Outsourcing your accounting

Now more than ever, some companies are opting to outsource certain aspects of a business, or transfer management of that area to an external company that specializes in that area. Some forms of business that are typically outsourced include information technology, tech support, accounting, call center duties, or property management.

Outsourcing has a number of benefits, depending on how you look at it. Many companies opt to outsource because they can often save money by outsourcing rather than paying a higher salary to employees in-house. In fact, companies who outsource spend roughly 40% less on training employees than do companies who do not. Even companies who outsource nothing but say, their technical staff, will save a larger amount of money in the long run.

Many companies also feel that by outsourcing certain aspects of their work, they are able to better focus on and spend more money on the key competences their business is responsible for. In addition, outsourcing is a smart idea for smaller businesses or those who are just starting up and would like to save money in initially.

One area companies often outsource is accounting. There are many reasons this is beneficial, including:

 Better service. By outsourcing accounting, businesses are able to provide better service to their clients for a number of reasons. Administrative staff is freed up for duties that will better serve the customers and help to develop your products, and key personnel are able to focus on the main areas of their business rather than areas in which the business has little expertise, such as accounting.
 Save money. Companies, particularly smaller ones, opt to outsource because it is cheaper to do that rather than hire someone to work on accounting full-time. In addition to salary, businesses that don’t outsource accounting also pay for software, training, and benefits.
 Better quality. Outsourcing also makes sense for smaller or new companies because it ensures that experts are doing the accounting, minimizing the chances of errors.

What Does the Outsourcing Firm Do?

If you decide to outsource your accounting, you can expect them to handle a wide range of your accounting practices, such as:

 Bill payment. The firm will generally prepare you cash disbursement checks where required
 Record receipts. In addition to keeping track of your receipts, they will prepare bank deposits and input credits
 Payroll. Accounting will also compute and prepare your company’s payroll checks as well as payroll tax deposits
 Analysis and review of quarterly financial results
 Tax preparation, such as W2s and 1099s, W3 and state reconciliations, and prepare and review federal and state corporate tax returns

Hiring an Outsourcing Firm

Before you hire an outsourcing firm, there are a number of things to take into consideration.

 Cultural fit within the company. Make sure you are hiring a firm that aligns with your company’s goals and values.
 Services. Is the range of outsourcing services the firm offers sufficient, or do you need more or less?
 The expertise it has in your industry. For example, if you are a retail store, you probably wouldn’t want to go with a firm that specialized in corporate accounting.
 Resources. You will also want to take into consideration the firm’s available resources. Do they have everything they need, or will you need to provide?
 Contracts. Consider the length and flexibility of its contracts before signing.
 Cost. Calculate all costs to make sure outsourcing really is cost-effective for your company.

Outsourcing your accounting can prove to be very beneficial to your company if done correctly.

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Categories: Accounting, Hiring,

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