As a small business, you are always under time and cost pressures. You have to worry about creating a good product or service line while reducing costs. When it comes to controlling every part of a small business, you may find it difficult or not doable. One area you may feel like you need help with is the accounting. An option you should consider for accounting is outsourcing. Many small businesses benefit greatly from outsourcing accounting. We outline the benefits, timing of when to hire an accountant, pros and cons, and pricing.
5 Benefits of Outsourcing Accounting
Financial Savings
The true value of outsourcing accounting is the reduction in costs. When you outsource your accounting, you are only paying for the accounting services you use. Meaning, you only pay for the help when you need it. Outsource accounting eliminates the typical employee expenses like benefits, insurance, payroll taxes, and paid leave. When you choose to outsource your accounting, you are reducing your overall operating cost.
Access to the Latest Technology
Accounting firms always want to make sure they are at the forefront of their industry. A part of being at the forefront is to have the latest technology. When you have access to the latest accounting technology, it ensures your bookkeeping is always up to date. Therefore, you know your cost better and can stay ahead of the competition.
The Best Expertise
When you hire an accounting firm, you can rest easy knowing you have access to the experts. Having an accounting firm on your side ensures you have the best financial reports that meet regulatory and compliance standards. An accounting firm specializes in the work they do, so they are perfect for getting all your accounting projects done. Hire a third-party accounting firm and rest assured that they will complete all your accounting quickly and correctly.
Daily Monitoring
An outsourced accounting firm allows you to keep track of your accounting records and data on a daily basis. Most accounting firms will assign a team that is dedicated to your company, allowing you to access your accounting records whenever you need them. Having daily reporting allows you to make better business decisions and stay ahead of the competition. Hiring an accounting firm helps your business to grow by having accurate and daily reports.
Better Time Use
When you outsource your accounting, you get time back that you used to spend doing administrative tasks. The time you used to spend on accounting can now be used to better your small business. Sometimes when you have to do tedious tasks such as accounting, it is distracting to you. Hiring an accounting firm, allows you to focus on the core of your business. Don’t waste time worrying if your accounting is correct, outsource it instead.
When should you start outsourcing accounting?
Hiring an accountant will save you money, time, and headaches. However; there are several key times when you want to have an accountant to help you with the process.
Writing your business plan.
Accountants have software with financial projections. This will help you write a business plan that is more professional and realistic which will give you more chance to succeed, especially if you are looking for financing.
Forming your business.
Forming your business requires a lot of decisions including what entity structure makes the most sense, help with getting all the business licenses set up, employee paperwork, and bookkeeping software to name a few. You should be careful when deciding what form of entity you choose whether it’s an s-corp, c-corp, LLC, sole proprietorship, etc… and that is where an expert comes in.
When setting up compliance and taxes.
Will you be charging sales tax, running payroll, or issuing 1099s? Even if your business does not require you to do either of those things, there are other reporting requirements businesses need to be compliant with.
In case you’re audited.
It’s better to hire an accountant before an audit happens but if it does happen it can be expensive, time consuming, and frustrating. If you already have an accountant in place, the process will be much more streamlined since they have already done upfront work to make sure your books are in order.
Outsourcing accounting pros and cons
Pros
More cost effective.
Outsourced accounting costs are often less expensive than hiring someone in house.
Time. Wouldn’t you rather be spending time doing the things you love rather than crunching numbers or managing the accountant on your in house team?
Accuracy.
Accounting firms take care of all the details so you don’t have to worry come tax time whether or not you or your solo in house accountant added up your expenses properly.
Fraud.
Outsourced accounting firms have a team of people working for you. This reduces the chance of fraud that can happen with one person at the helm.
Cons
Control. Giving up the control of your accounting to a firm can be hard and can feel uncomfortable. When choosing the best outsourced accounting services, make sure to choose an accounting service that has a smooth onboarding process, defines roles within the team, has policies and procedures in place, and has excellent communication.
Article by Singletrack Accounting
