How Contracting for Accounting and Tax Services Can Save You Time and Money
Outsourcing accounting services is a proven, cost-effective solution for businesses of all sizes, even those that have dedicated accounting personnel.
It’s a popular trend in the current economy. When companies decide to streamline operations, staff reduction is an obvious consideration. Business owners may figure they can handle cutting checks, or they disperse various accounting responsibilities among managers. But these tasks can be time-consuming and take leaders away from their primary roles.
“In the past few years, companies have reduced their staffs,” says Karen Stern, member in charge of BSW Small Business Services LLC, an affiliate of Brown Smith Wallace LLC in St. Louis, Mo. “Often, they seek to downsize personnel who can only do one job, such as a bookkeeper, who only handles payroll.”
An outside firm can provide a valuable third-party perspective and the experienced, licensed and trained personnel to complete mission-critical tasks. You can outsource payroll, analysis and preparation of special documents such as property tax returns, or any other accounting function.
Smart Business spoke with Stern about what accounting services can be outsourced and how it saves valuable time and money.
What Types of Companies Can Benefit by Outsourcing the Accounting Function?
Any company from a mom-and-pop shop to a Fortune 500 corporation can utilize outsourced accounting services. Depending on the size of the company and its accounting workload and demands, a business might decide to leverage a single task, such as payroll, to an accounting/tax services provider. A Fortune 500 company might hire a firm to manage all back office work. Another company might require a professional to analyze its property tax reports.
On the other hand, a business might want the firm to act as the bookkeeper and take on all accounting duties. Keep in mind, firms that provide a full range of accounting services have the ability to look at a company’s financials from a tax perspective, as well.
What Types of Services Can Be Outsourced?
Any and all accounting services can be outsourced, whether it’s receivables, payables or payroll — anything that is considered a bookkeeping task. And delegating these duties to a professional accounting/tax services firm will not compromise your security. Payroll is password protected, and there is complete anonymity.
Accounts are never discussed outside of the company, nor are they discussed with those inside the company who are not directly involved in those accounting processes.
What are the Benefits of Outsourcing?
First, there is the time management benefit. For example, in a smaller company, perhaps the owner’s spouse is managing payroll and keeping the books when that person could instead be selling or analyzing financials — responsibilities that are important to the growth of the company. Larger companies can farm out aspects of accounting such as payroll and free up their staff accountants’ workloads.
Second, the outsourced firm performs more efficiently. When a business outsources accounting tasks, the firm taking on those responsibilities does not require benefits or vacation time. The firm won’t call in sick, and there aren’t phone calls to answer, meetings to attend or other distractions.
The ease of transitioning to an outsourced firm is surprising for many clients. A professional accounting/tax services firm can quickly drop in and analyze company financials, clean up books, set up processes and procedures, and train employees to read financial statements.
What Is the Typical Delivery Model?
Outsourced services can be provided electronically or in person. Some clients prefer to have professionals in the office physically writing checks and managing other accounting tasks. It’s important for them to have the personal contact. Other clients like the convenience of a professional who works remotely and performs accounting tasks electronically.
These days, it’s easy to outsource services by using cloud computing, where information can be shared in real time. Many clients rely on a combination of personal and electronic services to meet their accounting service needs.
How Does Outsourced Accounting Help Decrease a Company’s Risk?
The main risk with accounting services is safeguarding one’s assets. A company is exposed to innumerable risks when there is a single bookkeeper or one back-office clerk who makes all the deposits, writes the checks, pays the bills and reconciles the bank accounts.
These risks can be alleviated by involving a third party, a professional accounting/tax services firm that brings separation of duties to the financial process at the company. Perhaps the payroll clerk still writes checks and makes deposits, and the outsourced firm reconciles bank accounts so there is another party reviewing the work. Or, the outsourced firm might take over the check writing and bank reconciliation, or any combination of duties.
The key is to split those duties so that all of a company’s financial information isn’t managed by one person. For this reason alone, it’s a good idea to include an outside professional in the company’s accounting practices — and the efficiencies and cost savings the company will realize are an added bonus. <<