OUTSOURCED Accounting

What Is Outsourced Accounting? 

If you’re a business owner looking for bookkeeping and accounting support, chances are you’ve come across many of the classic solutions in your search; the retired Big 4 CPA, the stay-at-home bookkeeper, to the outsourced accounting services advertised by your accounting software.  It's no secret that business owners have a myriad of options when it comes to bookkeeping and accounting services. At the end of the day - you are looking for the one that packs the most punch when it comes to addressing your strategic finance needs, yet flexible enough to work with your small business budget as the business grows.  Outsourced accounting tends to meet those needs - more so than the classic solutions.

Modern business owners are partnering with outsourced accounting firms because they offer an agile solution that provides a “one-stop shop” for all things bookkeeping, accounting, and tax related. These firms oversee the necessary day-to-day bookkeeping tasks that keep the business operating smoothly while also acting as a strategic partner to clients. To help business owners make sense of outsourced bookkeeping and accounting, we put together a guide to help them understand how they can leverage their bookkeeping and accounting solution to grow their businesses.

Not All Bookkeeping And Accounting Solutions Are Created Equal 

Before making any decisions about your business’s bookkeeping and accounting needs, it’s important to understand the differences between bookkeepers and accountants. Generally, bookkeepers are responsible for record keeping and organizing data, while accountants help business owners leverage that data in making strategic decisions about the business. Both bookkeepers and accountants are valuable - but more powerful when used in tandem.

While bookkeepers are a vital part of an overall bookkeeping and accounting strategy, it’s a mistake for business owners to assume they can offer a complete solution. Yes, bookkeepers are intimately familiar with the business because they regularly review invoices, process payroll, and code transactions, but their work is reactive and doesn’t offer much in the way of strategic oversight or financial management. Even if you hire a cheap bookkeeper, you’ll likely need more support when it comes down to things like filing taxes—and more support means more hours, more parties involved, and more bills for you to pay as the business owner. So, pay a little extra and just work with an accountant, right? Wrong.

More often than not, business owners have an accountant they check in with a couple times a year to review the books and prepare for taxes. While this type of relationship is important, accountants tend to be costly and out of touch with the day-to-day operations of the business. For growing businesses, having in-depth strategy sessions and reviewing the books a couple times a year is not enough. Growth-focused business owners need a proactive bookkeeping and accounting solution that will provide them with up-to-date, accurate financials and ongoing strategic expertise.

Is there a happy medium? Yes. Outsourced bookkeeping and accounting firms offer business owners affordable strategic solutions that can be tailored to meet their needs, timeline, and budget. For many business owners, outsourced bookkeeping and accounting is a new concept that can spark questions:

How does outsourced accounting work?
How do I choose an outsourced accounting firm?

Why do business owners outsource their bookkeeping and accounting?
When should I outsource my bookkeeping and accounting?

A good outsourced bookkeeping and accounting firm customizes its engagements to support the varied needs of its clients. From the one-person startup to the multi-office agency, engagements can be as simple or complex as needed. Work with a firm that will act as your day-to-day bookkeeper and CFO.

From Startup Founder To Established Business Owner

You probably became a business owner because of great ideas, game-changing products, or much-needed expertise to offer—not because you love to process payroll or download bank transactions. If this sounds like you, it’s likely you’ll benefit from an outsourced bookkeeping and accounting engagement.  Big and small, new and old, businesses across all industries can benefit from outsourced bookkeeping and accounting:

The Startup Founder

The Small Business Owner

The Service Based Business

The Product Based Business

 

Whether you’re a service based selling design hours or product based selling hot sauce, your business will benefit from an outsourced bookkeeping and accounting solution.

The Time Is Now 

Generally, there are two scenarios where outsourcing your accounting makes sense.  They can both be narrowed down to a need for accounting support that can remain flexible as the business grows and changes.  The lesser common scenario, but just as important, may be that a business needs to scale back the large expense of an in-house finance team.  Shifting over to an outsourced team may benefit a business that needs to cut expenses, but still maintain a sense of its financial health through the changes as it gets back on track.  

Secondly, and most commonly, is the business owner struggling to manage the business, and play part time bookkeeper.  If you’re perpetually frustrated because you can’t get to bookkeeping tasks (again), it’s probably time to outsource your bookkeeping and accounting. Sure, business owners can keep things afloat for a short period of time, but as the business grows, clients sign on, products start selling, and employees are hired, the business naturally becomes more complicated. Rather than racking up penalties with the IRS for incorrectly filing sales tax and payroll withholdings, work with an outsourced bookkeeping and accounting firm that will proactively manage your books. Don’t learn the hard way why you shouldn’t be your own bookkeeper. 

There are signs it’s time to outsource your bookkeeping and accounting, and the sooner you hand them over the better. There’s no shame in delegating tasks that fall outside your skillset. Outsourced bookkeeping and accounting is a strategic decision that not only saves time and money, it puts your business on track for success and ultimately growth. In fact, Rhett Power, author of The Entrepreneur's Book Of Actions, stresses the ways outsourcing your financial department can help business owners drive consistent profits in his Inc.com article.

Partnering With A Team Of Industry Experts

Outsourced bookkeeping and accounting firms use cloud-based systems and tools to support clients. Unlike traditional bookkeepers and accountants who manage their clients’ numbers on desktop versions of QuickBooks, the cloud-based model gives business owners complete access to financials. It shouldn’t matter where your bookkeeper and accountant are located, but as a business owner you should have visibility to your books at all times—from wherever you are. While there are a number of cloud-based bookkeeping and accounting tools to choose from, we recommend the following for growing businesses. Due to their flexibility and customization, these smart cloud-based solutions can transform business bookkeeping and accounting processes.

QuickBooks Online for bookkeeping

Harvest for time tracking

Expensify for expenses and expense reporting

Gusto for processing payroll

Dear/ Cin7 Core Inventory for inventory management

Fathom for KPI reporting

Asana for workflow management

For a business owner, the benefits of cloud-based bookkeeping and accounting are vast. When growing a business, it’s imperative to have real-time access to financial documents. You don’t need to understand every number on every balance sheet, but you should know where to find them. By partnering with an outsourced bookkeeping and accounting firm, cloud-based systems become the foundation to create bookkeeping experiences that work for you, not against you.

From Payroll To Accounts Payable

The beauty of working with an outsourced bookkeeping and accounting firm is that they can tailor an engagement to fit your business’ needs. Most likely, the majority of their efforts will be concentrated on bookkeeping tasks that will help your business run more efficiently. Some of the things outsourced bookkeeping and accounting firms will help with are:

Identifying and measuring key performance indicators

Improving the invoicing processes
Quarterly tax filing strategies

But there are also larger, more strategic things an outsourced bookkeeping and accounting firm can help you with. From managing cash flow for a seasonal business to assessing the pros and cons of full-time employees vs 1099 contractors, an outsourced accounting firm will act as a true partner and help you make decisions that will positively affect the business.

Custom Solutions For Unique Ventures

Once you decide to outsource your bookkeeping and accounting, it’s time to find a firm committed to your business and goals. 

They will sit down with you to understand your business, the systems you use, your budget, timeline, and growth projections. Avoid working with firms that try to fit you and your business into a pre-packaged solution, as the outsourced bookkeeping and accounting firm you work with should create something tailored to meet your needs.

At Accountfully, we believe that accounting is an important and necessary piece of every company’s strategic framework. To be successful, we recommend business owners find a partner with true accounting expertise, not just bookkeeping or tax-prep services—someone who can create a relationship that includes strategic insight and forecasting from experts who know your books better than you do.