How to Decide on Outsourcing Accounting Services
Many businesses struggle with the decision whether or not to outsource their accounting duties. This issue can be a dilemma. Of course there is the self employed worker that feels that everything must be done by them to do it right and save money. Then there are business owners who outsource every job they do not directly specialize in.
There is really only one draw-back to paying to have accounting services done by someone else. Money invested, is still money not able to be spent somewhere else. This detractor is a big one because the whole reason of running a business is to make as much money as you can, not spend it.
There can be many benefits to paying out money for accounting services. When another group of people calculate income and expenses, you don’t have to spend time doing it. This allows more time to either spend in relaxation or developing other areas of your operation.
If you are ambitious and want to spend that extra time in your company, there are many productive things to do. More time allows focus to be used on more important tasks to make procedures and processes more efficient. Developing new customers or solidifying existing customers is a wise objective. In this decision implicit costs, also called opportunity costs, must be considered. If your time is worth $40/hr then is spending 5 hours a week worth doing it yourself, equaling $200. Could you be doing something more valuable with those 5 hours? An accounting service may make more per hour, but consider that it would take them half the time.
With an accounting service, the accuracy of the figures does not have to be questioned. The sole purpose of an accounting service to quickly and correctly calculate accounting numbers of their client. In most cases, expensive software is utilized to ensure proper formulas calculate correctly every time.
Because double checking is already done for you and not needed again by you, reliability is an asset. A good accounting service makes a name for themselves with dependability.
Come tax time, already having an accounting service in place, saves money with applicable deductions. Since they are fully aware of your type of business and your operations, the in-depth knowledge of an accounting service can offer tax advantages year after year.
Another benefit of having an accounting service know the ins and outs of the company is in the event of an audit. Audits are done occasionally for taxes and some insurance companies require payroll audits quarterly or every year. If accounting is figured in-house, this process can take weeks out of productivity. If accounting services are employed, they are totally responsible to comply with any records requested and methods of calculations.
Both conclusions can work well for many different companies. There is no one answer for every situation. Some companies have enough capital and revenue from services or sales that the cash flow can support paying for accounting services and some do not. After reading this article the generic answer should be: If there is enough money to substantiate outsourcing accounting services then it will pay off in the scheme of things.