Many small business owners and entrepreneurs start their new ventures with few or no employees. As the company grows and a team is built, owners begin delegating tasks they originally did themselves. However, there are many small businesses that have found that outsourcing is more cost-effective than hiring employees for some tasks, including accounting. While managing your own accounting can be cost-effective for some small businesses, there are several reasons why outsourcing your accounting functions can save you money in the long run.
Here are 10 ways your small business can save money by not doing your own accounting:
1. Time Savings
Hiring someone to handle your bookkeeping and accounting tasks is a great way to help you and your team save time and focus on more important responsibilities. Accounting tasks can be time-consuming, taking you away from more productive activities that only you can do like growing your business and leading your team. Outsourcing allows you to focus on your core operations.
Many small businesses assign bookkeeping and accounting tasks to employees who are not properly trained in these jobs. Other owners do these tasks themselves. However, professional accounting firms and consultancies have the knowledge and experience to handle small business financial planning efficiently, reducing the risk of errors that can lead to costly mistakes. Many accountants are also knowledgeable about the effects of various financial business decisions and can help guide you in tax strategies, depending on the training and licensing they have received.
Outsourcing your accounting and bookkeeping to a professional can help make sure your business is in compliance with all federal state and local laws. Tax laws and regulations are constantly changing and if this is not your area of expertise it can be difficult or impossible to stay educated on all the changes. A skilled accountant can ensure your business remains compliant, avoiding penalties and legal issues.
4. Cost Reduction
While it can seem counterintuitive at first, hiring a firm to handle your accounting and bookkeeping needs can actually help your business save money. Outsourcing accounting eliminates the need to hire and train in-house staff, saving on salaries, benefits, and office space costs. In addition, it can save you money in legal costs, fees, and other problems in the case of errors or missed deadlines which can be common with untrained employees handling accounts.
5. Technology Savings
Your company can also realize cost savings in the area of accounting software and programs. Accounting software and tools can be expensive to purchase and maintain. Accounting firms often have access to the latest software, sparing you these costs and providing access to the best software that wouldn’t be possible for your small business to purchase.
6. Reduced Risk
One of the biggest advantages of using an accounting firm or professional accountant instead of handling your bookkeeping in-house is reduced risk to your business. An experienced accountant can help you identify and mitigate financial risks, such as fraud or mismanagement, safeguarding your assets. They are also much less likely to cause costly mistakes in your accounts compared with an untrained bookkeeper.
7. Financial Analysis
Professional accountants can provide valuable insights into your financial data, helping you make informed decisions that can positively impact your bottom line. Accounting firms or consulting companies often have dedicated CPAs and business tax advisors as well as financial planners. These professionals can help you make wise financial decisions in addition to handling your bookkeeping and accounting tests.
Sticking with in-house accounting can become a roadblock to your company’s growth. Over time, your growing business will need more accounting services and more knowledge than your in-house employees may be able to provide. On the other hand, if you hire people specifically for bookkeeping tasks and your business goes through a downturn, you may be stuck paying employees that you no longer need. Outsourced accounting services can easily adapt to your business’s changing needs, whether you’re growing rapidly or need to cut back during slow periods.
9. Avoiding Burnout
For owners and managers who are currently attempting to do their own bookkeeping, outsourcing to an accounting professional can bring a great amount of stress relief and help to avoid burnout. Handling accounting on your own can lead to stress and frustration, especially for those who aren’t trained in this task or for whom this is not a primary task, negatively affecting your overall productivity and well-being.
10. Peace of Mind
Finally, outsourcing your accounting and bookkeeping needs to a competent professional can bring you great peace of mind. For many business owners, accounts, bookkeeping, payroll, and other financial matters are stressful and confusing. Knowing that your financial matters are in capable hands can reduce anxiety and allow you to focus on growing your business.
While outsourcing accounting services may come with a fee, the benefits in terms of saved time, reduced risk, and improved financial management can often outweigh the cost. It can also provide a level of professionalism and accuracy that may be challenging to achieve with limited accounting expertise in-house. Consider your specific business needs and financial situation to determine whether outsourcing your accounting tasks is the right choice for you.