Personal Finance guide

Outsourcing accounting services has long remained a privilege reserved only for larger corporations. But now, the affordability and cost effectiveness of using outsourced accounting services is attracting small businesses as well. Small businesses normally have a lot of functions and very less resources for completing them. Using expert bookkeeping and accounting service providers for outsourcing accounting functions save small businesses a lot of resources, which can then be utilized somewhere else within the business.

But the main query a small business entrepreneur will have is this: Is outsourcing accounting services really worth it for my small business? The answer to this is complicated and requires evaluating the pros and cons of using a firm for financial functions of the business.

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When you open a small business firm, there are lots of task to tend to in one time. Some of the important activities that needs immediate attention during beginning months of a firm include registering business firm, getting license, formulating investment plans and policies, filing partnership deals, profit and loss sheets, and other business deals. In the maze of all these activities accounting gets backseat.

Small business accounting is the keeping and maintaining of the financial records of the firm. This helps in retrieving the financial and accounts related information whenever necessary. There are two fundamental ways to achieve small business accounting which includes:

1. Cash-Basis Accounting

2. Accrual –Basis Accounting

Small business firms are free to put for either of the method as per the convenience and resources available. Also, IRS terms and conditions must be followed by while opting for any one of the small business accounting method.

Cash-basis accounting is one of the oldest methods used by almost every small business firm owing to its traditional usage and age long trust on the procedure. In this process, as soon as the income is received, taxes levied are deducted right away. And, in the similar vein, expenses are deducted as soon as they are being paid. This means that in cash-basis accounting system expenses and income is entered into the journals as the transactions takes place. This is the simplest way of small business accounting, exercised by firms worldwide.

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A lot of people wonder what is so great about accounting outsourcing and why so many business houses outsource accounting work to firms. There is no logic in making another firm do that same work that the company can do by itself. Then why is there so much craze about outsourcing? There are a lot of benefits when companies outsource their accounting work. Accounting Outsourcing has become the key through which companies save millions of dollars and increase their global respect. Below we will describe why it has become so important for firms.

The basic meaning of outsourcing is to give another firm a part of the work of the company at a cheaper rate so that it can be beneficial to the firm. This helps the business because not only does the work get done; it gets done at a much cheaper price than what the company previously paid for. Mostly firms who get the accounting work are firms in developing countries where the cost of labor is relatively low. They have experienced and well qualified staff and no work hence when they get accounting work they are ready to work for a much less rate.

Outsourcing is only done for jobs that do not require face to face interaction with the customer. Accounting is a back office job and hence falls under this category.

In order to survive this tough competition, firms need to outsource their accounting services. When they outsource they also get one very important advantage. They get global recognition. They can expand their services not only to one country then but to any other country. In this age of globalization where the entire process from manufacturing to sales is divided into which country it would be most economical to produce and use the services, accounting outsourcing matters a lot in the profitability of the firm.

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Do you want to enliven your workplace? Are you interested in making all the monotonous work of your company someone else’s headache? There are other things that you want you staff to do but they still take a long time in doing their other clerical duties? If you answer in a positive for any of the following questions then you need Bookkeeping help.

Many individuals do not know the difference between accounting and bookkeeping. There is a big difference between accounting which is a task that requires the intellect and bookkeeping which is a task that not only requires intelligence but cumbersome manual work as well. Bookkeeping is not at all an interesting task and makes the staff very bored. They also do not have a great productively due to the task of bookkeeping.

When an entry is generated the record of it is made in accounts books. It is made manually for small companies and in large scale corporate firms, computer systems and software are installed to perform the task. All these entries are compiled from various places at various periods of time, at one time and one place and then are recorded in the book called journal where the entries have two effects.

After recording them in the journal they get recorded in their ledger accounts. This transfer of records from the journal to the ledger under each heading is called bookkeeping. As the name suggests, the people working here keep the books up to date. Hence on the final date the final amounts of various headings are taken to form the final accounts or the statement of accounts. Hence this task of bookkeeping gets very boring with the people doing the same work every single day. That kind of job does not pose a lot of challenge, and is also a work that does not require the employee to be active. This makes the employee lose concentration and reduce productivity.

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Accounting outsourcing is the new buzz word in today’s market. Many companies are employing this outlet for their accounting work. Hence we need to understand in depth what it means and how one can benefit from it knowing very well all the hidden pros and cons of the deal. The current economic scenario is not of a pleasant type. Many firms are shutting down business because costs are more than the profits they can earn. This directly hints at lowering down the investment expenses and concentrates on accumulation of capital. Cost cutting techniques are directly aimed at employees but there is one other way of cutting costs. If the company removes an entire department from its office not only will it cut costs from the salary perspective but it will also save office space and give a sort of motivation to the employees to work hard. This way the resources can be directed into other more useful and visionary ways.

For this you can seek assistance from accounting outsourcing firms. Accounting is not a function that directly helps the business promote goodwill or a higher clientele. It does this indirectly through statements and final accounts. But the important thing to consider is that the function can be done anywhere is the world and does not have a direct co relation with the customers. Customers do not need to interact with the staff in the accounts department. Hence getting this activity done away from the place of work in a more economical way would prove to be very advantageous for the company.

There are many firms that render services of accounting. They are not only in low income countries but are present in the United States as well. The cost factor however differs greatly between the two. Hence whatever company there is no matter the size big or small can take the advantage of this great cost cutting tool. There is no restriction on the sort of business the company undertakes. Accounting outsourcing can be done for a real estate company as well as a FMCG company by the same firm.

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Dr. Duncan gets in his office and checks his email for a status update from his bookkeeper Kathy. An email from Kathy has an attached statement generated using QuickBooks which includes invoices waiting for Dr. Duncan’s approval and hours to be billed to his clients for services. Dr. Duncan contacts Kathy over instant messenger and tells her to (a) pay the invoices, and (b) send bills for services clients. Kathy immediately acknowledges and goes on to pay off invoices using Dr. Duncan’s online Bill Pay system. She then emails and faxes bills for services provided to clients.

Who exactly is Kathy and where is she located? Kathy is a virtual assistant – virtual bookkeeper to be specific – working from India for Maxim Liberty, Inc. which provides online bookkeeping services for various clients in the USA. As Ms. Prabhukumar, President of Maxim Liberty, Inc. remarked, “We are our client’s best kept secret. Every firm has tasks that can be handled via virtual assistants. And, if these tasks can be done better than on-site bookkeepers at a fraction of the cost, the explosive growth of our bookkeeping services shouldn’t be surprise. Since our virtual assistants work with various businesses and specialize on a specific process or task such as bookkeeping or word processing, they can draw upon best practices of operating a small business.”

Online virtual assistant and bookkeeping services are an outsourcing strategy that can be used to gain competitive advantage. As a result, they have shot to prominence and firms of various sizes are utilizing them. The recession has made businesses more prudent about how they spend their operating budgets making virtual assistants a hot commodity.

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Have you become tired of doing so much accounting for your company each year? Do you get bored of doing the same thing again and again? For a small firm the accounting work is handled by the entrepreneur since there is no scope of employing a CPA to handle the accounts. Hence with the basic information on accounts the entrepreneur has to manage the balancing of accounts and searching for the errors. Along with that he has to manage the business and look at the progress of the business and what are the weaknesses so that they can be developed into the strengths. All this is bound to make the entrepreneurs go crazy. This makes accounting outsourcing a great option.

For big firms the expenses are way too much to maintain an accounts department. The condition of the business is not that great and the businesses all over the country have been experiencing perishing sales. Along with this, maintaining an entire department to handle something which does not aid the process of sales directly becomes a big problem. Big firms have bigger expenses and not maintaining a budget on these expenses have made the firms realize that they would have to incur losses.

Accounting outsourcing can be defined as a business giving all its accounting work to another firm for a payment which is far less then getting the job done within the business. This is because of the concept of economies of scale. The firms that do the business of accounting outsourcing employ expert accountants who not only manage the accounts for one company but for an entire portfolio of companies. This makes them earn a profit as well as enables the company to save on the costs of accountants.

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Online bookkeeping services and virtual assistants are an outsourcing strategy that can be used to gain competitive advantage. As a result, they have shot to prominence and firms of various sizes are utilizing them. The most recent recession has made businesses more prudent about how they spend their operating budgets making virtual assistants a hot commodity.

How exactly does using an online bookkeeping service help crush the competition? Paying as low as $5 per hour for online bookkeeping services vs. the typical $30,000 for an in-house bookkeeper yields tremendous cost savings for a small business. A small business owner can use the money saved to (a) beat the competition with lower prices for products and services, (b) invest in additional advertising to outgrow the competition, and (c) prepare better strategic plans.

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Have you ever seen a business running without an accounting system? I bet there is none otherwise the business is doomed to fail. Every business from small home based venture to major corporations has accounting needs because it is the barometer of every business. It tells you whether your business is gaining substantial profits or losing revenues. Such important function in the business must not be taken for granted.

Unfortunately, not all business owners have the skill and expertise to carry out accounting functions in their own companies. Also, the resources to fulfill these functions are very limited in small to mid-scale businesses unlike in multibillion corporations. Oftentimes the owners run the business operation while trying to meet its accounting needs. It is not quite a smart choice because you fail to solely focus on the critical needs of the company, an essential step to sustain your business. More so, not all businessmen are good accountants.

This is the reason that outsourcing your accounting needs is highly recommended. The advent of outsourcing the accounting services such as bookkeeping to third party surges in the recent years because of the unbeatable benefits it offers to you and your company.

Outsourcing your accounting needs allows you to save up to 40% from your payroll and employee related expenses. In a typical business structure you require the basics such as desk, office chair, stationery supplies and computer for your staff. Also, onsite employees entail a portion of your expenditure to be allocated for employee benefits such as health insurance, social security system and so on.

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Nowadays, in the world of business it is extremely difficult to survive on ineffectual backups, which has lead to the owners of the business to make sure that the services they opt for are the best. To fulfill this requirement, the outsourcing facility is on an ever increase in the world of business. All the companies whether on a small, medium or a large scale are actively hiring outsourcing firms. Accounting outsourcing firms is known to be the most prominent amongst the all as accounting is the most laborious and exhaustive task. With the services of accounting outsourcing you can curtail your overall expenses along with boosting the monetary condition of your company.

With the popularity of the services of outsourcing becoming popular numerous outsourcing firms are emerging as a perfect option. Many of them are rendering online services to the customers. This not only saves the costly time of the client who has exhausted all their energy in running from one place to another to keep up the monetary records on regular basis. The services of accounting outsourcing have popped out as an ideal means of relieving yourself of all the anxieties and worries which prevailed in the company. The companies are very much convinced that they will get efficient as well as proficient services from accounting outsourcing firms which will work in the favor of the company. The growing demand of the outsourcing firms clearly spells a splendid future for the businesses.

Nonetheless, there are numerous things which the owner of the business must be assured of prior to appointing an accounting outsourcing firm. The first and foremost being, the entrepreneur should evaluate the authentication as well as efficiency of the accounting outsourcing firms as it might require you to divulge company’s confidential data as well as documents with the firm while making tax evaluation sheet along with other reports associated with accounts. In fact, while carrying out this research you will also get an opportunity to speculate the sincerity of the accounting outsourcing firm towards time. With this you can be assured of timely submission of work.

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