If outsourcing sounds foreign and undesirable, think again, because it’s actually a very good thing. Outsourcing has become quite popular in the United States as it is world-wide, and outsourced accounting is a major go-to tool for small to medium-sized businesses.
What Is Outsourced Accounting?
Outsourced Accounting is the process of using an outside of the company or third-party resource to perform accounting and financial functions that otherwise could be accomplished in-house. According to a survey by Clutch, 37 percent of small U.S. businesses outsourced their accounting functions in 2019.
Accounting functions that are typically outsourced to a third-party firm include bookkeeping, payroll processing, accounts receivables and payables management, balancing ledgers, drafting of financial statements, filing taxes, and submitting tax payments.
To decide if outsourced accounting is right for your company, ask if:
- You as the owner can handle all the accounting functions on your own.
- It is financially justifiable and affordable to hire an adequate number of accounting professionals for the enterprise.
- If performing the accounting functions are or will be distracting from other operational aspects of the business.
- If the accounting functions can be improved by a third-party’s services.
Reasons to Outsource Accounting
- The most common reason to utilize outsourced accounting is to save money versus hiring additional permanent staff, paying their benefits, and absorbing other manpower support costs.
- By outsourcing accounting functions, time spent on those functions can be shifted to other more mission-critical business functions. Having an in-house team attempt to juggle accounting duties along with other duties can result in a major productivity loss.
- Outsourcing can enable a company’s personnel to focus on what they are good at doing.
- Reduced fraud. Outsourced accounting means that professionals will have oversight of possible problems in transactional data. Accounting controls and audits have been shown to be major factors in detecting and preventing fraud.
- More minds, more skill. A third-party accounting firm will have trained and ready-to-go professionals who know all the current accounting regulations and requirements and who will collaborate with you to accomplish the accounting functions professionally.
- A third-party accounting firm can grow with you, without constantly hiring additional permanent party staff.
- Small mistakes made in payroll, for example, can result in tax audits and possible heavy penalties. Professional attention to this function and others helps prevent potentially costly mistakes.
- A professional outsourced accounting company will know all the relevant tax codes and can help a company reduce its tax burden.
- Experienced accountants can offer highly valuable advice regarding business and financial operations.
- A professional service will have access to the latest accounting software to make accounting processes simpler and more reliable.
- Peace of mind. Rather than struggling with accounting concerns, a professional firm will offer peace of mind, so you know that the financial information is accurate and properly presented.
Tips to Successfully Outsource
Consider these tips for a successful outsourced accounting engagement:
- Develop clear goals and plans for what you need to accomplish.
- Examine your budget and prepare accordingly.
- Carefully pursue vendor selection. Find someone with experience in your category. Pick someone who is compatible. Examine their support proposal and costs.
- Sign a well-structured service contract.
- Follow-thru with effective communication and relationship management.
Get Expert Accounting and Financial Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.