Benefits and Drawbacks of Outsourcing Accounting Services
Proper accounting is an essential component of every well-run business. Accounting can be a complicated process, depending on the nature of your business. Taking care of your accounting can be too burdensome, and seeking professional help for the same is usually the best course. To hire an in-house accountant or to outsource your work to an independent accountant is a choice that needs deliberation. Take a look at the factors that should be considered before making this decision.
Benefits of Outsourcing
Here are a few benefits of outsourced accounting services -
If your business or organization is not large enough to justify an accounting department of its own, then outsourcing the work to an accountant is beneficial. Having an accounting department or hiring a full-time accountant is more costly expensive than outsourcing. You will have to pay more to a full-time accountant, along with providing expensive accounting software. You also have to pay for the office space and utilities for a full-time accounting employee or employees.
If you outsource an accountant, you have to pay a more reasonable hourly or project rate, which comes out to a significantly lower cost for your business.
Since you do not have to manage an in-house accountant if you outsource your accounting, it saves you time, which serves better utility elsewhere. An outsourced accountant will usually deliver the work on time and in good condition. Thus, your duties if you decide to outsource your accounting needs are limited to prescribing the task and setting a deadline for the accountant to follow. You will notice that having an in-house accountant eats up a significantly greater portion of your time since they require day-to-day supervision. Be sure to hire a good accountant with experience because they are more likely to submit the work on time than a fresher or someone with a couple of years of experience.
Hire for as Long as You Need
Since an outsourced accountant is not your full-time employee, you can stop their services without any doubts. An outsourced accountant can be hired for a one-time job or regular work, depending on the needs of your organization. You do not have to provide benefits to an outsourced accountant, and you can pay hourly rates based on the market rate. A full-time in-house accountant might need to be given notice, and you will have to pay for the notice period as well as termination charges, depending on the contract.
Hire Experienced Professionals
Since outsourcing accounting services is more cost-efficient than having a full-time employee, you can afford to hire a more experienced professional to make and review your accounting books. Hiring an expert with a decade’s worth of experience can be done at the same cost of hiring a full-time fresher. The need for experienced eyes to check your books cannot be stressed enough since accounting can be a highly sophisticated job, and every accountant may not be competent enough to maintain proper accounts.
Professional accountants can be relied upon to keep the secrets of your business. They are well-versed with accounting practices and standards and do not divulge your accounting particulars to anyone. The damage to reputation which an accountant will face if they are caught disclosing confidential information is enough to keep professional accountants strictly adhering to secrecy.
Drawbacks of Outsourcing
Below are a few cons of outsourced accounting services -
Lack of Involvement
One of the main problems which you will face once you start outsourcing your accounting is that you don’t know how the accounting was done and what practices were followed. You will only be privy to the final product of your accountant’s work. This can create a certain distance between the accounting and the functioning of your business. A full-time accountant will be more involved with the running of your business, and you can keep a check on the accounting standards.
You will not be involved in the day-to-day business of an outsourced accountant. Your communications will generally be limited to prescribing the work and receiving the final work. Since there is no daily communication between you and the person looking after your books, it opens the door for time-consuming misunderstandings which can reflect in your books.
Hiring an accountant, be it full-time or outsourced, is an exercise in trust, and you should be completely confident in the person you choose for the job. Remember, outsourced accounting services can be the lynchpin you need to move ahead. Good luck!