In many companies, accounting comes as an afterthought. The main goal initially is to turn an idea into a profitable product. After a while, the business may add things like bookkeeping, collections, and financial statements out of necessity. Outsourced accounting services turn the piecemeal solutions that businesses may have added over time into a more efficient system that adds value by helping the business plan its growth.
The Limits of Bookkeeping
Bookkeeping is a key part of any business. Someone has to keep the numbers, whether by computer or by hand. Bookkeepers also frequently take on routine tasks like accounts receivable, accounts payable, bank account reconciliation, and basic financial statements.
Bookkeeping covers routine day-to-day tasks. However, bookkeepers normally don't have the expertise to do things like generate complex reports to help managers make decisions or engage in proactive planning based on accounting data.
What Your Tax Accountant Doesn't Do
The job of a tax accountant is to prepare the business's tax return at the end of the year. Completing a tax return, looking for tax savings, and planning potential tax moves for next year is a different skillset from other accounting services.
Tax accountants usually prefer to receive a good set of books prepared by a bookkeeper. Some may offer to clean up books or provide full bookkeeping services as a separate service. Some also offer more accounting services. Most of the time, these extra services are performed by a separate team at the accounting firm and are essentially the same as outsourced accounting services. It's just a matter of what outsourced services they're offering and whether it's a good fit for the business. Handing over clean, organized and prepared books from an outsourced accounting firm will keep your tax accountant very happy!
What Owners and Managers Don't Have Time For
Accounting is very important because it measures a business's health. Owners and managers should always take time to be familiar with the business's finances. However, they also have many other important tasks, such as negotiating business deals, hiring and managing employees, and overseeing productivity.
Someone has to be in charge of gathering accounting data, running reports, and making recommendations on how to improve. As a business grows, an owner's or manager's time gets stretched too thin to handle all of these tasks without help.
Common Times to Switch to Outsourced Accounting Services
There are several common factors that lead to businesses outsourcing their accounting:
- Large increases in revenue — usually to around $1 million
- Hiring more than 10 people
- Getting outside investors or loans that require formal accounting processes
- Nonprofit organizations triggering reporting requirements
- Tasks not completed or mistakes made due to lack of time or resources dedicated to accounting
- Plans for rapidly accelerated growth in the near future
Often, businesses recognize the need to pay more attention to their accounting processes long before they make changes. One of the common reasons is that even when they recognize the benefit of accounting, they can't yet justify the salary of a full-time accountant.
AccountingDepartment.com offers scalable outsourced accounting services to match the needs of any business. Request a free consultation to learn more about how we can help your business grow.
