Is your business in need of a bookkeeper or controller? Perhaps you already have one but are looking to cut personnel costs.
Or, are you a small business owner who has been handling your accounting functions yourself but no longer have the time, desire or expertise to adequately handle this task? If these concerns resonate with you, then outsourcing your accounting may be the solution.
For many years, outsourcing payroll processing has been common practice. But did you know that outsourcing of your total accounting department is gaining in popularity?
There are a number of considerations to take into account before making this significant decision.
Effectiveness and Efficiencies
As a business owner, how much time do you spend keeping the books for your company? What is it really costing you? Time spent on bookkeeping is time you are not spending growing your business, relationships and profits. Not only is this task time-consuming, it also can be cumbersome if you are not highly proficient in this area. Outsourcing allows you to focus on what you know best—your customers, products and/or services. An outsourced accountant can often provide bookkeeping solutions more effectively and efficiently than you can.
Now that you have considered effectiveness and efficiencies, you want to consider the third “e”—expertise. If your accounting is outsourced to a CPA firm, you are receiving services from professionals who are experts in their field. They will also have the benefit of other tax and industry specialists within their firm who can be valuable resources to you.
If your accounting is done by a CPA firm, you have the benefit of a one-stop shop for all of your financial needs. You will have assurance that when tax time comes, everything will be well-organized and easily passed to a tax professional in the same firm for tax return preparation. In addition to tax compliance, many CPA firms have consulting practices that can help you with strategic planning, transaction services, business valuations, investment management and loan proposal reviews.
You may be thinking that it’s not possible to save money by outsourcing your accounting work, but consider this: You will pay for only the services that you need when you need them—which may be weekly, monthly or quarterly. The outsourcing cost can end up being much less than having a full-time person on staff (and paying benefits) whom you may or may not be able to keep busy.
The Association of Certified Fraud Examiners estimates that a typical business loses about 5 percent of its annual revenue to fraud. Many times, when small businesses fall victim to fraud, it is due to limited staffing. The segregation of duties and cross-training among accounting functions is important in helping to prevent fraud. Outsourced accounting allows for an independent perspective and a segregation of duties, therefore mitigating your risk.
We have all been there. You lose a key employee but think you can cover for him/her until a replacement is found. Unfortunately, when you are wearing too many hats, things start falling through the cracks. One task on which you should not fall behind is your accounting. Whether you are temporarily without an accountant; interviewing potential candidates; or needing extra help due to a medical leave or uptick in accounting demand, outsourced professionals can help you out in a bind.
You have capital expenditures planned for the fiscal year but new accounting technology did not make the list. Did you know that special services like payroll, bill pay and online banking are now inaccessible if you are using QuickBooks versions prior to 2008? While QuickBooks is not the only accounting software out there, upgrades and conversions are common to all of them and it can be difficult for a small business to keep pace. An outsourced CPA firm should have the latest and greatest technologies.
Further considerations and questions to ask when selecting an outsourced accounting firm:
• Inquire about the size of the firm’s accounting staff. Be sure it is adequate to address your needs in any situation. A smaller firm may be affected by illnesses and vacations that may in turn affect service to you.
• Ask about the firm’s technology. Are they utilizing the newest version of their accounting software? Also, are their people certified in using it?
• Consider a firm that can also prepare your tax return at the end of the year. Communication will be more fluid, saving you time and money.
• Think about your needs—both short-term and long-term. Look for a firm that is flexible in meeting these needs—one that can provide the exact services you want and can customize additional services as needed.
• Ask if the firm has experience in your industry. If so, it can make your working relationship easier and more effective.
• Leverage your network for referrals. Ask other business owners whom they use for outsourced accounting.
If you still are not sure if outsourcing is right for your business, you may want to set up meetings with several firms to explain your situation. Reputable professionals will meet with you at no cost and may uncover other considerations that will help with your decision.
Content contributed by the Charlotte office of Elliott Davis, PLLC, an accounting, tax and consulting services firm providing clients the solutions needed to achieve their objectives in 10 offices throughout the Southeast. For more information, contact Dan Warren at 704-808-5210 or visit www.elliottdavis.com.