Accounting and bookkeeping are the two important aspects of any kind of business. These two aspects assist the business in achieving growth and development. For a well-developed business, it is easy to keep accounting and bookkeeping. They can hire accountants and bookkeepers in-house, but when it comes to small businesses, it is a little bit difficult for them. They are already struggling with many things; however, in the middle of those things keeping the accounting and bookkeeping up to date is a little bit difficult task. For them, hiring an accountant or bookkeeper is a kind of financial burden on these entities. Hence, it is always suggested to small businesses to outsource accounting and bookkeeping. There are multiple benefits or advantages of outsourcing accounting and bookkeeping, especially with respect to small businesses. The current blog will discuss the benefits of outsourcing accounting and bookkeeping in detail.
Benefits of Outsource Accounting and Bookkeeping
There are various benefits to outsourcing accounting and bookkeeping services to small businesses. They are already struggling with many things in such a situation; maintaining accounting and bookkeeping is not easy. Also, accounting cannot be done by a random person. A piece of expert advice needs to be taken for accounting and bookkeeping. Following is the list of benefits that small businesses can have after they outsource accounting and bookkeeping:
- Easy maintenance of accounting and bookkeeping
- Get expert help at a lower cost
- No need to hire any accountant or bookkeeper
- Saves the hiring cost
- Hassle-free management of accounting and bookkeeping of the business
- Easy management of the legal and accounting compliances of the business
- Get advice from the experts with regard to the accounting and bookkeeping of your company whenever it is required
- It helps in the scaling of accounting easily
- Will get access to the automation accounting services
- Business can grow and develop with 2x speed
When Should Accounting and Bookkeeping be Outsourced?
There are many situations that come in front of companies where it becomes very important to outsource accounting and bookkeeping. Some of these situations are given below:
- In the composition of the business plan of the small businesses. A business plan plays very important role when it comes to fundraising and fetching investors.
- While the incorporation or building of your firm. There are many types of entities like Private Limited Companies, Proprietorship Firm, Limited Liability Partnership Firm, One Person Companies etc., and it is not easy to choose one of these entities without having proper knowledge about the same. In such a situation, an expert will guide you regarding the same.
- After the incorporation of the business, its compliance must be done on time to save the business from penalties. At that time, an expert in accounting will be very crucial
- During the time of tax compliance
- Preparation of the audit report of your company
Reasons to Which Small Businesses Outsource Accounting and Bookkeeping
There are a number of reasons why it is suggested to small businesses to outsource accounting and bookkeeping. Some of the main reasons behind the suggestion to outsource accounting and bookkeeping are given below:
Save Time
Outsourcing of accounting and bookkeeping will save the time and energy of the company. It will not only be beneficial from the perspective of the growth of the company but also help the company in its business expansion. Accounting and bookkeeping have a lot of things involved, like compliances, taxation etc. These things are time-consuming, and a small mistake can cause a loss of thousands of rupees; in a small business, these losses are not tolerable. By delegating accounting and bookkeeping services to a third party, the company can focus on other things and can grow with 2x speed.
Reduce the Possibility of Error
Hiring an expert costs a lot to small businesses. But instead of hiring an expert, if a company hire a person who has less knowledge about accounting and bookkeeping, it may cause loss to the company in the later stage if any mistake gets committed by the less experienced person. Accounting and bookkeeping are related to the financial data of the company. If anything got missed, then the company have to pay for the same. Hence, outsourcing accounting and bookkeeping will reduce the risk of error and help the company to grow.
Get Professional Assistance
After the delegation of accounting and bookkeeping to some third party, you will get in touch with the professionals who will handle your work. Mostly, these professionals are experienced and have educational backgrounds in the same field. Therefore, after outsourcing accounting and bookkeeping services you got a team of professionals or experts who can help you out in resolving many issues related to the accounts and financial things of your company.
Saves Hiring Cost
If a small business is not outsourcing the accounting and bookkeeping, then they have to hire an expert for the same in-house. But hiring is not an easy task, and secondly, it will be an extra financial burden on the company. After hiring an employee, the company needs to spend on that employee in various forms like salary, providing benefits, infrastructure and equipment for work management, training etc. All this will be a financial burden on the company, and on the other hand, if you are going to outsource the accounting and bookkeeping, you just need to spend one-third of the same amount, and you will get the best services.
Advice to Scale Business
When a small business is growing, every now and then, such businesses need expert advice related to the finances of the company. In such a situation, if you outsource accounting and bookkeeping, you don’t need to go here and there for such advice. You just need to get in touch with the professional who is taking care of your finances, like accounting and bookkeeping and they will guide you regarding the things that can scale your business between the competitors in the market.
Things to Know Before Outsourcing Accounting and Bookkeeping
There are numerous things one must take care of before outsourcing the accounting and bookkeeping services of small businesses. A few of the important things one must check before outsourcing the accounting and bookkeeping are given below:
- Check the background of the third party or vendor whom you are outsourcing the services
- Check regarding the team of experts he or she is having
- Make each and everything clear before hiring the services of the third party or vendor
- Always do things legally on paper
- Check each and everything in the Non-Disclosure Agreement and Master Service Agreement before signing them.
- Make sure to check the terms and conditions regarding the consideration carefully.
- Always check the Vendor Management Agreement carefully
- Try to have a vendor onboard policy as per the convenience of your company
- Check the papers of the vendor before taking their services
- Check regarding the data protection policy of the third-party
- Check the reviews of the company
- Try to get in touch with its clients once for feedback
Conclusion
Small businesses often choose to outsource accounting and bookkeeping due to the ease of maintenance, cost-effective access to expertise, savings on hiring costs, hassle-free management, and compliance handling, among other benefits. Outsourcing becomes crucial during business planning, incorporation, compliance management, tax season, and audit preparation. This approach saves time, reduces errors, provides professional assistance, and offers scalability guidance while also minimising hiring expenses. Before outsourcing, businesses should carefully vet the service provider, ensure data protection, and establish clear terms to maximise the advantages of this strategic decision. From the perspective of small businesses, outsource accounting and bookkeeping is the best option one can avail.
