One critical function of any business is the accounting process. No matter how much profit a business makes, without proper money records, the probability of the business failing is very high. One formula for disaster is launching a company without an appropriate budget for professional bookkeeping services.
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.
Without proper help in keeping the books organized, a business is likely to misuse its money. Fortunately, an outsourced accounting firm can help a firm save its money.
If you think that this will be an additional cost, read along to understand why it is beneficial and how it could actually save you money.
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. This is not only a flimsy excuse but a recipe for business failure. Nevertheless, in all fairness, 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.
An outsourced accounting firm will save your business money in:
- Hiring and training (your firm does not have to incur the costs of recruiting and training)
- Paid time-off
- Unemployment taxes
- Healthcare benefits
An outsourced accounting firm works from a place of their own convenience. The outsourced bookkeeper will be responsible for your financial accounting services. Some of their tasks include generating financial reports, keeping your books and helping with cash flow management.
Accounting firms come in different sizes, and you can rest assured that they will meet you at your accounting needs. There are large accounting corporations that support big companies. For smaller enterprises, there are small practices that specialize in supporting sole traders and local businesses.
Affordability of an outsourced accounting firm should be among the least of your worries. The accounting firms understand that you may not have a big budget. They will hence offer their services from the perspective of helping you save money.
How an Outsourced Accounting Firm Saves You Money
Leaving your bookkeeping tasks to an expert frees up your time. This way, you can focus on serving your clients and implementing your growth plans. A professional accountant helps you save money in the following ways:
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.
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.
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.
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 the 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.
Financial planning is an enormous component of business growth. In addition to helping you in bookkeeping, an accountant will help you interpret the figures. A proper analysis of your books of accounting will provide a clear picture of where your business stands.
Investors may require accurate financing reports on a regular basis for better visibility and insights. Providing them with unaudited books of accounts can be a big mistake on your part. If you cannot afford to hire a full-time accountant, let an outsourced accounting firm do the work for you.
Accountants use a holistic approach to your business. They not only help you understand where it currently stands but also helps you predict the future.
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.
If you want to manage your business finance and bookkeeping efficiently, you can get started here with ScaleFactor.
Blake Patterson, CPA