As a business owner, you’re always looking for ways to maximize your performance and production. Certain aspects of running a business can have real-time and cost constraints that can spread your attention and keep you from focusing on your core business. One of the areas that require a lot of attention is your finance department needs.
This is one area you can’t ignore. For one, you could end up in tax trouble with the IRS. And two, you won’t be able to tell if you’re earning a profit or running your business into the ground, so you’re always on the lookout for new and innovative ways to streamline your efforts.
But what if you don’t have the time or manpower to maintain your finances? This is where outsourced accounting services come in. In this article, we explore three topics:
- Why you should consider outsourcing your accounting
- Benefits of outsourced accounting services
- How an outsourced accounting firm can save your business money
- Why expert-level accounting isn’t a luxury but a necessity
- How to know when it’s the right time to outsource your company accounting
Why Hire an Outsourced Accounting Firm?
The difference between making profits and losses lies in the qualifications of the business accountant. Proper accounting directly translates to good business. Hiring an accountant requires the utilization of specific technologies that will save the firm money.
One reason that many businesses give for not hiring an accountant is that they cannot afford them, which is a pretty flimsy excuse when stacked against the threat of business failure. Nevertheless, some small enterprises may not be well equipped to hire a full-time accounting professional.
This is when you can contract the services of an outsourced accounting firm. Accountants apply proper accounting measures to promote measures geared towards saving money. They also provide bookkeeping advice.
While there are many approaches to keeping the financial books, an accountant will guide you on the best fit for your business. This way, you will save time, lessen your tax liabilities, and ensure that all expenditures are claimed.
10 Benefits of Outsourced Accounting Services
1. Save Time, Money and Minimize Overhead
Now, this benefit alone will capture the attention of business owners across all industries. The race to reduce overhead is always on. So if there’s a clearcut way to do this, why not take the chance?
When you outsource accounting services, you’re no longer paying employees for 40-hour work weeks to manage your finances. Also, you have to factor in the cost of properly training an internal accounting department.
And let’s not forget the expenses associated with employee benefits, accounting software, office supplies and hardware. Then there’s always the potential of financial mistakes, which come with negative (and costly) consequences.
Goodbye to Extra Costs
All of these extra costs are out the window when you hire outsourced accounting services. On this end, you’re guaranteed a professional that knows what they’re doing. In most cases, the accountant has many years of experience, which should give you peace of mind.
As for time management, this too improves when you’re using outsourced accounting services. This is because you’re spending fewer hours daily overseeing bills and payroll. This will free up valuable time you can use to focus on growth and expansion.
Business owners have a lot on their plate, which typically includes maintaining business goals, growth and managing the daily operations.
2. Get Access to Expert Accounting Resources
This benefit is especially important for smaller businesses that lack the tools to properly run their own finance department. And in most cases, there isn’t anyone on your team that’s a master accountant.
So not only do you lack the tools, but the skill set as well. Sure, it’s possible that someone in your small business has some accounting experience or knowledge. But not enough to keep your company afloat and out of trouble with the IRS.
By using outsourced accounting services, you will have access to a team of knowledgeable professionals. No more worrying about whether your books are up-to-date and accurate.
And this will help to reduce chances of your business being subjected to penalties due to underpayments and other inaccuracies.
If you decide to buy outsourced accounting software that automates everything for you, even better. This way, you won’t have to worry about being a knowledgeable accountant. This is another way around manually managing your finances.
3. Reduce the Risk Factor
Likely, this is one of the top reasons you’re worried about hiring an accounting team for your business. No one wants to land in hot water with the IRS and for good reason—they won’t hesitate to penalize your company.
And when that happens, you can expect to pay hefty fines or face possible jail time. It’s a scary reality, which calls for a real solution.
Unfortunately, there are various risks associated with business finances. This includes having money stolen by trusted employees. It can be hard to enforce a solid checks and balances system without putting your employees at odds with your business.
That would only reduce workplace morale, which is never good for production and growth. The only way to get around this is with trusted outsourced accounting services.
Again, you’re saving money and time and eliminating the stress associated with managing money. You’re getting access to real experts and tools that can handle all your financial reporting. Plus, you have professionals who can audit your financial trail to ensure everything’s on track.
This, in turn, minimizes the risk of internal fraud and can improve trust and compliance. So it’s a win-win situation for you and your employees.
4. Get Access to Financial Data Anytime and Anywhere
Now, that’s the beauty of cloud-based accounting applications. You’re able to get access to the files and reports from wherever you are and at any time, as long as you have internet access.
This allows you to see financial data and records in real time. Some of the things you can see include updated cash balances and expenses. With total visibility of your finances, you can feel confident and make more informed business decisions.
5. Rest Assured Your Finances Are in Order
It doesn’t matter whether your business is flourishing or tanking. Knowing exactly where you stand in your finances offers peace of mind. As a business owner, you have to be confident in the decisions you make for the company.
It’s difficult to do this when you’re unsure of your financial standing and future. The accuracy of your reports and total visibility allows you to make tough calls.
With outsourced accounting services, you are guaranteed accurate reports. This is thanks to the elimination of human error. One thing accounting software doesn’t do is make human mistakes.
There’s no threat of fraudulent activity, and you can speak to a team of professionals to answer any questions you have. This is the top solution for companies of all sizes.
The confidence and security you’re awarded make this option well worth it.
6. Become Proactive and Scale Your Business
What if you could reduce the amount being invested in human resources, technology, and infrastructure? And at the same time increase production?
With these conditions, you’re able to easily scale your business and react to much-needed changes more quickly. Staying ahead of the curve is difficult when you’re distracted.
Outsourced accounting services can help free your mind from the worry of your business finances. For instance, say your company has a surge in activity. If you’re outsourcing your accounting, you can take this adjustment head on.
Some surges may be seasonal and others due to business cycles. If your internal resources are free to handle the influx, then your business has a better chance of growth.
7. Automate and Go Green
For some businesses, going paperless is a big deal. If you’re a company that takes pride in being eco-friendly, then this is another thing you can be proud of. Using outsourced accounting services means reducing the use of paper since everything is on software.
On that note, you’re reducing wasted paper, space, and your carbon footprint. If you can go paperless with other activities, you can forgo the use of fax machines, printers and the like.
8. Keep Your Finances Private and Confidential
One way to think of it is, the fewer people you let in on your finances the better. That’s the great thing about outsourced accounting services. You’re using software, which means fewer people need to look over your books.
Manually tracking your finances means increased chances of your data being leaked. When your finances are being handled by outsourced accounting services, your data is locked up tight.
Your files are encrypted and not shared with any third-parties. So that’s definitely great news for the integrity of your business financial data. Imagine what your competition would do to get their hands on that!
9. Choose to Expand or Cut Back
This is a decision every business has to make at some time or another. In fact, this is something you have to answer each year if you want to stay afloat. There are certain circumstances where it’s better to cut back expenses severely.
At other times, it’s best to take advantage of growth opportunities. This is easier to determine when you have accurate reporting of your income and expenses.
10. Ensure Payroll is Done Timely
Let’s face it, your employees like your company, but they’re mainly there to get paid. If you’re not cutting checks on time or have inaccuracies in hours worked and bonuses earned, then you’re going to run into problems with productivity.
It’s very important to ensure your payroll is done correctly. Outsourced accounting services can be used to ensure payroll is direct deposited on time and with accurate numbers.
How an Outsourced Accounting Firm Can Save Your Business Money
In addition to the many benefits of outsourced accounting listed above, one of the most enticing is that it can also save you and your business money. Many business owners tend to think that they are saving on costs by not hiring an accountant. On the contrary, they are setting up trouble for themselves. According to a study by a U.S. bank, 82% of businesses that fail to succeed lack proper skills in cash flow management. Many business owners wear many hats, functioning as the marketer, manager, and accountant.
The fact is, without proper help in keeping the books organized, a business is likely to misuse its money. An outsourced accounting firm can help keep that from happening. Here’s how:
1. Business Advisory Services
An outsourced accounting firm has professional accountants who have profound business knowledge. With their guidance, you can reach a point of making informed decisions concerning your business. It is best to consult them when you draw up or revise your business plan.
They will give you useful insights on how you can assess your business profitability to move your business forward. This way, you will avoid wasting time on strategies that are less likely to succeed.
Your accountant will help you determine
- Who your most valuable clients are
- The amount of money to invest in your growth plan
- Marketing strategies with the best returns on investment
- Strategies to monitor progress for higher profits
2. Bookkeeping Advice
An accountant will help you keep track of the money that comes into the business and that which goes out. There are different approaches to bookkeeping. An accountant will advise you accordingly depending on the size and type of your business.
With their help, you will save time and reduce the chances of having unbalanced financial records, which can be a source of losses.
3. Cash-Flow Advice
Mismanagement of cash flow can push you out of business. If you are not able to trace where your money is going, the chances are that you will not get it back. Having plans and projects in the pipeline is exciting, but if you cannot pay your bills, you are in trouble.
4. Cost Control
Every business has got costs, bills and overheads to meet. An accountant will analyze how you spend money on your business and advice on how to minimize expenditure. An accountant is trained to quickly see your monthly, daily or weekly costs and interpret their impact.
One thing you will realize is that keeping your accounts up to date will give you a better outlook on your investments. You can quickly tell which investments are yielding returns. This will help you to be more intentional about your spending.
With the help of the accountant, you will also spot trends in your finances, which you can utilize to earn more profits. In the same way, you will take note of how to save on staff, vendors and operating costs. Professional accounting will eliminate costly errors that happen when business owners try to track their expenses manually.
An outsourced accounting firm will play a significant role in checking that your cash flow is in line with your expenses. Where there are loopholes, the accountant will help you spot the problems and help you seal them off.
5. Avoid Tax Penalties
Small business owners tend to make some mistakes when it comes to staying up to date with tax regulations. A trusted advisor, in this case, an outsourced accounting firm, will provide out with expert advice. You need help with minimizing your tax penalties and maximizing your benefits.
Completing tax forms and submitting them on time can save you costs if it is done by a professional. Remember that there are penalties associated with late or no submission of tax returns. The fines can quickly add up, and with time, your business might not be able to withstand the pressure.
A struggling business cannot afford to pay tax fines. Let an accountant edit your accounts and tell you what you are entitled to claim. You will have an easy time knowing that you are not on the wrong side of the law.
6. Annual Reporting and Returns
Filing your business audited reports and returns, is a requirement by the law. Not filing them will attract a penalty. Lateness in submitting them will also see you fined. The cost of hiring an accountant to handle the returns on your behalf is much lower than the penalties pay if you get the returns wrong.
7. Business Structure
The structure of a business has a significant impact on its growth and changes. One significant influence is on the tax the firm is liable for, and how much the owner can take as income. There are the good and bad sides of each type of business structure.
An accountant will provide you with a financial analysis of the structure that best suits your situation. A clear picture of the same helps you know where your business stands. You can then make timely informed decisions on what is best for you.
8. Saves You Time
Running a successful business does not rely on guesswork. It calls for a lot of commitment on your part. Getting business finances right is crucial, but it does not happen overnight. If you rely on your own efforts, it may take you a long time.
The services of an outsourced accounting firm are efficient and take a shorter time to get your finances in order. Initially, it is okay to feel like you are cut out to handle everything single-handedly. With time, you will realize that hiring an outsourced professional saves you both time and money.
DIY Accounting Is Costing Your Small Business
Managing your own accounting needs can be tempting, especially as a small business owner. Often, it’s difficult to justify putting a large (or any) amount of money towards something you can do yourself—especially in the early days of a business. Odds are unless you have a background in accounting or finance, you aren’t properly tending to your books.
Luckily, you have options! Here’s how DIY accounting is wasting your resources, and how you can find the perfect solution for your business:
Accounting (Really) Requires Expertise
Accounting is very technical. There are many rules and processes associated with accounting, and they vary from business to business. There are federal, state and local requirements to also consider. Understanding your accounting, tax and finance requirements is essential to keep your business healthy, tax compliant and growing.
For many people, navigating these rules and regulations can quickly become overwhelming. These technical requirements are very important, but it’s easy to overlook or minimize them if you aren’t a financial expert. Worst of all, these mistakes can be exceptionally costly for your business in the long run by way of fines and cash flow issues.
Common problems business owners experience when they attempt to do accounting tasks themselves:
- Missed Expenses
- Late Filing
- No Receipt Tracking
- Payroll Mistakes
- Late Invoicing
- Lack of Visibility
As a motivated self-starter, you may think to do it yourself is the right choice. However, if you find yourself facing any or all of the issues above, it’s time to enlist an expert to take care of your business’ accounting.
Your Time Is Valuable
As an entrepreneur, your attention is pulled in different directions 24/7. At the end of the day, you aren’t doing yourself any favors by devoting some of this precious time towards managing the books. How many hours do you spend on accounting tasks per month? Now, imagine what you could be doing with those hours instead—engaging with customers, designing new products or spending time with family and friends.
Your time is difficult to delegate.
It’s natural for tasks to fall to the back-burner when your time is stretched and you’re attention is continuously pulled in different directions. Bookkeeping should never be one of those things. If you are not able to schedule and stick to your accounting tasks consistently, you’re going to fall behind which will be quite problematic for your business. Doing it yourself is not worth missing deadlines or feeling out of control.
Your time isn’t free, even if it seems like it.
It can be difficult to recognize costs associated with your own time, especially when you can’t directly see the impact on your bank account. Your hours are very valuable to your business and there is a cost associated with how you spend them, so spend them doing what you’re best at! At the end of the day, unless you have a firm understanding of accounting and finance, DIY accounting is costly and demands a large amount of your time.
Hiring an outsourced accounting firm is not a waste of money. On the contrary, a bookkeeping company aims at scaling your growth, not stifling it. If you work with a company that is cut out for what it does, you will minimize the financial mistakes that can curtail your growth.
How to Know When It’s The Right Time To Outsource Your Company Accounting
With changes in tax requirements, bill pay, and client expectations, small and large businesses alike are trying to improve their financial services. In fact, more than 50 percent of small businesses in the U.S. now have a CFO or other financial manager keeping track of their accounts.
Not sure if you’re ready to switch to outsourced accounting? Here are some factors to consider before taking this step:
Your Business Needs Guidance
Outsourcing your CFO needs can give your company’s finances a new direction. At the same time, it helps cut costs and improve your finances.
You’ll get a streamlined approach to accounting that will save you time and money. You’ll also get expert reviews and guidance to help ensure that you aren’t making costly mistakes.
Whether you’re just starting out or you’re already successful, outsourced company accounting can help. The latest technologies can take your business to the next level.
You Don’t Need a Full-time Accountant
While it may feel as though your business is too small for outsourcing, that often isn’t the case at all. That’s because outsourced accounting services reduce the need for an in-house accountant.
Besides paying someone to do your accounting, you also have to pay for benefits. You’ll have to make adjustments during that employee’s vacation or sick days. You’ll also have to provide them with space and resources within your office. Also, small businesses may not have enough accounting work to require the help of a full-time accountant.
You’ll need an accountant to deal with balancing accounts and paying employees. But if you only have a few employees and don’t make large purchases, it doesn’t make sense to hire someone. While you will need an accountant full-time during tax season, paying for an in-house accountant year-round may be a waste.
Outsourcing your company accounting means only paying for the services you need. This will not only save your company money but also free up space in your office.
You’re Trying to Do It All on Your Own
Whether you’re running a small business or launching a startup, you’re likely taking on many different roles. You’re a manager, making decisions about hours and instructing employees. You’re a marketer, deciding how to promote your business. If your business operates online, you may also be a web designer or SEO expert.
Not only are each of these jobs tough to learn, but they are tough to master and, most importantly, they’re time-consuming. The last thing that you need to do is accounting work.
Trying to take on your company accounting on your own is a mistake. If you don’t have a financial background, you’ll have to take the time to learn. You also need to know how to keep ledgers, balance accounts, pay taxes, and more. Company accounting is a sensitive, important area. Trying to tackle it on your own without advanced financial knowledge may cause a disaster.
You’ve Made an Accounting Mistake in the Past
Maybe you’ve been handling your own company accounting or having another employee do so. Whichever it is, if you aren’t using an experienced accountant, mistakes are likely to happen. There are tons of accounting mistakes that are simple to make, tough to identify, and hard to fix once they’ve been made.
For new companies, one common mistake is not learning to keep proper records.
When you’re busy running a business, it can be tempting to simplify your bookkeeping.
Maybe you lump all of your expenses, including rent, employee pay, and office resources, into one category. Then you lump the rest into a category for profit.
After all, from a non-accountant perspective, it would seem reasonable to assume that all of the money that doesn’t go towards expenses is profit.
But breaking down your records into accurate categories with outsourced bookkeeping can help you better judge the success of your business. These records can also be used to create budgets or help you make changes when profits begin to drop.
Your Current Accounting Methods Are Slow
If you regularly send invoices after deadlines or experience delays related to your company’s accounting department, it’s time for a change.
Your company can only operate and grow as quickly as you can keep up on the financial side of things. When these begin to lag, it can have a serious effect on the rest of the workflow. Both your employees and clients will suffer.
Employees who are paid late aren’t going to continue to provide quality work. Clients who don’t receive an invoice or other financial records may go elsewhere next time they need services like what you are offering.
If your company accounting gets slow enough, you could experience delays in tax filing. This could cause your business to incur fees or face legal trouble. By outsourcing your accounting needs, you can be assured that everything will get done on time. That way you can continue to focus on growing your business rather than constantly overseeing the financial side of things.
Your Company Is Growing
As your company begins to expand, so do its accounting needs. Where you may have only needed to process a few transactions each week, you may soon have dozens. While you may have had just an employee or two in the past, you may now be hiring many others who will need to be paid and have their hours recorded. Additionally, you’ll also experience changes in tax requirements and potential deductions.
Trying to tackle these issues in-house while also dealing with a growing business can be a challenge. Even the smallest mistakes could deter the growth of your company. Therefore, it’s best to outsource your accounting needs when your business begins to grow and expand.
You Need Advanced Accounting But Are Afraid of the Costs
Some companies expand their finance and accounting departments as they grow, rather than outsourcing.
But as your company grows, you’ll need someone with advanced accounting skills. Perhaps you’ve had an employee who dealt with some of your company’s finances in the past. However, a higher flow of cash requires advanced skills that your employees may not have.
Hiring an in-house accountant with those skills can get expensive. Outsourcing is an affordable, effective alternative.
You Need New Technology and Software
A skilled accountant isn’t the only thing you’ll need to keep up with your company’s expanding accounting needs. You’ll also need advanced technology.
For new small businesses, a few Excel spreadsheets and an invoicing system might be enough. But when sales begin rolling in, employees are added to the payroll, and a brick-and-mortar store is built, these will quickly become insufficient.
Advanced technology is expensive. To add them in-house, you’d need a new computer and all of the accessories that go with it. You will also need software and accounting programs to handle daily tasks. When tax season comes around, you will need advanced tax software. Can you really afford these costs?
Cloud-based accounting is a great feature for growing modern businesses. It’s convenient, inexpensive, and easy to use. This system allows owners and management to track sales and monitor profits with ease. It also enables employers to pay their staff from anywhere.
It’s an excellent option for both small, local businesses and those that operate online with employees around the world. Try it yourself – the benefits are immediate.
Implementing New Technology and Software
Simply buying the technology and software you’ll need for advanced company accounting isn’t enough. In case you choose to do this in-house, you must implement the new system. If you have in-house accountants, they’ll need to learn the system. If you split different accounting duties among employees, everyone needs to learn how to use the new technology.
By outsourcing your company accounting, you’ll get the benefit of advanced software. On top of that, it will eliminate the high costs or the need to teach your employees a new system.
Outsource Your Company Accounting Today
In this post, we’ve discussed the benefits of outsourcing accounting, as well as the pitfalls of trying to do it yourself without adequate accounting or bookkeeping knowledge. Even knowing all this, if you’re still feeling hesitant to invest in outsourcing your accounting needs, know this: Accountants use a holistic approach to your business. They not only help you understand where it currently stands but also help you predict the future. This type of financial planning is an enormous component of your business’ growth.
Are you ready to see the difference that outsourced company accounting can make? Request a demo to see how accounting and bookkeeping software could benefit you and your business.