As an entrepreneur, what is the most precious to you ? Money ? No, its time. Your time is the most important which you should utilize in the most optimal manner such as strategy making or handling client deal. Most of the businesses are closed due to non-management of time by business owner. If you stuck with technical work always, there is very less chance that your business will grow enough. You have to let go of ” I can do everything ” mentality as entrepreneur and start to assign work. In this post, we will evaluate when and why you should outsource bookkeeping service.
When you should outsource bookkeeping service :
No. of transaction:
It is not related with revenue but related with business transactions. Sometimes turnover is higher but no. of transactions are very less.In this case, business owner can enter transaction himself. When you have growing transactions per month, you should think to outsource bookkeeping to save your time and energy.
When there are increasing mistakes in bills/invoices, it is warning signal to move to outsource bookkeeping work.
Value per hour:
When your value per hour is more than cost per hour for outsourcing, you should consider outsource accounting work. Let say, you invest 4 hours in marketing work and increase revenue $1000. It is foolish thing to do accounting work yourself which cost you $20-25/ hour.
When outside party invests in your business, he obviously needs more reports. You can get accurate report on timely manner by using outsourcing.
Lack of qualified people:
Hiring and managing employees is time consuming and burdensome task. When you have difficult to hire right finance qualified, better option is outsourcing accounting work.
Options open to you:
Build accounting division: This one is the most costly option. You need junior accountant ($300), senior accountant ($500), management accountant ($1000), tax expert ($2000), finance controller($5000). The cost will be approximately $9000 to $10,000. Additionally, you have to employ administration person to manage the department.
Hire CPA: You can aim CPA service. CPA will approx. charge you $ 200-$300/hour. If you avail 20 hours of his service, cost will be $250*20 = $5000. Furthermore, you need accounting person to resource the details to CPA. We consider his salary $2000. Total cost will be $7000/month.
Avail accounting service from account outsourcing agency: Account outsourcing agency is the group of accountants, tax and finance experts. They charge as per your requirement. You can choose package ranging from $200 to $500/ month. It is the cost effective option with less drain on management.
Why you should outsource bookkeeping service :
Focus on essential activity:
You can focus of core activity of business such as strategy making or marketing. There is no value addition in business by using in house accounting. You can allocate people in research work rather than entering bills.
Less people less stress:
It is old fashioned to have large number of employees to make the business successful. Remember that more employees mean more fight and it means more stress. You can reduce this strain by eliminating one department from your HR.
By outsourcing, you can get benefit of the expert mind in the field. The outsourcing company has blend of people with expertise in finance, tax and accounts. You can avail the benefit of the entire expert by purchasing single package.
Business owner is required to take daily decision for cash, venture, recruitment, purchases. Management reporting helps to take right decision on right time. He can keep sense on weekly progress and makes suitable plans for future. Outsourcing agency has reporting feature in all packages. You can get daily, weekly, monthly reports regularly. Even, you can ask customized reports suitable for your business. You can’t expect all these from old-style accountant. You have option to hire management accountant but it is costly.
Lower risk of fraud:
As per 2008 Report to the nation on occupational fraud & Abbuse, U.S. organisation lose 7% of their annual revenue due to fraud. 29% of the frauds are committed by account department. The reason of fraud is lack of internal control. By outsourcing accounting function, you as business owner reduce the chances of fraud by staffs as whole bookkeeping and finance function is done by outside personnel.
The data handled by agency is kept 100% safe and secure. The data access is restricted to the agency accountant and other staff of agency cannot access it. Additionally, data is kept in cloud platform and regular backup is done.
Fewer burdens on organization:
Organization needs supply information to agency and gets work done. Time and resources for recruiting and training accounting staff has been saved. In this mode, management can emphasis on other important activities.
Cash flow management:
Cash management becomes vigorous when business grows. When business is growing, you have not time to keep eye on cash. Even you forget receivable. By getting help of outsourcing accounting function, you get weekly reports on cash flows, receivable and payable. Even you can allot cash management function to accountant. He pays bills, receive payments and review cash daily on your behalf. All these features are given in accounting package.
Stress free payments:
As receivable and payable are handled by dedicated accountant, you have no stress for outstanding. The cycle of receivable will be condensed and cash position will be improved.
Although accounting function is handled by outsourcing agency, you are still driver of business vehicle. Each activity is done with your sanction. You get regular work as per your need and get customized the job done as per your business growth.
No fear of losing employees:
The biggest fear of small business is losing valuable employees. Imagine you wake up, go to office and find sudden resignation of your accountant. No worry! You can eliminate this by choosing annual package of accounting service of outsourcing agency.
Accuracy is the most important in getting picture of business financial health. If you are solo owner of business and thinking that I will handle my accounts myself, wait for a second! Will you able to provide time to record and reconcile each and every transaction of business ? How much time does it require? Are you able to prepare reports and review the same? Believe me it takes time to get accounts up to date. There are many holes which we need to fill to prepare the whole image. Outsourcing gives you accuracy in business numbers consistently!
Your business needs to comply with many laws related to income tax, GST, payroll. Accurate accounts help to provide data on time to prepare various tax reports. The compliance will increase and penalty will be reduced. Indirectly, you save money by complying with laws. This money can be used in more productive way to grow the business.
Benefit of virtualization:
It is old fashioned now to build separate section in house for accounting department. Now all the things are getting virtual! Your accounting section too! Outsourcing agency uses various cloud based software and collaboration tools to create virtual accounting department for you. All these are done with low subscription fee. You can supply your data; connect with the accounting team and getting reporting faster using single platform.
If you have large turnover, daily reporting is compulsion. Outsource agency gives you option to get up to date daily reports related to cash, profit, stock. Indirectly, this will save you from unanticipated losses or omission of important business transaction.
Outsourcing not only reduces cost but also helps you when you have crisis or deflection in country. You choose to operate at optimal resources. Here you can read how outsourcing helps US auto sector in tough times. More and more smart entrepreneurs are choosing outsourcing various function of business including accounting function.
You can choose your accounting package as per your need. You can add required service and remove needless features of service. There is ad on facility in accounting package. You pay as per your consumption of service and business nature.
With growing needs of business, you can move on to large package of accounting and avail additional services. In this way, you can cut cost in initial years of business and still can do the finest use of accounting service.
Pay as per your need:
We are charging bookkeeping fees as low as $15/hour. At this rate, you will get experienced bookkeeper service with 5 working days support per week. Fill contact form below to know more about our service. Our support team will reply you within 12 hours.
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I hope this article helps you to decide whether you should outsource bookkeeping service or not. Share this post on social media to encourage me to write more.