Are you on the fence about outsourcing your accounting tasks?
Like most small business owners, you certainly do DIY accounting. Keeping your books organized is key to business success, yet many entrepreneurs lack the requisite skills and knowledge. Reporting finances, managing cash flow, and filing taxes isn’t something you can effectively do without proper training.
Outsourcing accounting involves getting an external accountant, usually a firm, to do your bookkeeping tasks. It’s an alternative to hiring an in-house accountant, but it does have its pros and cons.
In this article, we’re fleshing out everything you need to know about outsourced accounting. Let’s crunch it!
Benefits of Outsourcing Your Accounting Function
Outsourcing accounting has a number of significant benefits, especially when compared to hiring accountants in-house. They include:
Access to Professional Accounting Services
As your business grows, so do its accounting needs. In the early days, you’ll do just fine with a bookkeeper, but as cash flows increase, you’ll need an accountant, a financial controller, and even a CFO.
You might not be in a position to hire all these professionals in-house. Outsourcing the function to an accounting services provider enables your company to access a wide range of accounting services. These firms typically employ different kinds of financial and accounting professionals.
Generally speaking, outsourcing any business function is cheaper than having an employee. There are direct and indirect costs that your business must incur when hiring bookkeepers and accountants.
Outsourcing can save your business up to 50 percent of the cost of hiring an accountant. Throw in the fact that your business will access several accounting services and you quickly see how outsourcing is cost-effective.
Free Up Your Time
If you’re in charge of the accounting function, you certainly spend a significant amount of time on it. Even if you’re using the best accounting software, theirs is still plenty of your time sucked up in the task. (On that note, check out this NetSuite vs QuickBooks comparison to learn more about the best accounting software.)
Outsourcing accounting takes the function off your hands completely. You can use the free-up time to focus on growing your business.
The Downsides of Accounting Outsourcing
With all the attractive benefits of outsourcing accounting to a third party, there are some disadvantages that can make you think twice. Here are some of the major ones:
Loss of Supervisory Control
As a business owner, you want to have a strong sense of control over key business functions. Outsourcing accounting means handing over everything that has to do with bookkeeping and accounting to the service provider. Although you’ll keep an eye on what you’re doing, they’ll largely work on their own terms.
When you outsource, the provider gains access to your financial data, some of which is confidential.
Although choosing a reliable accounting partner can give you a sense of data security, there’s still a risk of your data being stolen or misused. Especially now that cyberattacks are increasing at an alarming rate, data breach risks cannot be ignored.
Should You Outsource Accounting Tasks?
For a small business, outsourcing accounting tasks is a no-brainer, really. You’ll save money and time while ensuring your business’s finances are in the hands of qualified professionals. Although there are some downsides, they shouldn’t be enough to deter you.
Explore our blog for more small business advice.