by Joyce M. Washington, CPA
If you own a business and are doing your own accounting then you are costing your company money. Too many owners think they are cutting costs but keeping accounting internal but the price they are paying is actually higher than hiring an outsourced accountant/accounting department.
Procedures & Professionalism
If accounting were nothing but addition and subtraction, then it wouldn’t be necessary of accountants to attend college to learn the ins and outs. Since accounting is a framework of smart business practices that ensures financial records are current and complete, it’s clear to see that it is more than just a sophisticated system of tracking cashflow.
Professional bookkeepers are not trained in accounting practices. This is one reason to hire an outsourced accounting department rather than a bookkeeper. Outsourcing to an accountant will bring needed discipline to financial operations to “close your books”.
Taxes: Laws, Breaks & Incentives
Few business owners understand the tax laws as they apply to their businesses. Payroll tax, sales tax, unemployment tax, Social Security tax, etc… they all have to be calculated correctly and paid on time. Then as soon as you learn the rules of the game, they change.
Business owners have more important things to do than pour over IRS regulations. An outsource accountant gives the owners access to an expert who is familiar with the tax laws and filing requirements.
In addition to making sure your business is compliant, accountants often have insight into tax breaks that business owners may not be aware of. Some of these can amount to significant tax savings to the company’s bottom line, savings that are more than the cost to hire an outsourced accounting department costs.
Analysis & Advice
Professional accountants can provide a level of analysis of a company’s finances well beyond what a layman could. Reports can show patterns in revenues and expenditures that a superficial examination may not have revealed. With detailed information and review, the owner can focus and develop strategic plans that will bring future prosperity.
A business owner can ask the outsourced accounting department for advice. Ranging from basic business practices that can cut expenses and increase revenue to evaluations of major expenditures, this could be huge for a small business ventures prospects of survival and growth.
The value of an outsourced accounting department is difficult to measure but almost always exceeds the cost of the operation.
Summary
In short, as a business owner, you can’t do it all. By outsourcing your accounting, payroll and tax needs to a virtual accounting department, you get back that time to use on other things… like building and growing your business.
by Joyce M. Washington, CPA
Buried under a mountain of paperwork? Vendors calling you incessantly? Let’s face it, accounting isn’t fun. There are financial reports that you don’t understand, checks to prepare and mail, deposits to run to the bank and on and on. There just don’t seem to be enough hours in the day.
As a small business owner, focus on what you do best. So unless you actually enjoy tedious tasks, deadlines that never end, employees that give you that “will my direct deposit work this time” look… what you do best probably doesn’t include accounting. So pass the buck and let others do it for you.
Why should you outsource? Because contrary to popular belief, outsourcing done right, saves time and money. How? A lot of small businesses try to do everything but you have to find balance. By relinquishing tasks that don’t bring in the bucks, you garner more coveted time to focus on money making activities and save not only time but pieces of your sanity.
Check out the contestants
Before going all gung ho for outsourcing, be sure to check out your options and compare apples to apples. Ask what functions are available, what do you have to do (for example do you need to input hours, send a file, etc) and most important, know what your needs, requirements and preferences. Once you find the right fit, go for it.
“Pass the buck” downers
I would be a “Pollyanna” if I neglected to inform you of the potential pitfalls of passing the accounting buck by outsourcing. Here are a few.
- Inability to customize services so you only pay for the features you need/want.
- File swapping…you send them a file of your accounting information, they review your information and send you a file back for you to upload to your accounting software. A lot of steps, especially if you’re not a computer genius. Or if your provider is in the pre-internet age, they literally pickup the computer file as well as documents…and bring them back when the work is completed.
- Emailing files. Not the most secure way of transporting them. You may or may not have access to your accounting file to input current data while the accountant is away and if you’re impatient, merging files may be a hassle.
Picking the Buck Recipient
We can’t advocate this enough, do your research! Look around at what is available and do what works for you and your company. Some things to consider…
- Consider internal & external options – some service providers charge by the hour and others at a flat rate or per diem (as needed). Caveat: compare apples to apples.
- Consider those that will integrate with your software systems such as payroll and crm. There are distinct advantages to entering information one time.
- Consider the personality of your company. Match it to that of your service provider.
- Consider the features available, including real-time and/or virtual access, and compare them to the features you need. Don’t pay for more than what you need.
- Consider making a decision to outsource sooner than later. Believe me, you’ll be glad you did and you’ll probably wonder why you didn’t do it sooner.
Don’t forget, keep up with your service provider and spend time focusing on what you love, the things you’re good at. After all…that IS why you got into business. Right?
Common Cents Consulting and it’s subsidiary, Common Cents Outsourcing, were created to provide virtual accounting & payroll alternatives to small businesses on the go without sacrificing quality. Need help choosing an outsourcing provider? We’re happy to help…even if you don’t choose us! http://www.commoncentsoutsourcing.com/
(c) Common Cents Consulting LLC – Common Cents Outsourcing 2008
*originally published on www.ezinearticles.com
by Joyce M. Washington, CPA
Why should you outsource your accounting, bookkeeping and payroll functions? Simply, because it makes common sense (pun intended).
If you are a small business, this simple step could put you on a level playing field with companies two-three times your size…
In addition to this major benefit, an outsourcing partnership with a company like ours, Common Cents Outsourcing, is more effective and in the long run costs considerably less than doing it in-house. Here are some reasons why:
- Costs: Handling your own accounting/payroll may mean building and maintaining your own team of professionals. With that comes the necessary human, financial and technical capabilities needed to do the job(s) properly…all equal high fixed costs (salaries, benefits, office space, technology, etc). By partnering with an outsourcing firm, you pay only for the time needed to complete the services needed (making it variable costs) and you can typically add-on other services as needed (making it scalable).
- Removing Non-Core Activity: If you are running an accounting, bookkeeping or payroll service then creating an accounting team doesn’t present a problem for you. However, if this isn’t your core business, the real and intangible costs of creating and managing such a team or individual takes time and focus away from your core…money making…functions.
- Reduce People management Issues: Advertising/recruiting, interviewing, hiring, training and managing an in-house employee or team takes time and money. Outsourcing removes these issues and you don’t have to worry about staff turnover. Losing a trained team member can impact the effectiveness of your entire accounting function. By outsourcing, you won’t encounter this problem or incur the cost of retraining.
- Working With Specialist: For some small businesses (contractors, property management companies, grant funded non-profit organizations, etc), their industry requires some specialized compliance. Partnering with an outsourcing firm that caters to your industry is key. Since they may work exclusively with businesses like your own, they are aware of the constant changes in the tax code & accounting polices that apply to your specialized circumstances.
Good Luck!
Joyce
by Joyce M. Washington, CPA
Having a good accountant/bookkeeper may not make or break your business’ success but with the current state of the US economy and the weakening US Dollar – it sure helps! A good accountant can have a HUGE impact on your bottom line…
Because they handle your money, choosing one is a big decision. Here are a few questions to ask the prospective accountant (or accounting firm).
- How many years has the accountant been in business? With the constant changes in the tax laws and accounting reporting requirements, someone with a minimum of 5 years experience is ideal since you want a business/firm that has been around and won’t go under on you.
- How many years of experience does the accountant have? Again, a minimum of 5 years is ideal…however, industry specific experience of 2-3 years is a good start.
- What industry are they proficient in? Depending on your industry, this question could be vital. You want an accountant/bookkeeper who knows the red flags for your industry as well as what to look for when reviewing your financial statements & taxes for errors.
- What is their response time and communication style? Response time should ideally be within 24-48 hours as a business courtesy; however, communication style is up to you. You should lean toward someone that communicates via similar media as you. For example, if you are proficient and comfortable with email/Instant Messenger communication, but your accountant is not…you may have an impasse regarding responsiveness. So keep media preference in mind.
- What is the size of the firm? This only matters in terms of services offered and requested and responsiveness. If you need quick turnaround for certain items, a 20+ person firm may not be for you. If you need 20 financial reviews done simultaneously, a 2 person firm may not be for you.
- What experience do they have with the software of YOUR choice (and accounting software in general)? Software experience is more important if you use either an abstract or complicated software package. Chances are if you use QuickBooks, Peachtree, or MYOB, your accountant/bookkeeper has had some exposure to it. Bottom line, you don’t want your new accountant learning to use the software of your choice on your dime… In my opinion, that really should be something they come to the table with.
- What are their levels/types of service? Most, not all, firms will have levels and/or types of services. After consultation, they will make recommendations to you regarding what they can offer you. It is ultimately your decision which services you use.
- What are the typical terms of their service agreement? Your prospective accountant should be able to outline for you the “typical” terms of the agreement such as acceptable methods of payment, due date, late fees/penalties, etc.
- Is it an open ended arrangement? In my opinion, the agreement should be open to the extent that either party may cancel the services upon notification. Acceptable methods of notification should be discussed.
- What is your comfort level/rapport with them? This isn’t necessarily a question to ask the prospect but rather something you should ask yourself prior to signing on the dotted line. You want to have a certain level of comfort with them, after all, they will be handling your business’ money & financial affairs… so if something just doesn’t feel right, don’t ignore it.
Having the answers to these questions is a good foundation for making this decision…If you need help or you have questions, please contact us. We’d be happy to help.
Joyce
