Small business owners have choices when it comes to their bookkeeping. New owners often opt to handle the company books themselves. Although this may work when a business is in its infancy, the accounts for every growing firm will eventually become too complicated and time-consuming for the owner to manage. Additionally, the owner usually realizes that his or her time is too valuable to be eaten up with the minutiae of bookkeeping. For small business leaders, the next question is whether to hire an in-house accountant, add bookkeeping to a current employee’s already chock-full list of duties, or hire outsourced accounting services.
To help you figure out which of these options is best for your small business, the following is a look at the benefits of contracting with outsourced accounting services.
Companies offering bookkeeping for small business organizations may charge one-time fees for drop-in visits, or they may apply an hourly price structure. One last pricing option is to hire outsourced accounting services on a retainer basis. This means you contract with the outsourcing partner for a certain amount of time, and in exchange they take care of any accounting tasks that pop up. This can be a convenient approach if you anticipate having plenty of regular accounting work for your outsourcing partner. Otherwise, it may be more cost efficient to pay hourly rates for accounting services.
All three of these pay structures often result in saved costs, for the simple reason that you’re not paying employee salaries or taxes when you hire a consultant. Here are a few of the costs you will avoid by outsourcing your accounting rather than hiring a new employee:
Furthermore, you will have more control over your bookkeeping budget with an external bookkeeper. If you need only a few hours of accounting work per week, you can bring in your outsourcing partner for that period. And you’ll be able to understand how your bookkeeping budget is spent, since outsourced accounting services provide detailed invoices breaking down charges, usually on an hourly basis. Finally, an in-house bookkeeper is often distracted by other tasks, such as answering the phone or attending staff meetings. An outsourced accountant will focus solely on your books and will not waste time on other office activities.
With outsourced accounting services, most businesses enjoy increased efficiency. First, you’ll have less paperwork to wade through, since reports will be delivered to you in electronic form. Moreover, because your accounting partner will have everything prepared far ahead of time, you’ll be able to save time at the end of the financial year. Finally, your overall business process will be more efficient because employees won’t have to spend time on bookkeeping. For small business leaders, this is often one of the most compelling reasons to outsource accounting.
Unless you happen to run a financial services firm, chances are that bookkeeping is outside of your business’s core focus. Another benefit of hiring outsourced accounting services is that you will have more time to focus on your company’s specialty. Without bookkeeping hanging over their heads, employees can spend more time on crucial business procedures, management can better focus on improving performance, and owners can more effectively tackle business development.
Many believe they get higher quality bookkeeping for small business by arranging outsourced accounting services. These individuals point out that an in-house accountant has little reason to innovate; he or she is tenured, in a sense. Having won the bookkeeping position, an in-house accountant has little motivation for maintaining a competitive edge. However, outsourced accounting services must stay competitive to keep their clients. With an external accountant on your team, you will enjoy expert, cutting-edge financial help.
Because outsourced accounting services aren’t involved in day-to-day office politics, they can often deliver more balanced, impartial financial advice.
As you can see, there are plenty of advantages to outsourced bookkeeping. For small business leaders, cost savings, improved performance in core business offerings, increased efficiency, a competitive edge and an unbiased opinion add up to create a strong case for outsourced accounting services.
Barb is the CEO of Fisher Bookkeeping, an outsourced bookkeeping consultancy that provides small businesses with a full-service financial department. Her favorite aspect of work is to break down the accounting to meaningful bits, so entrepreneurs can make a powerful difference in their own business. She's also a power lifter (squat: 215, DL: 270).