What is outsourced accounting?
Small and medium-sized companies who want to cut overheads without sacrificing efficiency are increasingly choosing outsourcing accounting. Understanding the differences between in-house and outsourced accounting is essential if you are starting a business or just studying accounting. Both methods of accounting operations have the same scope, but each one is unique in how they are structured. Learn more about outsourcing and its benefits for all your accounting operations.
What is Outsourcing?
Outsourcing is the act of paying a third party to do a specific task or several tasks to keep the business running smoothly. The outsourcing company will sign a contract detailing the services rendered and agree to pay either an annual fixed or fluctuating fee. Accounting is one of the most popular functions and operations to be outsourced. It is possible to find an experienced professional to perform the task because US and global standard exists for reporting and processing all financial statements.
What Functions Can Accounting Firms Perform?
A third-party firm can perform many accounting functions. The size of your business and whether you have an accountant who can handle your books and file your taxes will determine the services you require. The following services are offered:
Payroll processing
Management of accounts receivables & payables
Financial statements drafting
Balancing ledgers
Bookkeeping
What are the benefits of outsourcing accounting functions?
There are many benefits to outsourcing accounting functions. The most significant advantage of outsourcing is keeping your office efficient while reducing expenditures. This is rare in business. Outsourcing can save money because it allows the chosen firm to take on multiple clients, which can help keep costs down. They can also employ experienced professionals and pay their salaries. The accounting firm handles all the payroll taxes and benefits, so you don't have to worry about it.
It will also give you peace of mind knowing that all functions will be performed for a flat fee. This makes budgeting much simpler for the following year.
How to choose a company
All companies are not created equal. You must research any company before you give your financial information to them. Ask about the experience of accountants, how they are screened and what software they use. Also, ask how often they contact clients and what fees they charge. Ask other business owners for suggestions or to read reviews about the company's performance.
Handle everything you can and pass on the functions you cannot to professionals. Everything points to outsourcing your accounting when you want to keep costs low. When you reduce the time and resources you spend on non-revenue producing functions, you can put your focus more on those functions that do generate profits. This is why outsourced accounting is so popular today.
