5 Reasons Why Small Business Owners Should Outsource Their Accounting
Updated: Feb 13, 2020
Have you thought about outsourcing your accounting?
You might be surprised at just how beneficial it is.
Small business owners are often experts in their field, but have one major challenge and that is - a lack of accounting experience.
Hiring an in-house financial professional is time-consuming and expensive as you need to pay full salaries and monitor their work.
A more viable option and a good tip for managing your small business is to outsource the bookkeeping and accounts work of the business to a reliable and experienced accounting firm.
The problem is that many small business owners are not sure if outsourcing their bookkeeping work to an external firm is the right solution for them.
If you’re on the fence and want to learn more about outsourcing, here are the 5 reasons you should stop doing your own accounting.
#1 - In-house teams are resource intensive
When you hire a bookkeeper or accountant, you will need to put in the time to find the right candidate. They need a strong record within accounting and bookkeeping as well as the right qualifications.
If you do not take the time to find the right candidate, you will compromise the quality of your accounting work such as the month-end financial reporting and the account processing.
This can do more harm to your business than good as the small business experts from Wayne’s Landscaping found out, “Outsourcing your accounting can be a huge asset to a small business like ours, but it is important to put in the hard work at the start to find the right person. In the past we’ve been burnt so we’re twice shy. Now we check for things such as their CPA qualification, past work and areas of expertise. Doing this will help you find the right match for your business.”
You will also need to ensure your in-house account staff are up to date with all the changes to financial rules and accounting principles. When you outsource your accounting work to a reputable company, you will ensure that you have the expertise and experience that you need.
To ensure that you are working with the best company, you will need to test their knowledge of current trends.
#2 - In-house teams need solid internal controls
When you have an in-house team handling your financials and accounts, there is a higher risk of fraud or omission. The accounting professionals in small businesses will generally take on a number of responsibilities. This will increase the chances of errors in financial reporting as they have multiple tasks to complete.
An outsourced team will have the right professionals for the job and will carefully review all of the financial statements for your business. They will also have solid technology which reviews work for discrepancies and will review financial reports for errors.
The internal controls in place in these businesses are created by accounting professionals and will ensure that the flow of information is handled according to industry standards. Omissions and errors will generally be minimal which means that the financial risks you face are minimised.
#3 - In-house teams create compromised financial reports
The accuracy of your financial reports is vital to get a clear picture of the overall cash flow of the business. This overview will help with the decision making of the business.
The problem is that internal finance professionals could delay these reports if they are not carefully reviewed or assessed because of the shortage of time.
When you work with an external company, they will not have any other responsibilities. This means that your reports will be provided in a timely manner and will be accurate.
You will be able to use these reports with confidence when it comes to making business critical decisions.
#4 - In-house teams require many salaries and roles
Bookkeepers will handle the sales, expenses and bank transactions of your business. These professionals will need to have excellent data entry skills, communication skills and analytical skills.
An accounting professional is different and will summarise your financial data in a way that is most effective for your business. They will also be responsible for the handling of your tax and the implication this has on the business. Accountants will need to have certain qualifications such as being a CPA.
As you need different professionals to handle the different financial functions in your business, you can find it challenging to hire them. When you use an outsourced service, they will handle the hiring of professionals. All you need to do is hire one company that can handle all aspects of your finances.
This removes some of the risk associated with the hiring process that occurs when you are not an expert in the field. Australian entrepreneur and couples counsellor, Amanda Woolveridge says, “The biggest advantage of using outsourced accounting services is that you know you’re going to be using a professional with expertise in the right field. For me, this saves both money and time as I know all my bookkeeping is being managed properly.”
#5 - In-house teams may not keep up with the latest changes
As a business owner, you have the challenge of keeping up to date with the latest trends in your industry. It will be impossible to keep track of the changes in the accounting world as well. The problem is that you will need to in order to ensure that your financial staff members are also up to date.
The small business owners at AOTH, a hypnotherapy training business in Australia, are familiar with this issue, “Our industry is ever changing, so it is important for us to be able to keep up with new trends and adapt our services accordingly. By outsourcing some of our other business activities such as accounting, we are able to keep our focus on delivering the most up to date services to our customers, whilst knowing that our administrative needs are being taken care of.”
When you work with a professional outsourcing company, they will have seasoned professionals who are up to date with the accounting industry and are experts on a variety of accounting services that are available.
Are you ready to become a more productive business owner?
Although trying to handle all aspects of your business yourself can be tempting, finding areas where you can outsource can actually be beneficial.
This gives you the peace of mind that your finances are being looked after so you have more time to focus on growing your business.
Now that you’ve considered outsourcing your accounting, the question is: How are you going to use the time you’ve saved to keep building your business?
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