Outsourcing 101: What It Is & Why So Many Businesses Are Doing It
If you’re the owner of a small to medium-sized business, then chances are you’re outsourcing at least a few of your business’s key logistical, back-end tasks. One of the most common services for which companies hire outsourced professionals in accounting.
Looking after all the financial aspects of the business, including everything from expenditures to tax compliance, can quickly become a hassle if you’re not prepared. In this article, we’ll look at a few of the key reasons why outsourced accounting is critical for most small businesses and identify if these services are right for the future of your company.
How Outsourced Accounting Works
Outsourced accountants are CPAs or registered bookkeepers with the experience necessary to look after the financial aspects of a business. In many cases, these accountants will work with multiple client businesses at once.
They may also have experience in working with businesses just like yours, or at least within your industry. To hire an outsourced accounting professional, you’ll need to reach out to an outsourcing firm that specializes in this type of service.
When you sign on the dotted line with an outsourcing firm, you’re essentially signing on to hire the accountant for a set amount of time, with the term length determined by the specifics of your contract. Most of the time, you’ll be hiring the accountant for a period of at least three months.
In some cases, your contract with the outsourcing firm will be annual rather than monthly. Then, you’ll receive a set amount of hours per week or month in which the accountant will handle the financial aspects of your business, including everything from the complexities of risk analysis to simply balancing the books.
Initial Steps in Outsourced Financial Management
When you sign on with a new outsourced accounting firm, you’ll usually receive a full audit of your company’s overhead spending, existing financial resources, and risk potential so that your accountant can identify a few areas where you can make immediate improvements.
If there’s something not quite right about your books, or if there’s an issue with the way you’ve been managing your payroll, your accountant will let you know right away. From this initial audit, your accountant will begin developing plans for managing your accounts in a way that supports the future of your business.
Strategic Planning and Risk Analysis
Once your existing operations are running as efficiently as possible, your outsourced accountant can help you plan for the future of your business and evaluate the financial risks you’d like to take.
Planning the future of your business is a challenge if you’re not prepared to evaluate the margins, cash flow, and expenditures constantly. An honest look at these numbers, with the help of a financial professional, can help you succeed both now and in the future.
Key Benefits of Outsourced Accounting
Outsourcing your accounting carries a number of benefits for businesses of any industry and operational scale. While it might seem difficult to manage expenditure in the early stages of your business, it’s a sound investment in the future of your business. Here are just a few of the benefits of hiring an outsourced accountant for your company.
Cost-Efficient Financial Management
It’s no secret that hiring an accountant is expensive. The average CPA, even early in their career, often makes north of $70,000. Hiring internally also means spending time on applications, interviews, and training.
To avoid the costs associated with hiring internally, you can simply outsource your financial management. You’ll get all the expertise of an in-house accountant with the knowledge, insights, and experience to improve the financial performance of all your operations.
Scalability
When you outsource your accounting, you’ll never have to worry about paying too much for professional support. You can easily set the number of hours you’re outsourcing for. So paying for an outsourced financial professional doesn’t come with any substantial risks.
Then, as your business continues to grow, you can easily hire for more hours and more financial support. If you need to downscale, your outsourced accountant can also decrease their hours accordingly. This is so that the cost-efficiency of hiring these services remains the same.
Save Time and Focus on Your Business
As a business owner, you shouldn’t have to get wrapped up in the small details associated with your business’s back-end logistics. Instead of spending your time looking after the minutia, you can focus on where your business is going next. As an innovator in your industry, this is essential for the growth of your company.
Want to hire more people? Expand your services to reach a wider network of clients and customers? Your outsourced accountant can help make this possible! By simply taking over the essential tasks associated with managing your company accounts.
Prepare for Tax Season
Business taxes are more than a hassle for business owners without professional financial training or accounting experience. Most of the time, they’re a nightmare.
To make the process of paying your business taxes as efficient as possible, your outsourced accountant can help prepare you for tax season. Both during tax season and at the end of the fiscal year. While they can’t technically file your tax returns for you, they can get all the relevant information together. This is so that the process is faster, with as little risk of errors as possible.
Conclusion
Outsourced accounting isn’t just a “nice to have” aspect of managing the logistics of a business. For many CEOs and executives, it’s an essential part of ensuring the financial security and stability of their businesses. To hire an outsourced accountant for your business, speak with an outsourcing firm today.
