When I talk to clients about outsourcing their accounting functions, I often get a lot of questions. Won’t it be more expensive? Will someone outside our business really know the details of our finances? Won’t I have more liabilities and be at a higher risk to make mistakes? These are all valid concerns. Here are the top eight reasons I tell business owners they should consider outsourced accounting.
1. Save money and reduce overhead
Staffing an internal accounting department involves training, software and hardware, office supplies, and employee benefits. Not only that, salaries for accounting roles have become more competitive. According to glassdoor.com, the average salary for a staff accountant nationally is $55,247. It all adds up to a pretty sizable start-up and ongoing investment. Compare the estimated numbers below and you’ll see that outsourcing your accounting functions can actually lower your total costs by eliminating the expenses associated with hiring full time staff.
|Annual Savings*||Savings Percentage*|
|Payroll Taxes (10%)||$5,524||None||$5,524||100%|
|Employee Benefits (30%)||$16,574||None||$16,574||100%|
2. Access to expert accounting resources
Accounting departments in small businesses are often asked to wear a lot of hats. Bookkeeping, payroll, taxes, forecasting, inventory, human resources and IT are just a few of the things your staff may be asked to oversee. It’s not uncommon for them to have competencies of a generalist rather than a specialist in any one area.
When you outsource to a qualified accounting firm, you get experts. These are people who have an advanced education in accounting, along with deep service and experience in business. You can lean on them for routine accounting functions and have the peace-of-mind that they are available if you run into any more complex tax, assurance, or accounting issues.
3. Reduce the risk of theft
The ACFE’s 2018 Report to the Nations on Occupational Fraud and Abuse states that the typical organization loses 5% of revenues to fraud each year. In the 2,690 cases they studied, fraud caused an excess of $7 billion in losses. Hiring a firm to perform your accounting functions instills a checks and balances systems.
4. Fresh perspective
The experts you hire for outsourced accounting also bring new ideas and may see things you would have otherwise overlooked. Their fresh perspective also comes with knowledge of best practices for your industry so you don’t make the same mistakes other people have already made.
5. Tax planning
Along with fresh perspective, you’ll have access to expert tax advisors. They can help you plan ahead to find deductions and reduce your tax liability. Who doesn’t want to pay less in taxes?
6. Timely monthly and year-end close processes
All businesses should be able to close their books and report the financial results to the management team or board within 14 days at most from the end of the prior month. A firm will help with a timely monthly close and year-end procedures. With all your processes set to a consistent schedule, you’ll be better able to tackle financial, tax, and business planning.
7. Less time spent managing, more time doing
Most entrepreneurs are experts in their line of work, but not necessarily experts in accounting, marketing, or other essential functions of that business. By spending less of your day overseeing the accounting functions, you’ll free up valuable time that can be redirected back into managing and growing your business.
8. Flexibility and scalability
You’ll get solutions that are customized for your business’ unique requirements. Your outsourced accounting partner can scale their services up or down depending on the time of year, level of business activity, or special projects that might come up. This allows you to react to change more quickly and redirect energy from peripheral activities towards growing your business.
If you'd like to explore whether outsourced accounting would be right for your business, give us a call! Our Business Accounting Services team is here to help!
Jennifer Grubb, CPA
Senior Manager, Business Accounting Services