Up-to-date financial records are critical to the success of any business. But as a small business owner, your time is valuable. It should be better spent developing your business and focusing on other core tasks, instead of inputting numbers into a spreadsheet. While online accounting software, such as QuickBooks, can take some of the load off your shoulders, these tools are only useful if the numbers and transactions are entered correctly. You could consider getting an in-house bookkeeper, either part-time or full-time, to handle your accounting and bookkeeping tasks, but then you’d end up paying salary and benefits to them, which can be quite expensive.
Also, an in-house bookkeeper would typically only provide bookkeeping services — by outsourcing to an accounting and bookkeeping services company; you can ensure that both accounting and bookkeeping needs are taken care of at a fraction of the cost.
In general terms, outsourcing accounting is represented by services for:
- preparation and execution of financial and/or tax reporting
- processing financial and/or tax documentation and reporting
- reporting in accordance with the applicable law
- timely submission of the necessary information to regulatory authorities
Pros of Outsourcing Accounting and Bookkeeping Services
Currently, an increasing number of organizations are resorting to outsourcing accounting. And this is natural, because with the help of a third-party that orders such services, it is possible to quickly establish the functioning of even a complex accounting system, as well as reduce the cost of accounting and its proper support.
There is an opinion that third-party accounting services in the economic sense are beneficial exclusively for small organizations. However, we note that with the competent construction of relationships, outsourcing accounting is quite suitable for medium-sized businesses.
Apart from the obvious time and cost-saving benefits, there are many other reasons why outsourcing your accounting and bookkeeping services makes sense.
Benefits of Outsourcing Accounting And Bookkeeping Services
1. Access to Experts
Basic bookkeeping mistakes can have disastrous consequences such as penalties, cash flow issues and even an investigation by the Internal Revenue Service (IRS). Outsourced accounting and bookkeeping gives you access to a team of highly qualified and trained professionals instead of just one person taking care of everything. In addition, the outsourced experts will use the latest technology and processes to ensure that your data is accurate and secure.
Bookkeeping and accounting also have an effect on factors that range from the number of employees you need to hire, to identifying the most and least profitable product lines because these experts provide a platform for improving cash flow, driving profits and growing your business.
2. Flexibility and Scalability
Services provided by an accounting and bookkeeping services firm are tailored to your specific needs. You get the flexibility to expand or scale back on the services, depending on how your business is growing.
3. Fraud Prevention
According to the Association of Certified Fraud Examiners’ study from 2012, the most common victims of fraud are small businesses that employ fewer than 100 employees, and the median fraud amounts to an astounding $147,000.
This is because most small businesses don’t have access to a controller or CFO who could spot abnormal activity in the transactional and billing data. By outsourcing accounting and bookkeeping services, you can have multiple people watching all transactions and reports and ensuring increased internal controls.
About the Author: Hemant Grover is a senior manager with Escalon Services, where he specializes in accounting, record-to-report, order-to-cash, procure-to-pay and process mapping, as well as other essential business functions.