Outsourced accounting refers to when a third party handles the accounting for your small business. This professional service manages your bookkeeping, taxes, payroll, financial reporting, and other accounts payable and accounts receivable functions.

Note: this is not simply a bookkeeper for your business. A true outsourced accounting firm acts as a collaborative partner. These professionals will work with you to provide insights into the financial health of your company and establish best practices for success. It’s their job to review your numbers with you regularly, help you understand the financial factors driving your business, and remain accountable to you with reporting and compliance tasks.

Using an outsourced accountant can help free you and your in-house team up from day-to-day accounting tasks that can bog down your operations. Examples of outsourced accounting functions can include:

  • Sales invoicing
  • Payroll processing
  • Budgeting
  • Transaction processing
  • Vendor payments
  • Forecasting

Why would I choose outsourced accounting?

Outsourced accounting offers several advantages:

  • Reduce costs: Hiring a third party is often more cost-effective than having an in-house accountant on staff. It allows you to enjoy all the benefits of having an expert taking care of your accounting duties, while not having to pay that person a year-round salary or provide benefits.
  • Enhance expertise: With outsourced accounting, you partner with a CPA specialist or accounting team that brings a ton of experience to the table. You can rest assured your books will be accurate, payroll will be completed on time, and your financial methods will be compliant with all regulations.
  • Save time: In-house accounting requires close oversight to ensure accuracy and compliance, and can consume a lot of your time. Outsourcing your accounting allows you and any members of your team who are currently handling accounting duties to focus on other tasks, such as marketing and growing your company.
  • Increase productivity: When experts are handling your finances, tasks are completed more quickly and efficiently. Fewer mistakes are made, performance is streamlined, and overall productivity improves.
  • Improve scalability: If your future plans include business growth, outsourced accounting makes scaling up easier. The accounting tasks associated with business expansion can be complex. Rather than attempting to handle these things yourself on top of everything else you’re doing, it’s easier to outsource this role to a third party for whom accounting is their sole focus. 
  • Upgrade systems: An outsourced accounting team provides the latest software and systems. This will allow you to streamline processes and access digital reports. These advantages help you further save time and money on tasks, processes, filing, and storage.

Is outsourced accounting right for me?

In the past, outsourced accounting was a benefit reserved for large corporations. However, today, technology and changing workforce dynamics have expanded outsourced accounting to smaller businesses. To determine if outsourced accounting has value for your company, consider the following questions:

Do you need a full-time accountant?

Often, small business owners don’t require the services of a full-time accountant or CFO. However, they need a professional who can provide more than basic admin or bookkeeping skills. Small business owners who find themselves in this situation are ideal candidates for outsourced accounting.

Are you struggling to hire?

Recruiting, onboarding, and training an accountant for your team can be an expensive and lengthy process—and that’s if you can find someone who is qualified and willing to work for you. If you’re struggling to find a suitable employee to manage your finances, it might be time to look at options.

Is your company growing?

Scaling up your financial transactions and expanding your accounting abilities to support your growing business can be difficult to do on your own. Outsourced accounting can help.

Are you a non-profit or charity?

Managing the finances for non-profits can be particularly challenging. An accounting firm can provide expertise to manage donations, tax deductions, grants, and reporting obligations.

Do you need short-term help?

Perhaps you only need extra accounting help during year-end reporting or because you’re facing an unexpected audit. Outsourced accounting professionals can jump in to provide short-term assistance to see you through financial challenges.

What else do I need to know before using outsourced accounting?

If outsourced accounting seems right for your business, it’s important to find the right partner to meet your financial needs.

  • Consider your values: Your outsourced accounting partner should share your values. Like-minded goals are key to a successful partnership. Research the values of any organization you are considering for accounting to ensure they align with those of you and your company.
  • Communicate your needs: Write out all the services you need an outsourced accounting company to provide. Include goals as well as tasks. For example, “improve cash flow” may be a goal you hope to achieve by outsourcing your accounting. Review this list with any potential accounting company to ensure they can meet these needs and create a service package that checks all your boxes.
  • Ensure they’ll tailor their approach: Your business has unique needs, and you need a third-party accounting firm that’s eager to customize their services to meet them. Confirm with any prospective firm that they’ll be able to work with you and be flexible enough to adapt to the changing needs of your growing company.

Getting started

Often, the best way to get started with outsourced accounting is to begin with a trial project. After completing the steps listed above, choose a service provider and allow them to work on a short project or single task for your company. Once this is complete, evaluate their performance:

  • Did they work well and communicate clearly with your staff?
  • Was their work efficient and accurate?
  • Did their work meet your needs and align with your values?

If you answer “yes” to these questions, you’ve likely found a great partner to handle your accounting. While there may be some trial and error involved in finding the perfect match, once you’re set up with an accounting firm, you’ll find it provides great value by saving you money and allowing you to focus on other important aspects of your company. 

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