We frequently encounter clients at a turning point in their growth. Even if some of them show up at our virtual door a bit later, those who have achieved the million-dollar mark in annual revenue are burdened by managing their own bookkeeping.
The importance of accurate and up-to-date financial records is known to every new business owner. At the same time, maintaining the financial records is frequently at the bottom of an owner's to-do list of priorities.
A report by Clutch has shown that as businesses keep growing, they tend to be less dependent on in-house accounting.
Moreover, because business owners did not go into business to be accountants, maintaining the books typically consumes a lot of time. Bookkeeping and accounting, therefore, result in a pretty expensive hourly rate.
Is reduced cost the only reason to outsource bookkeeping and accounting operations?
Let’s find out all the factors why small-mid scale businesses should outsource bookkeeping and accounting.
8 Reasons Why You Should Outsource Bookkeeping and Accounting
Primary reasons why organizations outsource include cost savings, focusing on core business activities, and solving capacity issues. However, driving transformational change and improving business performance are also the reasons leading organizations to outsource.
Let’s know the reasons one by one:
As mentioned earlier, having a specialized accountant handle your bookkeeping can help you save money. Keeping payroll costs down is a priority for most businesses and obviously, employing an in-house bookkeeper costs money. By outsourcing your bookkeeping, you can avoid paying an hourly wage or an annual salary.
Not employing an in-house bookkeeper and outsourcing this crucial function can offer your company much more. Instead of spending payroll money on support staff, you can spend more on employees that support your company's core.
For instance, if you own a construction business, you can employ additional workers to simplify the jobs. Or, if you own a restaurant, you can employ more cooks to reduce wait times and improve your dining experience.
You can grow your business while spending wisely using online accounting and bookkeeping services.
Having an outside firm handle your accounting saves you not only time and money but also guarantees accurate records. Your accountant's experience cannot be downplayed, especially if you are a business owner. Your impulse may be to keep your accounting in-house but outsourcing it will give you better insights into your finances.
You will benefit from working with an outside accounting firm if you have limited knowledge of your industry’s tax structure or if you are seeking financial advice that is otherwise unavailable. This will allow you to strategize effectively for your company.
It is because accounting firms must continually improve their skills and qualifications to remain competitive in the market. Imagine 100 people working in the same office; they will obviously discuss and exchange new accounting trends, solutions, and tools. Furthermore, excellent accounting firms have continuous access to training, courses, and participation.
Modern bookkeeping and accounting service providers don’t function using pen and paper. Using an online portal that handles everything, bookkeeping services can streamline your process, opening the door to new opportunities.
The portal's functionality varies based on bookkeeping pricing packages, but the outcome is simple. Because it's located in the cloud, you and your accounting firm may access your records at any time.
With a cross-collaboration, the accounting firm can instantly input expenses and/or income. This allows you to instantly view your finances, including new transactions, with a single button click. Centralizing financial information can help keep things organized. Anyone in your organization may view or modify this data, while accountants handle the day-to-day operations.
Fraud is a common occurrence in small to medium-sized companies where just one or two people are in charge of accounting. It is simple to falsify the accounting books or have an imaginary cost go unnoticed for months or even years.
There are numerous warning signs that can signal fraud, and they are often the result of an employee's difficulty, who feels financial pressure and doesn't know what else to do. It’s recommended not to trust the employees blindly without any protection or accountability; doing so is a sure way to leave you exposed to fraud.
When you outsource your accounting, you gain increased internal controls thanks to the presence of bird eyes on your transaction processing and reports. Even though frauds can never be ruled out 100%, a specialized team with accounting expertise will be much more likely to detect an anomaly than someone who is probably overwhelmed and overloaded with work.
When you employ an in-house bookkeeper, you accept certain mistakes while waiting for them to become familiar with the job. Before the numbers can be accurate (or even reliable), bookkeepers would require some time to get acquainted. Bookkeeping services providers help mitigate that problem by promising maximal productivity on day 1.
When you hire a virtual accounting firm, you will have an expert team on your side to assist you. Virtual accountants use an automated system to track your finances, with expert oversight to deal with any issues immediately.
One of the most desired benefits of the bookkeeping outsourcing business model is the financial information it provides. At any moment, you can access accounting reports that provide you with detailed information about your company’s financial health.
You may view your cash flow history, profits and losses, or a balance sheet straight from your computer. Because virtual bookkeepers meticulously record this data, it is quick and simple to examine.
You may share this information with colleagues, employees, lawyers, and financial advisors as your business expands. It's important to have quantitative insights like this as your company grows.
Having the numbers on your side supports your gut instincts and business growth decisions. Financial intelligence about your business enables you to make better, more informed decisions.
Keeping tax season simple is a great way to keep unnecessary stress off your shoulders. Among the many other benefits of outsourcing bookkeeping, simplified tax preparation and full compliance can help you take care of everything in one place.
Rather than frantically striving to get your numbers in order, virtual bookkeepers will assist you in preparing for tax season as time passes. When the time comes, they will be able to assist you in filing immediately, taking advantage of any potential tax reductions.
Moreover, the accuracy of financial records is not in question with accounting experts, nor is the integrity of the data. Outsourced bookkeeping services ensure that there is no doubt about the data whether the business owner needs to present financial statements to the bank, satisfy investor reviews, or share information with the IRS.
Smaller businesses often begin with less extensive accounting services; however, as they grow, they require a complete range of bookkeeping services.
And, it's true that not all accounting service providers and plans provide the same level of services. However, that doesn't mean you're bound to a strict agreement.
As your business grows, you may find that your current accounting package is inadequate. Upgrading can provide your company with additional capabilities that may help you achieve success.
Accounting is not just about preserving records; it's also about providing a foundation for growth, cash flow, and profit.
Despite being a vital part of any company, accounting is time-consuming and intricate. Accounting errors often lead to a reduction in business or even bankruptcy.
Bookkeeping and accounting services are the way out for businesses. They offer an array of services while also saving businesses a good deal of money. It also includes having the ability to structure the contract as you see fit or employ as many employees as you need.
Your outsourced accounting and bookkeeping service is designed to augment your in-house staff and revolutionize your financial department. From an outsourced accounting team to custom management reporting and controller services, you can avail of everything with outsourcing.