With the advancement in technology, many small and medium-size business owners are outsourcing their accounting and bookkeeping services. The outsourcing of a company’s bookkeeping and accounting services could benefit the company, or it could financially hurt the company. If you are considering outsourcing your accounting department, it would be wise to thoroughly investigate the accounting firm that you intend to use.
Whether or not you should outsource your business accounting depends on many factors. You would have to evaluate your personal situation to determine if it is an appropriate step for your business. Here are some important factors you may want to consider prior to outsourcing your accounting department.
The Benefits
There are many benefits to outsourcing your accounting department. Some of the benefits include not having to deal with the accounting, not having to hire and manage employees, and having additional time to work on more important matters. Let’s face it; accounting can suck up a huge amount of time. It just doesn’t make financial sense for a small business owner to devote so much time to accounting and bookkeeping matters.
1. Additional Time – Once your company has decided to outsource its bookkeeping and accounting services, you now have time to work on matters that will increase revenue for your company. Rather than sitting for hours analyzing receipts, bills, and invoices, it just makes more sense to have someone else do it.
2. Employees – When a company outsources its accounting services, there is no longer a need to hire and manage employees. Having full-time employees can be rather expensive. Difficult employees can also physically drain a small business owner. For many start ups and small businesses, an accounting firm may be a better option.
3. Experts – The accountants and bookkeepers employed by most accounting firms are usually very knowledgeable about the various aspects of accounting. They usually know a lot more about accounting procedures than the average small business owner. Working with the right accounting firm, could be financially beneficial. These professionals are experts in the field of accounting, and they are more knowledgeable about payroll, bookkeeping, accounts payable, accounts receivable, and tax saving strategies.
The Disadvantages
Although there are many advantages to outsourcing your accounting needs, there are some disadvantages. The disadvantages are very small in comparison to the advantages. Many of the disadvantages can be avoided by contracting with an accounting firm that has a history of offering its clients quality customer service.
1. Less Control – If you are the type of small business owner that wants to have control over the entire accounting process, then outsourcing your accounting needs is not for you. You would probably be better off purchasing an accounting software and doing it yourself. Many of the larger accounting firms usually require that financial documents and data is forwarded to their office for processing.
2. Financial Records – Every accounting firm is different. According to AccountingFreedom.com, “Before contracting services with any accounting firm, you may want to ask about the method and process by which they will handle your accounting records. Some accounting firms now offers its clients a paperless platform, allowing the client digital access to financial records.” Financial records can be acquired remotely from any location in the world, provided there is some type of connection to the internet. On the other hand, some accounting firms may keep all or copies of your financial records.
3. Security Issues – The security of your financial records could be an issue depending upon the accounting firm you have contracted with. Most accounting firms are good at securing their customers financial records. You may want to inquire about their security procedures and what methods they take to avoid the lost of financial records and data.
By utilizing these steps, you will probably be able to avoid many financial disasters by contracting with an accounting firm that has a reputation for providing good quality service. As a small business owner, you may want to speak with several accounting firms before making any decisions.
Resources: Outsource Bookkeeping, Best Activities to Outsource in Your Small Business
