Small Businesses: 3 Major Reasons to Outsource Accounting
April 26, 2016 Francine Jones 0 Comments
Once considered a service for very large corporations, outsourcing has become a popular tool for small businesses who want the same edge that their much larger competitors have. Although it may initially seem to be counter-intuitive, outsourcing the finance and accounting department may provide substantial benefits to a small business.
According to Forbes, many companies are outsourcing more than just basic accounting functions; internal auditing, forecasting, budgeting, and so forth, are now being outsourced. The result of outsourcing has been an increase in profitability and efficiency, enabling businesses to expand their market share. The following three reasons may help you to determine if outsourcing is right for your small business:
1. Quality of Expertise
Outsourcing provides companies with a higher level of expertise and technological advancement than is available to the typical small business. Companies who provide outsourcing usually have the most sophisticated technologies available and the best technologists using them. This level of expertise is often financially out of reach for the small business, but outsourcing can provide high level expertise at an affordable rate.
2. Staffing and Accountability
When accounting functions are consolidated, companies can better track expensive duplication of procedures, monitor errors, and streamline ordering procedures.
When payroll is part of the outsourced accounting function, quarterly tax filings are less likely to be missed, end of year W-2 functions are more likely to be on time and accurate, and so forth. Payroll specialists are kept current on the most recent updates and legislative changes that can affect payroll compliance; this can save thousands of dollars in potential fines for a small business. In addition, staffing issues are eliminated since the outsourced company is responsible for their own employees.
According to a 2012 report by the Association of Certified Fraud Examiners, privately owned small businesses are the most common victims of fraud. Outsourcing the finance and accounting department means that an executive will be checking the reports monthly for any abnormal activity and be able to implement proper precautions.
3. Better Time Management
Finance and accounting, particularly when it includes payroll, is arguably the most important department in a company and therefore one of the weightiest matters on the mind of an owner, president, or CEO. Outsourcing finance and accounting frees up valuable time that can be better spent promoting company growth. Peace of mind is invaluable and knowing that the accounting functions, particularly when they include payroll, are under the purview of a reputable outsourcing company can alleviate many headaches for the small business owner.
As with all benefits, there can be some drawbacks. Be sure when signing a contract to outsource your finance and accounting department that you are signing with a reputable company who has a good reputation and provides excellent customer service. Be sure that there are no communication barriers and that the company employs adequate security controls. It’s your business, but outsourcing your finance and accounting department may help you run it better.