As a small business owner, your primary objective is to manage and grow your business. With so many demands on your time and limited resources, you may need help with your accounting requirements. Let’s look at the benefits of outsourcing your accounting and bookkeeping services.
What Is Outsourced Accounting?
Outsourcing involves hiring a third-party service provider to perform multiple accounting functions, depending on the size and needs of your business. These accounting functions include:
- Balancing ledgers
- Categorizing expenses
- Managing accounts receivable/payable
- Bookkeeping
- Preparing financial statements
- Payroll processing
- Filing business tax returns
Since accounting is complex and time-consuming, engaging a third-party accountant’s services can help keep track of your finances while you focus on running your business.
5 Benefits of Outsourced Accounting
Outsourced accounting allows small business owners to move bookkeeping off their plates and:
1. Save Money
A common misconception is that outsourcing involves additional costs. However, working with an outsourced accounting firm is more cost-effective than hiring accounting staff, which means paying salaries, benefits, and other perks, not to mention the time and money spent onboarding and training them. Budgeting for these expenses isn’t feasible for startups and small businesses. Outsourcing your accounting services gives you access to highly-trained, qualified professionals at a fraction of the cost of hiring an accounting staff.
2. Save Time
As a small business owner, there aren’t enough hours in the day to make sure your books are balanced. Outsourcing tasks like reconciliation, budgeting, payroll processing, and debt management to an accountant or CPA will free up your time to focus on business development.
Professional accountants can regularly update your books and prepare financial statements (e.g. income statements and balance sheets), ensuring your business is on track to meet its financial goals.
3. Avoid Costly Financial Mistakes
When it comes to small-business bookkeeping, doing it yourself opens the door to potential mistakes, including:
- Recording transactions incorrectly
- Failing to list expenses under the right tax category
- Missing quarterly tax-filing deadlines
- Miscalculating payroll
Such mistakes can have lasting repercussions, including exposing your business to legal and tax liabilities that can put your company out of business. Outsourcing your accounting to an experienced professional mitigates the risks of bookkeeping errors that can doom your business.
4. Objective Insights
Backed by expertise in preparing financials (e.g. profit and loss statements, cash flow statements, balance sheets), an outsourced accountant can analyze your financials and provide an objective point of view about the fiscal health of your business. Their insights can help you make informed business decisions that allow your company to grow and be profitable.
5. Proactively Monitor Your Business Strategy
When you work with a third-party accounting service, you will have access to the core metrics necessary to make critical decisions and take steps to scale your business.
The Bottom Line
Let’s face it: accounting is complex, and your goal is not to be an accountant but to run a successful business. By outsourcing your accounting and bookkeeping functions to an experienced CPA, you can save time and money, avoid costly mistakes, and achieve your objectives.