Whether your a small startup focused on growing or a large business with a booming business, all companies have the same basic goals when it comes to accounting. Your business must be able to analyze costs, weigh major financial moves, and ensure best tax practices. In fact, accounting is so important that most small business owners rank their accountant as the #1 most important job to their success. Accountants rank above lawyers, bankers, IT managers, and all other staff, by a wide margin.
In-house accounting has been the traditional form of business bookkeeping, but with emerging technology, many companies are turning to outsourced accounting services. Each of the two options comes with pros and cons, so it can be tough to know which approach to accounting is the best fit for your business. Understanding the differences is vital in order to choose the right accounting solution for your business.
Hours of Service
An in-house accountant usually has standard hours such as a 9 am to 5 pm 40 hours a week schedule. When they are in the office, your team can expect great assistance from them. When they are out of office, however, a small business owner could be left hanging if something urgent is needed.
Outsourced accounting services, on the other hand, offer extended hours to help your business. Some outsourced services offer a flat fixed fee per month while others may charge on a per hour basis. Outsourced accounting services can be especially beneficial to businesses where business hours don’t apply such as restaurants, entertainment, web-based businesses, and hair and beauty services.
Sourcing & Training
When you hire a full-time in-house employee, you will need to find a candidate with the correct experience for the complexity of your financial needs. A huge challenge for small business owners is having to evaluate the skills of a potential candidate without having a deep understanding in accounting themselves. If you are interviewing for an internal accounting position, you need to understand each candidate’s qualifications to decide if they are even the right fit for your financial needs.
Ideally, a candidate that needs less training may be ideal. However, even the most experienced accountants will require some training and an onboarding period to help understand existing systems and accounting procedures.
Outsourced accounting firms that specialize in outsourcing their services to clients eliminate the challenge of going through dozens, or even hundreds, of applicants. Outsourced services usually asses your business and the challenges of your financials, and pair you with an accounting professional that matches our small business’s needs.
Outsourced accounting firms are already staffed with knowledgeable and experienced professionals who specialize in high-level accounting, eliminating most training needs. An onboarding period will still be required for even the best-outsourced accounting firms, this time period, however, is greatly minimized due to their experience with being a professional vendor of services.
Quality & Fraud
Most small businesses hire no more than two accountants to handle their business accounting and financial needs. One huge issue with hiring such a small team is the change of honest mistakes as well as internal fraud.
Did you know 80% of embezzlement cases occur at small businesses? Most business owners operate on trust and let just one employee handle all of their financial information. That means that one person is in control of your banking and reporting with heightened chances of internal fraud. When more people are involved, the risk is significantly reduced as multiple layers of checks and the division of labor makes everyone more accountable.
When you hire outsourced accounting services the accountability lies entirely with the agency you have hired. Their only job is to ensure your books are accounted for and that the math adds up.
Additionally, the agency’s professional reputation relies on their ability to properly and honestly service their clients, it’s completely counterproductive for them to commit fraud or engage in any other illegal activity. Most outsourced accounting firms divvy up specified duties, streamline responsibilities, and put at least two sets of eyes checking the work before the financial statements are finalized
Financial Reporting
In-house accountants at small companies often have numerous responsibilities. They may be caught up with data entry and clearing bills. While these may be equally important tasks for the company overall, the final financial reporting may be neglected and even inaccurate. Considering that these reports are vital for driving the business forward, this can be a costly downfall.
Outsourced accountant services will assign a team of experts to ensure that all aspects of accounting are handled accurately and in a timely manner. In fact, a good outsourced accounting provider will go above just the basic accounting procedures and can act as a business consultant by offering you advice based on your financial information.
If you choose to retain your in-house bookkeeping staff outsourced accounting services add tremendous support. While your internal team members help out with important responsibilities that fall outside of financial reporting, the outsourced accounting firm can collate relevant information about financial statements and status. Additionally, hiring an external agency has shown to better the performance of existing employees by providing them with greater support, supervision, and guidance. It also helps to increase your internal team members’ output and ensure that your business gets the best results by providing a friendly competition that sets the bar higher than before.
Annual Costs
It is important to accurately asses how much an in-house employee will cost. Not only are you paying them a full salary, but employers are also expected to offer benefits such as health insurance, 401K, and paid time off. There’s also the productivity cost of paid time off when your employee is unavailable during sick time and vacations.
When you use outsourced accounting services, you will need to pay for the services but all of the overhead costs are left out of the equation. The monthly cost of hiring outsourced accounting services can start as low as a few hundred dollars per month. The cost of business accounting services will usually rise based on the complexity of work, but it is usually far more affordable to outsource business accounting needs than hire an in-house employee
Final Thoughts
Bringing in external accounting assistance can be beneficial for businesses in nearly any industry– construction, manufacturing, non-profits, marketing, technology, and professional services. You can eliminate instances of inaccurate, meaningless or late financial reporting with the help of outsourced accounting services as well as lower overhead costs.
Limitless Investment & Capital Outsourced Accounting Services
For businesses in search of outsourced accounting, Limitless Investment & Capital offers a range of expertise across industries, from technology to healthcare to media and entertainment and more. We’re always happy to learn about your business needs and discuss how we can help you achieve your financial goals. Contact us today to get started!
