Outsourced Accounting: Everything You Need to Know
Handling company finances can be difficult and time-consuming. People have to pay employees and even track all of their expenses. This is when outsourcing accounting starts to make sense. Outsourced accounting is smart and efficient. Using outsourced accounting, you transfer your accounting duties to experienced professionals, which will save your costs, cut down on errors, and you can even utilize specific tools without needing to onboard a full-time, in-house team.
Whether you have a startup, are a small business, or are scaling, you’ll discover that leveraging outsourced service providers will make it easier to run your finances correctly and, more importantly, give you more time to focus on what really counts – successfully running and growing your business.
What Is Outsourced Accounting?
Outsourced accounting is becoming a popular choice for businesses that want accurate financial management without the hassle of building a large internal team.
Definition and Overview
Outsourced accounting is when a business uses an external service provider to perform its accounting duties. This service provider could be an accounting firm, a virtual bookkeeping service, or a specialised freelancer. Instead of using your tools, systems, and experience, your financial work is handled by someone else while you focus on operating the business.
Who Uses Outsourced Accounting Services?
It is common for various types of organisations and businesses to utilise outsourced accounting services. Startups often make use of outsourced accounting to eliminate costs during the early stages when they need to conserve cash. Small and midsize organisations use outsourced accounting services to bring all of the expert knowledge of a CPA, without employing that expert full-time. Larger organisations will use outsourced accounting services to leverage expert knowledge to help the organisation scale quickly, or to look at ways to reorganise processes and tools, rather than bring an internal resource in-house to assist with that.
Types of Outsourced Accounting Services
When engaging in accounting outsourcing, you can choose the specific services you require. Some companies may outsource everything, while others will only focus on a few areas of their accounting.
Bookkeeping and Financial Reporting
Bookkeeping forms the basis of healthy financial management. Service providers keep consistent records of all transactions and complete the necessary reports, such as income statements and balance sheets. This allows business owners to always be aware of their company’s financial condition.
Payroll Processing and Compliance
Payroll is much more than simply paying employees. It involves calculating pay, deducting taxes, and filing various documents with local agencies. By using outsourced payroll, businesses can save money by avoiding mistakes and ensuring they fulfil payroll legislation.
Accounts Payable and Receivable Management
Accounts payable outsourcing services will allow your business to provide accurate vendor invoices and appropriate payments. Accounts receivable outsourcing services will ensure that the customers you have billed pay on time. Both accounts payable and accounts receivable will foster healthy cash flow while minimising delays in payment.
Tax Preparation and Filing
Tax rules and regulations can be complex and change from one locality to another. An experienced outsourced accountant can both prepare an accurate tax return and file it on your behalf. Additionally, a good outsourced accountant can provide sound advice on tax strategies which minimise tax liabilities, while remaining in compliance.
Advantages of Outsourcing Accounting Services
The benefits of outsourcing accounting services extend well beyond cost savings. When you find the right partner to perform your accounting services, you can benefit from improved accuracy, access to technology, and a chance to reclaim lost time on core functions of your business. Here is a brief overview of the key benefits of outsourcing your accounting function.
| Advantage | Description |
| Cost Savings and Less Overhead Costs | By hiring a full-time accountant, your firm pays salaries, benefits, training costs, as well as investment in software costs. Outsourced accounting services free you of these costs; you only pay for what you use and need. |
| Access to Knowledge and Technology | Your outsourced provider accesses trained professionals who are always up-to-date with accounting rules and regulations, latest trends, software, and tools. This helps ensure that your finances are processed with accuracy and that you use the most current technology without hourly fees. |
| Increased Accuracy with Less Mistakes | An experienced accounting team has systems and processes in place to promote accuracy; they can double-check data entry and reconciliation, and use technology to minimise mistakes. Outsourcing is especially useful for professional businesses that have made mistakes in their accounting. |
| Focus on Company Functions | When accounting services are outsourced, organisations are able to refocus their personnel to spend time on strategy, marketing and customer service, instead of devoting valuable time to manual data entry and reconciliations. |
How to Choose the Right Accounting Outsourcing Partner
Choosing the right partner is critical to the success of your endeavor. Choosing the wrong partner can lead to delays, errors, or communication problems.
Considerations: Be sure to consider whether your prospective partner has experience in your industry — they understand your need better than anyone without that experience. Data security will be paramount to the success of your engagement, so you want to invest with a partner that has solid data security practices in place and that can scale to your community’s future needs. |
Questions to Ask Before You Outsource Accounting
Before engaging, inquire about aspects such as:
- How will my data be protected?
- How often will we receive reports?
- What references do you have from similar organisations?
The answers to these questions will help ensure the partnership is successful and supports your objectives and expectations.
The right accounting outsourcing services partner can become a valued part of your extended team. By focusing on the partner’s experience and expertise, their tools and technology, and the style of their communication, you can collaboratively create a successful partnership that helps ensure accuracy in reporting, has strong data security, and consistently supports your growing business.
Should You Consider Accounting Outsourcing?
It is true that effective financial management is fundamental to long-term success in business. Outsourced accounting services assist by providing professional, cost-saving, and timely, accurate financial documentation. This frees up your time to work with customers or focus on growing your business, rather than performing bookkeeping functions, payroll services, or paying taxes. The outsourced accounting services team you choose to partner with, like Orbit Accountants, will also bring valuable tools and industry knowledge. It may help to avoid mistakes and help you maintain compliance with various regulations.
As a result of our ongoing experience providing professional accounting services for businesses, we have worked with businesses of all sizes in every aspect of accounting services – bookkeeping, income tax compliance, payroll services, and more. We use our experience and client-focused approach to provide assurances of accuracy, compliance, and peace of mind. Orbit Accountants’ mission is to simplify your finances so you can focus on the part of your business you should be concentrating on – growing your business successfully. Don’t hesitate to contact us to arrange a free consultation with our skilled accounting services team.
Frequently Asked Questions
Is outsourced accounting suitable for small businesses?
Yes. Small companies often find the value in outsourcing as it is cost-effective and gives them access to professional services without the cost of hiring full-time staff.
How much do outsourced accounting services cost?
The costs will depend on the services selected and the location of the accounting firm. Most companies report that outsourced accounting services are more economical than hiring in-house accounting services.
Can I outsource just part of my accounting (like AP or payroll)?
Certainly. You have the ability to outsource specific accounting functions, (i.e., payroll or accounts payable outsourcing services) but keep some of the accounting work in-house.
How do I ensure quality when outsourcing accounting work?
You can establish quality reporting by setting proper expectations from the start, getting periodic updates and reviewing reports. If you use an experienced and reputable consulting provider, they will keep you up to date on the quality and expectations.
Disclaimer: This article is provided by Orbit Accountants for general informational purposes only and does not constitute professional accounting, tax, or legal advice. Rules can vary by province and change over time. For advice specific to your business, please consult Orbit Accountants directly.
