Running a business is demanding. From paying bills and managing employees to making strategic, long-term decisions, successfully addressing the many demands often requires a team effort. Therefore, it is critical to have the right people in the right positions.
To prevent burnout and failure, you must determine what facets are successfully run in-house and which would be better to outsource. For example, accounting is a critical function for every business and a prime candidate for outsourcing. While some mistakenly think accounting is simply punching numbers, it is critical to every company’s growth and vital for implementing a successful business strategy.
If you want to take your company to the next level, you want an experienced and knowledgeable accountant. However, this doesn’t always fit a company’s budget, especially small businesses and startups. By outsourcing your accounting services, you get the best of both worlds: an experienced, knowledgeable accounting team at a price that is right for your company.
Why Outsource Accounting Services?
As previously mentioned, accounting is more than punching numbers. There is bookkeeping, tax compliance, maintaining financial transparency, audits, and so much more. As businesses try to do more with fewer resources, it is imperative to have the best people in place. Fortunately, as the business community normalizes remote work, accessing talented accounting professionals becomes easier. For example, you can do business in Washington State and hire an accounting professional based in New York State.
Let’s look at the other benefits of outsourcing accounting services.
1. Lower Out-of-Pocket Costs Due to Contracting vs. Hiring
When hiring an employee, there are expenses to consider. Payroll tax costs include:
- Employer share of FICA
- Federal and state unemployment taxes
- Workers’ compensation
Employers are also responsible for Benefits that can include:
- Health insurance
- Paid time off
- Retirement plans
There are also onboarding costs, training, providing office space and equipment, as well as other expenses. When you outsource accounting tasks, you only pay for the service you need and when it is needed.
2. Experienced Professionals at an Affordable Price
When outsourcing your accounting services, it is imperative to thoroughly research firms that will fit your needs. First, understand the services you need, then research who can best offer these services. Next, ask potential firms how they are better than the competition, get credentials from existing clients, and check out their online reviews.
Once you have vetted your firm, be confident in your decision. Accounting experts tend to take their work very seriously. As a result, businesses can get quality accounting and bookkeeping services without breaking the bank.
Teaming up with an accounting firm gives you the confidence that only qualified experts are assigned to handle your finances. Why? Because accounting firms have a reputation for building and protecting. As a result, the company will only hire the best experts.
Professional, experienced accounting professionals will also tailor services to meet your needs as your business grows to provide greater flexibility at different stages of your business.
3. Accurate Bookkeeping and Accounting Services
When you outsource services to an accounting firm, you eliminate discrepancies. Knowledgeable and experienced accountants can guarantee maximum efficiency and error-free reporting. In addition, accounting firms have a well-trained workforce with access to regular training and educational courses.
Accounting firms also offer the latest in automated bookkeeping processes, which makes tracking finances easy. This feature will help your business improve accuracy and streamline accounting needs while reducing costs.
Since the accounting world is very competitive, accounting firms are always looking for new ways to improve services. By doing so, their professional staff remains cutting edge on the latest accounting trends and technology.
4. Focus on Your Business
One thing every business owner needs is adequate time to focus on the core of one’s business. However, accounting and bookkeeping can derail your attention, especially if it is not your forte.
Accounting professionals can help with capital optimization, debt compliance monitoring, and investments. They can also help with growth strategy, outlining business expansion models, and profit maximization.
When a business outsources accounting needs, business owners can focus on the core of their business and utilize an accountant’s expertise to build for the future.
5. Meeting Stipulated Compliance Requirements
Every business must adhere to stipulated financial compliances. Accounting experts are knowledgeable and up to date about financial regulations across different industries. They obtain this knowledge through experience and continuous monitoring. Therefore, when you outsource an accounting expert, your business financial records should be in full compliance with regulatory laws.
6. Increased Productivity
One of the benefits of having a team of experts handling your finances is increased productivity. Professional accounting firms also use analytics to provide businesses with a better understanding of their finances in a glance.
Additionally, because the accounting firm is external to the business, there is a level of neutrality in accounting, making for better reporting. Activities that look suspicious can be easily detected, helping to prevent fraud, bankruptcy, and possible penalties from government authorities.
7. Reduced Incidence of Fraud
Unfortunately, fraud is one of the inevitable occurrences in business. Many small, medium and large-scale businesses have lost a considerable amount of money due to fraud.
When a business outsources accounting services, there is an increased level of internal controls. Multiple eyes are on the books, therefore, reducing the incidence of fraud. Of course, no one can guarantee a 100% fraud-free operation in the business. However, with a team of experts handling the books, it will be easier to spot an abnormality.
8. Smarter Business Decisions
Most business decisions are made by careful observation and following your instinct. However, having the numbers on your side goes a long way to give surety to your plans. A good business record helps business owners stay financially informed.
Decisions made from information gathered from past dealings are more likely to succeed than those based on instinct and gut feeling. When you outsource accounting services, you have access to information to fuel your investment plans. You can learn where to invest more, which marketing plan yields the best outcome and when it is the right time to expand operations.
9. Adequate Preparation for Taxation
Another benefit of outsourcing accounting services is being ready for tax season. When working with an accounting firm, you can ensure your records are compliant with the prevalent regulations and practices. Outsourced accounting firms can also help businesses take advantage of tax deductions, which saves your business money.
What to Consider Before Outsourcing
While outsourcing comes with many advantages, there are some things to consider before making a move. While efficiency and quality are the main focus, you should also consider:
Business Needs: Different businesses need different accounting services at different stages. Some businesses may need help with payroll, monthly reports, bank reconciliation, and balance sheets. Businesses must decide what they are outsourcing and what can be done in-house.
Cost Implications: The payment scheme of different accounting firms is unique to them. While some may charge on an hourly basis, others may have monthly stipends. Businesses should choose a payment plan that suits the present need and budget.
Level of Expertise: You may defeat the entire purpose of outsourcing if you hire a firm with no track record. Businesses must do their due diligence to ensure that the outsourcing firm has a team of experts. Take time to research the firm. Request recommendations from other clients and ensure the firm will deliver quality work.
Security of the Data Provided: Data security is an essential factor to consider while making outsourcing decisions. Reputable firms will handle the data of clients with the utmost confidentiality. Therefore businesses will need to ensure the firm’s credibility before giving them their data.
Accurate accounting and proper bookkeeping are essential to scale your business. Outsourcing these tasks can be the key to ensuring greater efficiency and profitability.
Bowers & Company CPAs aims to offer helpful information to our clients and friends. Learn more about how we can help should your business need accounting and financial services.
Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.