What You Need to Know About Outsourcing Your Accounting

Once a service that only the highly profitable companies could afford, accountants and bookkeepers are now very common. Unless you have an accounting degree, properly setting up your company’s books and accounting will not come automatically, you have to learn it. Conversely, you can outsource the task. This article will discuss what you need to know about outsourced accounting services.

Bookkeeping is a meticulous and time-consuming task, especially if you are new to it. Not to mention that mistakes can easily be made, and they can be costly.

Believe it or not, your books determine the health of your business. Thus, it is crucial to maintain immaculate record-keeping and balanced accounts at all times. Your finances depend on it. If you do not have what it takes, you should consider outsourcing it.

What is Outsourced Accounting Services?

Outsourced accounting service performs all of your business accounting duties. As your business grows, ideally, you would hire someone to take care of the books for you. However, having a full-time accountant is a huge overhead, and a lot of small business would not be able to afford it.

For many years, outsourcing the service has been an alternative. However, just as of recent that this service is becoming more affordable.

In theory, when you hire a third-party company, it is hiring an accounting department. They will handle accounts payables, accounts receivables, payroll, financial reports, transaction coding, and other services.

Why Find an Outsourced Accounting Services?

According to a TD Bank survey, almost half of business owners surveyed said bookkeeping is their least favorite task. Besides being time-consuming, it is also very tedious. Moreover, adding payroll into the mix will make things even more complicated.

Most business decisions boil down to finance. Thus, without well-kept books, your business might not survive. Not to mention compliance requirements. Additionally, you will quickly find that your time will be better used elsewhere.

If you have not decided whether you should outsource your accounting, here are a few more things to consider.

Are Outsourced Accounting Services Cost Effective?

One of the main reasons organizations, small businesses included, are outsourcing accounting is to save money. While a CPA might charge a hefty fee, the cost of hiring someone will be much higher. An employee will require floor space, equipment, time off, paid holidays, etc. An outsourced accountant has all of that built into their prices.

Most companies that provide accounting or bookkeeping services will offer packages with different services. You can choose the different services they offer and build your own package. For instance, you can hire someone only to do the books. Or you can request them to pay your bills and do the payroll.

You might even find more economical to outsource to a bookkeeper, and hire an CPA for taxes only.

Reduce Risk of Fraud

Believe it or not, fraud happens more often than you might think, especially in small businesses, most of the time, unintentionally. The source of this practice is the person working the books. Unless you have a clear understanding of how to do your books, I highly suggest hiring someone who does.

It is easy to manipulate the books. Mistakes are easy to make, and the wrong entry or fake expense could go unnoticed for years or never be caught. With outsourced accounting services, there will be more than one set of eyes. Any place that offers these services will have malpractice insurance, which would cover for errors as such.

Focus on Your Business

As your business grows, you will find yourself busier, and bookkeeping is one of the first tasks that is neglected. Outsourcing your accounting allows you to focus on the operation of your business.

Keep in mind that while you are delegating this function, you still need to monitor your finances. However, you will find more time to increase your opportunity to generate more sales or market your organization.

Business Growth or Investment

Another reason to outsource your accounting is if you are seeking a loan or investment for a growth opportunity.

You will find that one of the requirements is to have an unbiased financial assessment from an outside source. You can get ahead of the game by outsourcing your accounting to a reputable firm.

Conclusion

Finding a third-party company that provides accounting services is one of the best ways to remove your business’s clutter and unwanted tasks. A lot of companies offer packages and will tailor the service you want them to perform.

There are many benefits associated with outsourcing this task. It reduces the risk of fraud. Also, it allows you to concentrate on your business growth. Additionally, outsourcing your accounting rather than hiring an employee will save you money as you do not pay for all the burden that comes with employees.