Do you know that 90% of startups fail? And why do the majority of start-ups fail? About 16% of them fail due to poor finance and accounting management.
The financial crunch is common in any startup company. This makes it even more important to keep an efficient track of cash inflow and outflow.
For any startup company, it is very important to manage its funds properly because it already has limited financial resources. Now, you might have a stellar startup plan, but if you don’t manage your money properly, you can’t survive in the competitive work environment for a very long.
This type of small scaled business or limited budget company in the USA or worldwide has to handle efficient accounts. They also need to invest in cost analysis and budgeting. This data helps them make better moves and gain competitive advantages. Impressing investors with well defined bookkeeping can further help in getting funds to thrive.
In a general scenario, a startup business competes with big players that have already built their brand. The budget, time, and other resources are always too little for a startup compared to enterprises. In this case, it is getting difficult to sustain a business in cutthroat competition by a startup.
One of the vital aspects, as mentioned earlier is precise and expert-level accounting without stretching the budget. Accounting jobs should not waste the time of chief resources. Thus, using an accounting expert becomes necessary.
Hiring an offshore accounting expert for a startup can be an option, but it gets expensive to handle an in-house resource. Thus, the most effective option available for a startup is outsourced accounting services for startup.
Professional outsourcing accounting services will meet all needs of this type of company. The offshore financial service provider companies offer high caliber, affordable, and complete accounting services. This type of service helps in meeting a core need of a startup and that is scaling up. The top companies offering this service can offer various services as part of accounting such as:
- Monetary planning
- Payroll processing
- Business licensing
- Cash flow analysis
- And many more
In a nutshell, a CPA or financial management company will handle more than just bookkeeping for your business. It will not stretch your budget, too. This can be really beneficial.
If you are still wondering whether it is worth investing in outsourcing accounting services or not, then let us share the major reasons to outsource.
Reasons why startups use accounting outsourcing services
Outsourcing accounting services for this type of small business brings loads of benefits such as:
- Access to a pool of talent: The expertise of multiple accountants and bookkeepers because the firm will have a team of experienced resources.
- Access to the best accounting infrastructure: The efficiency of the latest accounting tools and access to the best accounting software and automation features to speed up bookkeeping, cost analysis, forecasting, and other jobs.
- Aid financial decision making: Assistance to address complicated financial issues with reconciliation and rectification services.
- Save time and energy: Stay stress free about accounting because you will not need to look back. Your team of experts will handle this job and you focus on your core strength.
- Boost operational competence: The accounting outsourcing firm can further help startup businesses in managing other operations effectively.
- Scale up your business: Use efficient account books and statements in your favor to scale up your business and grow rapidly.
- And many more.
These are the major advantages of using virtual accounting services for small businesses and startup companies. Let’s now explore the core reasons in detail that explain the worth of hiring an accounting outsourcing company to handle startup accounts and finance management.
Reason 1. First Five-Year Plan
The first five years are highly crucial for any startup company. The company not only needs to survive, but also needs to leave a mark. The question of number crunching will be there forever. Thus, budgeting, forecasting, and future planning are some of the vital jobs for these businesses. If they don’t chalk out their five-year financial plan in advance, they can’t survive in the long run. With the right accounting services and assistance, a business can gain more control over finances. Always remember that the best accounting company will provide more than basic data entry and virtual bookkeeping services.
One good accounting and bookkeeping service firm offers – consultancy as well as insight on various financial aspects. From managing financial statements to forecasting and monitoring your financial data, so much can be achieved with one competent outsourced accounting service solution. Your outsourcing accounting partner will analyze your financial statements and provide assistance in making the correct decisions that will help you grow your company. The detailed information and data driven finance planning will help you make a more reliable five years plan for your business.
Reason 2. Smooth Scale Up
Ten years ago, Airbnb was just a startup, and today, it is a million dollar travel idea. So, presently, you might be a startup, but you never know tomorrow, you’ll be a Fortune 500 company. Your fate and hard work can turn your business into a multimillion company. You must be prepared to embrace the massive growth of your business.
When you take the help of the right accounting partner, you can scale up your business smoothly. Right now, you might just want simple bank reconciliation and payroll services. However, in the future, you might require complete accounting and financial services. You may also need more finance management services. In this scenario, your part-time bookkeeper can’t manage the needs of the future, but an outsourcing company can.
For instance, at CapActix, we provide numerous accounting services to our clients like accounts receivable and payable, cash flow management, payroll, etc. We give full flexibility to our clients; they can anytime hire or drop any service as per their requirements. In this way, outsourcing accounting services for small business is very helpful to scale up accounting operations.
Reason 3. Expert Services at Affordable Rates
Usually, startups hire part-time or inexperienced bookkeeping professionals because they don’t have an adequate budget to hire experts. Now, a less experienced bookkeeper can help up to a certain extent only. When you need some special services like tax preparation or business analysis, you can’t rely upon a part-time bookkeeper. You need someone who has vast financial and accounting knowledge and experience.
Law and protocols related to business finance also change dynamically. It requires a bookkeeper to keep tracking the changes. A bookkeeper also needs to implement the learned taxation rules and other standards. However, a part time bookkeeper or an inexperienced accountant is less likely to invest that much time for you.
Accounting outsourcing companies facilitate startups to use or drop services anytime and only pay for the services that they have used. This type of support from an accounting firm lets startups receive professional accounting services within their budget. In fact, outsourced bookkeeping services for a startup are cheaper than hiring a local part time bookkeeper. Outsourcing service providers possess a team of accountants, bookkeepers, and other financial professionals who can offer the best services at competitive rates.
Reason 4. Full Dedication and Support
Your part-time bookkeeper has to handle many other clients at the same time. He cannot stay focused on your work for a long time. He or she may also not be able to finish your work within the deadline due to compressed schedules. It can be problematic for you, especially, when you want time-sensitive work.
On the contrary, when you are dealing with an outsourced accounting service provider, you can contact them anytime, and someone at the other end will always be available to help you. Outsourced companies have large teams, and they are available during their regular business hours to help you out. These companies also respond off-hours if there is something sensitive to handle. In many cases, CPA outsourcing services can also help in putting a dedicated resource to complete your requirement within the stipulated time.
Additionally, if you want to give more workload to outsourcing companies in a month, they always have the bandwidth for extra work. If you have hired an offshore accounting company based in a different time zone, you can get accounting services even in the middle of the night. Do not stress about communication hours. This type of firm is very much professional. They will be available in pre-scheduled meetings. They also support multiple means of communication.
Reason 5. Better Preparation for Tax Season
Tax season is crucial for any business. For startup companies, it is even more vital. Regular tax filing helps in building a strong portfolio. Moreover, the startup can also leverage financial benefits by regularly filing tax returns. Doing it last minute can result in missing out on important tax benefits in a hurry.
Your in-house accountant or bookkeeper might have prepared a smooth plan to manage your day-to-day operations. But, when tax season pressure knocks at your door, you need a team of accounting professionals to help you out.
A professional team of virtual tax preparation experts for startups helps in handling the pressure. They also know the most recent tax laws for a startup. This knowledge and experience can help your company survive the pressure of tax season like a cakewalk.
Outsourcing accounting service providers will have an extensive team of tax experts on board. They will have sufficient bandwidth to prepare your book on time. Thus, you can use outsourcing tax preparation services for a startup when the tax season rush starts. You can also take precautionary steps by outsourcing tax preparation in advance. In this way, the last minute hustle of correcting things and arranging documents can be avoided.
Reason 6. Protection Against Burnout
Burnout is a term referred to as an excessive spending rate. If you constantly spend at a burnout rate, you’ll have to shut down your business soon. It is important for startups to find out their burnout rate so that they can enhance their revenue scale.
This may all sound very vague and technical, isn’t it?
But, this is a fact to deal with. You must not reach the burnout rate of your business. To know if you are reaching there or not, the first thing you need to do is identify the burnout rate for your startup. It might not be something you know very well. Here, you can take the help of a reliable CPA outsourcing company.
The CPA firm providing remote accounting services can help you calculate the burnout point in your business. The accounting experts can even give recommendations to avoid reaching that point, which may lead to shutting down your business.
In a nutshell, a startup business owner has a lot to deal with. Along with financial struggles, he or she also needs to tackle other business challenges. Accurate accounting is one of the hurdles to cross for a startup firm.
Outsourcing accounting jobs to a reliable and certified finance management company can really work in the favor of the company. The company will have a team of accounting experts, bookkeepers, and CPAs. The company will also have the best tools and infrastructure. Any startup organization can gain numerous benefits by outsourcing accounting work.
Some of the key advantages of using outsourced accounting and financial management services for a startup are listed below:
- Improve turnaround time
- Cut costs
- Access to accounting experts
- Reduced expenses
- Reduced stress and hustle
- Comply with legislation and other standards
- And many more
Overall, it won’t be wrong to say that outsourcing accounting services to a company can help startups to succeed and grow in many ways. In fact, it can reduce the learning curve and speed up the growth of the success curve of a business.
There are multiple accounting companies that offer outsourcing accounting and financial management services to startups at pocket friendly rates. Indian accounting firms are more popular among top countries for their accuracy and cost benefits.
Here you can read about Why India is preferred for outsourcing accounting projects.
Are you hunting for the right partner to handle accounts, tax preparation, or any other financial management jobs for your startup?
CapActix can help.
CapActix is a reputed accounting outsourcing company that can provide finance and accounting services at affordable rates. To know more about its services, drop an email on [email protected]. or you can use the inquiry form. CLICK HERE TO DROP YOUR INQUIRY.