To ensure growth, success, and smooth operations, accurate management of accounting and bookkeeping is necessary for any scaled business. For small businesses, this job becomes even more crucial because of compressed resources. Most small business owners choose to invest in Outsourced Accounting and Bookkeeping services, small businesses often struggle in keeping up with the accounting and bookkeeping needs of the business. Moreover, investing in an in-house expert is a more expensive option for a small business, which might not have enough accounting work to handle a full-time accounting expert.
In the past few years, small businesses have already realized the value of using outsourced accounting services and in the year 2023, it is considered a smart move that can contribute to thriving businesses.
If you are running a small business in the USA and still thinking about whether it is a smart decision to outsource your accounting and bookkeeping work or not, then this article is for you. It will give a detailed insight into outsourced accounting and bookkeeping for a small business.
This article will share important points to give you actionable insight into the subject matter, so you can make more informed decisions and define the right business finance management strategy for your business.
Benefits of Outsourcing Your Accounting and Bookkeeping Work
There are several advantages of using outsourced bookkeeping services from a reliable company for any company. Let’s explore the top 5 benefits that will directly impact the finance management of your business.
a. Keep up with the regulatory changes
Business finance is a critical operation because of the complexity of legislation and regulatory changes. According to the statistics shared by Accounting Today, 51% of CPA firms in the USA find it difficult to cope with changing regulations in accounting. When CPA firms that have a force of financial experts find it difficult, then you can think of the complexities a small business would face in this regard. When you invest in outsourced accounting and bookkeeping, you don’t need to worry about regulations that keep on changing. The company offering you outsourced services will handle this extra work.
b. Reduced expenses
Many small businesses consider using outsourced accounting services as an added expense, but the reality is completely opposite to this myth. A small business can save from 30% to 75% on overall expenses by outsourcing financial management work to an experienced outsourced accounting and bookkeeping firm. This expense will be saved from wages to recruitment, operations, technology, physical space, etc.
c. Expertise at your disposal
A company that offers outsourced bookkeeping services to small businesses will have a team of certified and experienced accounting professionals and CPAs. It will also have the best tools and technology to serve you on time with accurate results. Thus, outsourcing your accounting and bookkeeping job will ensure that at a low cost, you get expert services.
d. Excellent efficiency and accuracy
The CPAs and accountants working at offshore accounting companies will have rich experience in this industry. They will be able to spot silly mistakes and easily overlooked errors. They will also be adept in managing books and accounts having missing details, entries, etc. with their expertise without any error. They are trained in working even under pressure and stressful environments. Therefore, you will always get excellent accuracy and efficiency in finance management for your business.
e. Complete focus on business
When you have an army of experienced accountants working for you, you can channel your energy, and resources, and focus on your core business. When you use outsourced accounting and bookkeeping services from the best offshore company, you are stress-free from all accounting jobs such as managing books, handling tax season, keeping payroll on time, etc. Put all your focus on business expansion, growth, and success.
Consequences of Setting Up an In-House Accounting Team Compared to Outsourcing to a Professional Company
A small business owner often juggles between thoughts of setting up an in-house accounting team with professionals or using outsourced accounting and bookkeeping services offered by the best and most affordable offshore company. To help you make the right choice, here are the major risks associated with the option of having an in-house finance management team.
a. The stress of handling recruitment and team attrition
According to the statistics shared by Accounting Today, 35% of firms find recruitment and employee retention a difficult job in the finance industry. As per Guidant Financial, small businesses across all industry verticals face a 22% of increase in inflation and price, 14% of capital lack, and 11% of issues in the supply chain.
From these statistics, it is evident that small business owners in finance and other industries find concerns and issues in scouting the right talent and retailing them. There are several challenges associated with in-house team setup by hiring professionals. Unlike that, a company offering outsourced accounting services will have the best recruitment team and expertise in onboarding the right and skilled team to accurately manage books and accounts for clients like you. They will also effectively tackle all challenges associated with this process of hiring the best accounting professionals and retaining them in the team.
b. Increased overheads
To set up an in-house team of CPAs, along with the skilled staff, you will also need accounting software, physical space, technology infrastructure, etc. All this will increase overall overheads. With outsourced accounting and bookkeeping, you will be able to reduce your expenses from 35% to 70%.
c. Inflexibility in scaling
Offshore companies that offer the best-outsourced bookkeeping services will give you a flexible option to add and remove accounting professionals from your team. This completely depends on the workload that your business faces during different seasons. Specifically in small businesses, the finance management workload increases during tax season and decreases in other seasons.
When you have an in-house team, you need to pay wages without any effect of increased or reduced workload. Moreover, you will not have the flexibility of adding and removing CPAs based on your business needs. This increases the risk of added errors during stressful times and underutilization of resources when work is not sufficient for hired staff. While using outsourced accounting services, this risk is completely eliminated.
d. Providing a healthy work environment
Accounting and bookkeeping are very demanding jobs and it often gets very hectic. It needs skills, experience, and attention. Even veteran CPAs can get overwhelmed and anxious because of stress created due to silly mistakes, misplaced bills, and other similar concerns. This makes the job employer difficult to provide a healthy work environment to the accounting team.
Furthermore, one needs to invest in training the accounting team, buying the best financial management software, and giving sufficient time to learn new regulations. This not only gets expensive but also overwhelming for a small business owner to cope with increasing changes to provide a healthy work environment.
Unlike that, when a small business invests in outsourced accounting and bookkeeping services, the team of CPA is handled by the provider company. The company will be responsible to manage work-life balance and a healthy work environment, so you can receive max returns on your investment.
e. More compliance and regulations to handle
We all know, the accounting and finance industry keeps on facing changes in regulations, which small businesses need to keep up with. Moreover, when you have an in-house team, you have more regulations and compliances to deal with related to employment, recruitment, etc. In some countries, it is difficult to terminate an underperforming employee due to legislation. All these increases stress instead of reducing it.
The outsourced accounting and bookkeeping companies will have a flexible engagement model for small businesses. Even if there are regulatory challenges related to the team of CPAs and accountants, you don’t need to be bothered about it.
Role of Technology in Outsourced Accounting and Bookkeeping
Technology has been contributing to all industry verticals and empowers them to augment the deliverables and returns. When we talk about businesses that offer the best-outsourced accounting services, technology has proven to be a real boon for them. Even for small businesses that want to use this service, technology can be a real savior for them.
The major role of technology in this outsourced accounting and bookkeeping industry is segmented into the following areas:
The cloud-based accounting software solutions are now available, which makes it very easy to work remotely for offshore companies. Small businesses can keep track of their financial records, bookkeeping accuracy, etc.
Technology empowers outsourced accounting and bookkeeping service provider companies to provide secure services. Data and transactions will be encrypted. Moreover, these companies can even work in the customer environment and software to reduce risks related to security.
One of the major reasons behind the resistance of small businesses to use outsourced bookkeeping services is related to the misuse of assigned hours or accounting resources. Technology lets small business owners keep track of every hour used by the remote accounting professional offering outsourced accounting and bookkeeping services. Expense tracking gives you more confidence to use these services and enjoy the best returns.
Tips to Choose the Right Partner to Outsource Accounting Work
You must be convinced by now to use the best-outsourced accounting services offered by one of the top offshore companies. It is necessary to choose the right partner to enjoy the advantages of outsourced accounting and bookkeeping. Here are the top tips to choose an ideal partner to manage your finances.
Check the reliability of the company
It is necessary to choose a company over freelancers because services will be more definite, on-time, and reliable. To ensure you choose the best provider, check the following:
- Registration/license number
- Experience in a number of years
- Online reviews and ratings
- Customer testimonials
Interview the accounting professional
You must know who is going to work for you before deciding on a partner for outsourced accounting and bookkeeping. You can check the resume of the CPA and you must interview the one. The short communication during the interview will help you judge whether this professional can match your expectations or not. This will also define how easy it will be to communicate your requirements.
Ask for references
Along with online reviews and ratings, it is necessary to check some of the references. Discussing the experience of real customers in your region or industry will give you an opportunity to assess the claims made by outsourced accounting and bookkeeping service providers.
Why do companies outsource bookkeeping and accounting?
Companies outsource bookkeeping and accounting to save costs, access specialized expertise, focus on core business activities, utilize advanced technology, achieve scalability, ensure compliance, and enhance data security.
What are outsourcing accounting services for small businesses?
Outsourcing accounting services for small businesses means hiring external accounting professionals or firms to handle financial tasks such as bookkeeping, payroll processing, tax preparation, and financial reporting. This allows small businesses to access expert accounting support, reduce costs, receive financial support without maintaining an in-house accounting department, and focus on their core operations while ensuring accurate and compliant financial management.
What are the roles of outsourced bookkeeping and accounting in small businesses?
The role of outsourced bookkeeping and accounting in small businesses is to manage and record financial transactions, track income, and expenses, maintain accurate financial records, analyze business performance, prepare financial statements, ensure compliance with tax regulations, manage cash flow, ensure compliance with tax and regulatory requirements, and provide crucial financial insights for informed decision-making.
Accounting, bookkeeping, and financial management of a small business might look like a small job, but it is definitely not. It is a very demanding business function. One needs to keep up with changing regulations, deal with peak seasons, get the best technology tools, and manage several other challenges. Setting up an in-house team of accountants instead of using outsourced accounting and bookkeeping can cause several risks as discussed in this article.
On the other hand, investing in the best-outsourced bookkeeping services can be the smart move for small businesses. It does not just take off the stress of scouting the right talent, but it also helps in enjoying stress-free finance management. There are wide-ranging advantages associated with outsourced accounting and bookkeeping. The ultimate advantage is getting the best and most accurate services within the stipulated time frame without draining energy or in-house resources.
You can keep simple yet practical tips shared in this article to choose an ideal partner to meet your financial management needs out of all available companies that offer outsourced accounting and bookkeeping. In the world of smart devices and artificial intelligence, you must make sure to be smart enough to make intelligent decisions and one of the smart moves is outsourcing your accounting needs.
We are one of the most experienced Outsourced Accounting and Bookkeeping Service providers for CPA firms. If you have any queries, visit our website and Contact us at +1 201-778-0509 or reach out at [email protected].