Should you outsource your small business accounting?
If you operate a small business, you already fill a lot of different roles. Should Accountant / Bookkeeper be one of them? Maybe outsourcing is an option that will work for you. Here are some pros and cons to consider when deciding whether to outsource your accounting functions vs. doing them inhouse.
The Benefits of Outsourcing
- Expertise. Hiring professionals to manage your accounting services means you are getting expert advice, knowledge and experience - and that is key to running your operations, especially when it comes to tax time. A professional accountant may be able to find you deductions and tax savings that you might not be aware of.
- Time Saving. Accounting involves a host of functions including banking, managing receivables and payables, reconciling accounts, running payroll and remitting deductions, maintaining and auditing records, and preparation of weekly, monthly, quarterly, and yearly financial reports - a hefty workload when you have the rest of your business to run. Using an accounting service frees up more of your valuable time to concentrate on your business' operations.
- Cost Effectiveness. The costs of paying accounting fees could save you money versus what you would pay to hire a full-time inhouse bookkeeper, including wages, benefits, deductions, payroll taxes and related expenses.
- Tax Filing. Offloading your federal, provincial, municipal, GST / HST and other tax filings to a professional firm will ensure that the returns are filed on time and prepared correctly. You will also have the peace of mind knowing that if you are audited, your accountant will deal with the auditors on your behalf.
- Reporting. A professional accountant will provide you with up-to-date interim reports and yearly financials on a timely basis.
- Financial Planning. An accounting professional can assist your business with establishing appropriate financial planning, budgeting, forecasting and fiscal controls to keep your business on a steady course.
- Risk Management. Outsourcing to professionals ensures that your accounting processes and information will be accurate, error-free and complete, to reduce the risks to your bottom line.
The Advantages of Keeping Your Bookkeeping Functions In-House
- Costs. Depending on the size of your business and the complexity of your financial records and reporting, you may find it onerously expensive to retain an outside firm to handle all of those functions. With the use of a financial reporting software package like Quickbooks, a good bookkeeper could handle most of the necessary tasks, while outsourcing the tax portion to an accountant.
- Control. Keeping the bookkeeping in-house gives you much more control over the process, as well as instant access to your financial data and records.
- Communication. It's much easier to keep an open line of communication with an in-house employee than with a third party service provider. This is especially important when you have questions or concerns that you want to address right away.
As a small business operator, only you can decide when and if the time is right to outsource the management of your financial records to an external firm.