No one knows the challenges of managing your company's finances better than you. Making sense of your numbers can be time-consuming and frustrating, to say the least. It's no wonder so many small business owners have turned to outsourced accounting services for relief.
What is outsourced accounting, though, and is it a viable solution for you?
Not to be confused with bookkeeping, which mainly deals with recording transactions, accounting involves:
Put simply, outsourced accounting means hiring a third party to handle all or some of your accounting functions for you. So what are some benefits of outsourcing your accounting?
Outsourced accounting services can:
Clearly, outsourced accounting has many advantages. But how does it stack up to alternative solutions?
As mentioned, one alternative to outsourcing is hiring a full-time employee or assembling an accounting team to handle accounting functions. But this is often a huge expense for smaller businesses and difficult to scale as businesses grow. This is why many companies look into DIY accounting systems such as QuickBooks or Xero.
These tools can be helpful for automatically importing transactions from your bank accounts and payment processors like Stripe. You can categorize them quickly as well. And they generally cost less than hiring expert bookkeepers and accountants.
However, accounting software has its downsides too. For example, the learning curve can be steep, which could cause you to input information incorrectly and yield inaccurate financial insights. Not only could such errors land you in hot water with the IRS, but they could also contribute to bad business decisions that impact your financial future.
In an effort to avoid that pitfall, many companies fall into another one. They spend hours doing tutorials, chatting with support representatives, or double-checking their numbers. And every hour spent learning or managing accounting software is an hour not spent on generating revenue directly. If your business is growing steadily or you're already spread thin, that may be time that you don't have.
Ultimately, the best route for you will depend on several factors. Be sure to consider all of the following.
As with any service, the cost of outsourced accounting varies by provider. The same goes for payment terms, since some charge by the hour and others by the month. Therefore, your decision will require some budgeting on your end to see what you can afford—whether it be an accounting partner or an alternative.
If you do decide to pay a third party to handle your accounting, be aware of the potential for scope creep. You'll want to set clear expectations from the start about the scope of work, not to mention how to handle any tasks outside of that scope, especially if you're paying hourly. An early and open discussion about this can keep you from being hit with unexpected costs down the line.
Cash flow, balance sheets, financial statements, and the like are all sensitive, confidential information. You wouldn't want any of it to fall into the wrong hands. So understanding how an accounting partner or tool protects your financial information before you share it is essential.
Do you or will you need comprehensive financial services? Or would help in just a few areas be sufficient? Your answer will reveal the right accounting solution for your company. (Ideally, you'll want one that works now and that's flexible enough to adapt to future business needs as well.)
Speaking of current and future needs, Accracy has three convenient, flexible options worth considering.
If you have a Certified Public Accountant (CPA), we can handle your monthly bookkeeping and then send your financials and tax prep info to your CPA at year-end. Clean and accurate books give your accountant less work to do and, ultimately, save you money.
If you need a bit more support, Accracy also offers outsourced accounting services, including tax prep and tax filing. If your needs are even more complex (say, for example, that you need to track accounts receivable, accounts payable, or segment level bookkeeping), we offer specialized bookkeeping and advanced accounting services.
As America's largest professional bookkeeping service for small businesses, we're dedicated to helping you get the financial insights you need in one simple, easy-to-use-platform. And it costs less than hiring a traditional bookkeeper or accountant.
We are offering free 1 Month Basic Bookkeeping to all new customers so you can experience Accracy's seemless and professional services.
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