retire over the next decade. For small business owners, this technology is democratizing access to the type of help they need in dealing with a tax system that’s burdensome and often seems stacked against them. 

Benefits of AI Bookkeeping for Solo Business Owners

There are many benefits of outsourcing your bookkeeping to AI. Here are a few of the main ones:

• Efficiency: More than 40% of freelancers spend at least 120 hours — the equivalent of three full work weeks — managing their business finances, according to Lettuce’s data. AI bookkeeping software can give you much of that time back.
• Accuracy: AI’s ability to automatically classify your income and expenses from your business bank account lessens the risk of errors that may happen when you do your own books. 
• Tax Savings: It also helps you save on taxes. Lettuce’s AI software, for instance, can save you at least $8,000 if your business brings in more than $80,000 a year, and more than $15,000 if you’re making over $200,000, according to Lettuce’s data.
• Scalability: AI software can help you do more as your business grows.
• Real-Time Analysis: AI can help you learn how to run your business better as well, with dynamic benchmarking to similar businesses, improved seasonality identification, and even predictive scoring of your ability to get a loan. 

Sam Faillace, a consultant and Lettuce client, says that AI bookkeeping and accounting has given him more security and deeper insights into his financial picture. Before he started using AI bookkeeping software, he says, he “never had real tax strategies or a total view of how things were going.” Now, he feels at ease knowing that his AI bookkeeping software “is taking care of all the hard legal and accounting work I didn't have time to dig into or understand."

Key Features of a Good AI Bookkeeping Tool

When choosing an AI bookkeeping tool, it’s important to consider whether it will work for you, is easy to use, and will give you the help you need. 

The tool should work well with others you’re already using for your business, and it should fit into your budget. Many bookkeeping companies cater mostly to large corporations and charge accordingly. So integrating them may not give you the cost savings you need as an independent business owner. 

Here are a few examples of how AI Bookkeeping tools can help your business: 

• Automated Data Collection: AI bookkeeping tools automatically track your cash flow by registering and organizing your income and expenses.
• Expense Tracking: Since these tools automatically organize your expenses, they can also offer insights into your spending.
• Invoicing and Payments: AI bookkeeping can streamline your invoices and payments.
• Financial Reporting: These tools also generate detailed financial reports, from income to taxes.
• Tax Preparation: Beyond basic bookkeeping, some AI bookkeeping tools like Lettuce can handle your tax preparation, so you can make AI — and the tax system — work for you.

Potential Challenges and How to Overcome Them

Despite the benefits of AI bookkeeping, some solopreneurs may still worry about trusting software with sensitive financial information or not being able to use a system they fear is too complex. If that’s you, keep in mind that many institutions in finance and banking — with plenty at stake — have deemed AI safe enough to use for sensitive work, like processing credit card applications and shaping investment portfolios. In 2023, PwC announced a $1 billion investment to expand its AI capabilities over the next three years. Reuters , meanwhile, has set aside $8 billion for artificial intelligence deals and investments. On a more micro level, nearly 40% of accountants say they are using AI to automate tasks, according to one survey. 

For extra assurance, most AI bookkeeping businesses publish their privacy policy online and are open about the steps they take to keep data safe, like using established cloud platforms and running regular security tests. The software also tends to be user friendly and easy for anyone to navigate. 

Why AI Bookkeeping Might Be Right for You

If you find yourself procrastinating every time it’s time to balance your books, stressing about tax season, and wondering how you can save more money on taxes, AI bookkeeping might be right for you. 

The proven technology will keep impeccable records of every dollar moving in and out of your accounts, prepare your tax documents in a way that keeps more money in your pocket, predict how much money you’re on track to make for the year, and give you insights into your financial performance that the average person couldn’t get on their own. 

Even if you always stay on top of your books and think you’ve got a good handle on your taxes, AI bookkeeping can save you time and money, allowing you to spend more time with your family, take that vacation you’ve been wanting to, or reinvest in your business.  

Learn More About Lettuce Today

Designed for solopreneurs, Lettuce offers services for business owners like you. Lettuce works 24/7 to organize your expenses so you never have to worry about receipts again. It looks at every dollar in your business every day to help you keep more of what you earn.  

Lettuce knows all the tax deductions you’re entitled to, so you’ll never be taken advantage of by the system again. Plus the Lettuce system was designed to be simple, accurate, secure, and always give you a sense of control — and peace of mind. 

Interested in learning more? Check out our website and chat with LettuceHead AI for clear, comprehensive answers, 24/7. You’ve got nothing to lose, and only time and money to gain.