As an entrepreneur grows a business from the ground, one of the first big hires the business owner might make is an accountant or Chief Financial Officer (CFO). The only other options are to handle the accounting in-house among the staff or use outsourced accounting services from a Certified Public Accountant (CPA).
Business owners can make this hiring decision based on the needs of the company and the overall strategic plan.
Assessing Your Company’s Accounting Needs
Entrepreneurs spend about 40% of their time on the basic financial operations of accounting and taxes, and many business owners lament the necessary duties. To be a good and compliant bookkeeper means business owners have to understand a complex world of knowledge such as state and federal tax codes and regulations.
The reason the accounting role is one of the first major hiring decisions is that the financial regulation of the business is paramount. Business owners may be able to get by with dispersing marketing or human resources tasks throughout a company in the early days, but failing to put the time or budget toward accounting can leave the company vulnerable from the start.
It’s important to understand that if the business owner is handling the company bookkeeping, they may be losing valuable time that could be spent on improving other areas of the company. If the business owner or staff are overwhelmed by the accounting role, it may be a good idea to outsource the bookkeeping.
Pros and Cons of Outsourcing Accounting Services
Many owners choose to buy back valuable operational time by outsourcing accounting services to a CPA. There are pros and cons to outsourcing that should be weighed when deciding.
It Will Save Time and Money for the Company
Depending on the complexity of the company bookkeeping, it can save hours and weeks of time to move the accounting services outside of the company.
The accountant will identify and reduce risk. A CPA will likely conduct internal audits and attempt to identify inefficiencies or problems in the company’s financial practices. Accountants are likely to have a keener eye for identifying these risks, and they will make suggestions for improvement that will positively impact the company’s bottom line.
The company will not need to budget and fund the hardware or software that is required to manage the accounting of the company. Outsourcing the work on contract means that the CPA will use their own tools for accounting.
The Company Will Gain the Expertise of a Qualified Professional
Accountants have to study a variety of accounting subjects to pass the national certification exam. Accountants can also have specialized certifications that may be appropriate for your business needs.
Outsourcing May Reduce the Carbon Footprint of the Company
If your accountant is not physically located with the company, it is more likely that most of the company bookkeeping will be done through cloud-based accounting. This practice will reduce the amount of paper and copying supplies your company will use, and it will save physical space to store fewer documents on-site.
An Accountant Can Help a Company Prepare to Scale
To scale, companies should be increasing revenue and profitability without increasing the cost of production. A professional accountant can guide the company on improved practices for scaling, such as automating particular tasks with software.
Outsourcing May Be Too Costly in the Beginning
Many entrepreneurs forgo the expertise of an outsourced accountant because they cannot afford the cost of funding the contract. It is essential to keep in mind that using a professional expert can help improve a company’s cash flow. If the budget doesn’t allow for outsourcing the accounting, an entrepreneur should consider improving the overall profitability model of the company.
Company Priorities May Not Be Aligned With an Outsourced Accountant
A CFO consulting service that branches out to multiple organizations will prioritize your company’s needs according to their contracts and clientele. It’s a good idea to understand how many other companies your CPA is currently serving when you negotiate an outsourcing contract.
The CPA May Not Fall in Line With Your Company’s Culture
Any person working in outsourced bookkeeping services may not have access to the daily life that creates a company’s culture, such as staff meetings and strategic planning sessions.
It is important that everyone who is working to improve the overall profitability of the company also has access to the company mission and vision, and the components that drive the strategic plan. Companies can make an effort to include outsourced accounting positions in the company culture, and these issues can generally be alleviated with communication.
As a company grows, it is important to recognize when outsourced bookkeeping is appropriate. Hiring an accounting professional can save the company time and money. Whether you choose to work in-house or outsource the accounting, transparent leadership can help keep the accounting practices consistent.
Latest posts by B2BNN Newsdesk (see all)
- 6 Best Home Security Tips to Protect Your Home-Based Business - July 7, 2022
- How Data Science is Propelling the Casino Sector - July 7, 2022
- Proven Ways to Generate Leads for Professional Roofers - July 6, 2022