Does My Business Need an Outsourced Accounting Firm?

As a business owner, you likely wear many hats. You’re the salesman today, a bookkeeper tomorrow, and chief financial officer the next day. That’s perfectly normal for a business that’s just starting. 

But what happens when your business starts to grow, and you find yourself stuck with too many responsibilities? Most likely, your efficiency drops, and you struggle to keep up with the numbers. That is where an outsourced accounting firm comes in.

An outsourced accounting firm is a company that provides accounting and financial services to other businesses on a contract basis. This arrangement is often used by businesses that do not have the in-house resources or expertise to handle their financial affairs effectively.

Functions of an Outsourced Accounting Firm

Outsourcing your accounting needs provides numerous benefits to a business. According to Deloitte research, many SME owners are adopting this strategy since it is effective yet cost-efficient. That’s also true for outsourced accounting firms because they provide all the services of an in-house team and more– yet at a lower price.

Some of the core services the outsourced accounting firms offer include:

  • Accurate bookkeeping, accounting, and auditing: Keeping accurate records of your business’s financial activity is a core responsibility of outsourced accounting firms. They also monitor your performance metrics, tracking incomes, expenses, liabilities, equity, and other KPIs.
  • Preparing financial statements and reports: At various intervals–weekly, fortnightly, monthly– the firm provides comprehensive financial statements and reports. These documents reflect the financial health of the business and make projections. Such information helps business owners track which areas will need more attention. 
  • Providing expert financial advice: To a large extent, the success of your business depends on your ability to make quality decisions. Your outsourced accounting firm helps to ensure you also make excellent financial decisions by advising on how best you can manage finances, invest and manage risks.
  • Tax filing And planning: Tax offenses are serious crimes in the US and several other places worldwide. The accounting firm keeps you ahead of your tax obligations by preparing and filing tax returns and providing advice on tax planning and strategies. The goal is to help the client minimize their tax liability and maximize their financial well-being.
  • Regulatory and Reporting Compliance: Government regulations change now and then, leaving many business owners clueless, even when they come across a line. Third-party accounting firms help you stay up-to-date on changing regulations and ensure your business is compliant.

5 Signs Your Business Needs an Outsourced Accounting Firm

One thing is knowing the value of outsourcing and how it can help businesses improve performance. But, it is a whole new ball game when deciding whether or not you’ll need an extra hand with your accounting services. These signs will let you know when it’s time to outsource:

  • You are spending too much time on accounting duties. If you’re spending more time on accounting than on your core business tasks, it’s time to outsource your accounting. This way, you can focus on your business while leaving the accounting to the experts.
  • You keep experiencing delays in payroll. It’s standard procedure to do the books before it’s time to pay staff. With a bucket list of tasks on your to-do and several other unplanned delays, you may start experiencing delays in payroll. Once you notice this, it’s a sign that you need to move on.
  •  You are growing too fast to keep up with finances. It’s the goal of every business to grow. However, monitoring and keeping pace with a fast-scaling venture can become challenging for you or your small in-house accounting team. At this point, you should consider getting an outsourced accounting company to help while you continue basic bookkeeping to keep track of daily business activities.
  • You do not have an organized database and financial information. The standard operation in accounting is to efficiently keep all the invoices and files in multiple storages for accessibility and security purposes. If you fall short of this, it indicates you need a third-party accountant. 
  • You can’t keep up with tax laws. What happens when external auditors request to audit your financial records? You must be ready to pull out your file and defend every financial action you took. However, that can be challenging when you can’t keep up with your tax obligations and compliance laws. Once you notice any lapses in keeping up with these policies, it’s time to consider outsourcing. 

Tips To Choose an Outsourced Accounting Firm

Now that you recognize the need for an outsourced accounting firm, the next steps lead to hiring a reliable firm. As you know, you will need accurate accounting to manage your business efficiently and steer towards faster growth. The following tips will help you find an excellent and reliable company that can handle your growing accounting needs:

  • Measure the firm’s expertise against your financial needs.

Before seeking a third-party accounting company, you should clearly state your financial needs, how they affect your business, and what you’ll need from an outsourced company. You must know what accounting services you need– financial, forensic, strategic, tax accounting, and more.

You can look for companies with expertise and experience in those specific specialties.  Another factor you should consider is “how much experience does the company have?”  You may want to make a deal with a company with more experience

  • Consider a company’s scaling needs.

As the owner of a scaling business, you must consider the future when making core decisions. In this case, you must assess your growth expectation for the coming years and measure that against the company’s current capacity to deliver.

Some things to look out for are the technologies companies will use to run your needs. You also want to know if they have growth plans or strategies to accommodate your growing financial demands.

  • Weigh the cost of acquiring the company’s services

Cost is another factor to consider when deciding which company you want to work with. That helps you stay within budget, ensuring you get the services you seek at a cost-effective solution to your accounting needs. Some things to look out for include the flexibility of the firm’s offerings and how they combine to form the final cost. 

  • Choose a company that has a structure to manage risks.

As more businesses opt for digital solutions for their accounting needs, there’s also increasing concern over cyber crimes and data privacy. Hence, asking for the company’s data protection and security infrastructure helps to decipher which company offers the best protection in cases of breaches. You should know if the firm has a cyber security specialist and the strategies for disaster recovery.

  • Check reviews from past and existing customers.

When looking for an outsourced accounting firm, it is important to check reviews from past and existing customers. That will give you a good idea of the quality of the firm’s services and whether they can meet your specific needs. There are a few different places you can look for customer reviews. One option is to search online on sites like Google or Yelp. Another option is to ask the firm for references from past clients.

When speaking with references, be sure to ask about the quality of the firm’s work, their level of customer service, and whether they would recommend the firm to others. These are all important factors to consider when choosing an outsourced accounting firm.

Hire an Outsourced Accounting Firm for Your Business

Running a business is hard enough with so many things to worry about. Taking your accounting needs off that list helps you focus on several other things and improve efficiency. 

Further, it can save your business significant money because an eCommerce accountant provides the same level of service as an in-house accounting department but at a fraction of the cost. You don’t have to wait for your business to show those stress signs. Follow the tips above to hire an outsourced accounting firm that suits your business needs.