The accounting world is persistently devising ways to be more efficient. Trending within the past five years, is a rise in outsourced accounting firms. Having an informed view of the services they offer, will lead you to the right remote accounting firm.
In this article:
- 3 advantages to outsourced accounting
- Common services offered by these types of companies
- Popular outsourced accounting firms cost comparison chart
What is Outsourced Accounting?
Outsourced accounting is a remote accounting firm. This firm is autonomous from the company, but resides in the same geographical location. They execute the same duties of in-house accounting departments, with low overhead. The structure offers high class work, from a skilled group of individuals.
Outsourced Accounting is Not Offshoring
Let’s address a common misconception about outsourced accounting. Offshoring and outsourcing are two different entities. Offshore accounting is hiring a person, or a firm, in another country. Which can be very cheap, contingent on where the activity is taking place.
This comes with a higher risk of errors resulting from: language barriers, unfamiliarity with local rules and regulations, and conflicting time zones. The time spent fixing any errors, would potentially offset the initial savings.
3 Advantages of Outsourced Accounting Teams
When you sign on with an outsourced accounting firm, expect an all inclusive financial package for low premiums. Here are the 3 advantages of outsourced accounting:
1. Financial Management
As stated above outsourced firms come with all levels of financial professionals. Working together allows the firm to spread their talent to many clients versus working solo. It also allows them to be a self sufficient department, with embedded management. As a business owner your job is to manage your business, not the outsourced accounting team.
With a firm, financial managers are at your disposal. A controller or CFO will manage the accounting team, help meet critical deadlines, and play a pivotal role during growth stages. This level of accounting is appreciated by investors. As they can see an organized company driving transformational change.
2. Advanced Accounting Software
Utilizing artificial intelligence (AI) for repetitive processing, accountants can shift their attention to strategy. Automation will accurately gather a wide set of business data. This data is analyzed by accountants, to generate detailed reports that serve growing companies.
Most outsourced accounting teams have an advanced understanding of accounting software. They know technology is always changing. So they extensively train to work with a multitude of programs. What’s more, they partner with developers to create customized software that meets client needs, not met by outside programs. These services are offered to you with set up, maintenance, and tech support included.
3. Customization of Services
Outsourced accounting isn’t one size fits all. Most companies will go above and beyond, offering custom packages. They know each situation is unique. A consultation will get the full scope of your finances and determine the best approach. As your business experiences growth, so will your financial needs. An outsourced accounting team will evolve with you over time. Expect mature financial services to support you at any stage.
Why Should I Outsource Accounting For My Business?
First, you get a network of talent: Chief Financial Officer (CFO), Controller, Tax and Accounting Managers, Accountant, Bookkeeper, Accounts Payable/Receivable, and Payroll. Second, they leverage cutting edge financial software. Finally, you can fine-tune exactly what services your business needs.
More and more businesses are discovering financial outsourcing solutions. It is a viable option for owners struggling to keep up with day-to-day OR companies needing a full service accounting department on a low budget. Really, it makes sense for businesses at any level. Especially for companies looking to scale.
Outsourced Accounting Services
Outsourced accounting firms come in many different flavors. Some offer project and hourly based packages–ideal for clients with a low workload. While many present monthly price plans. Firms will also specialize in certain areas of accounting over others. Here are the typical services offered:
Bookkeeping
Most outsourced firms will take over the task of bookkeeping. They will tally all transactions and report financial insights. They will integrate bookkeeping software into your business. Generally they will guide you in understanding generated statements and reports. Outsourced accountants should have expertise in both accounting methods, and advise on which is best for your company.
- Cash-basis Accounting: Where money is recorded when it is received, and when payments are made.
- Accrual-basis Accounting: When a sale is earned, or good/services are incurred.
Payroll
Issuing payroll on your behalf, is included with some outsourced accounting companies. This includes ad hoc payments, employee pay stubs, and keeping a record of income for w-2s.
Management Accounting
These services focus on operations in relation to business assets. Firms will partner with you and determine the best avenue to achieve growth. This is done by scrutinizing the performance of a company. Then suggesting budgets and forecasting revenue.
Controller Services
A controller is your personal liaison to the accounting team. They manage the accounting team and any information systems. They will report any accounting discrepancies to you. In short, controllers strive for the C’s: clean financing, compliance, and constant cash flow.
Tax Accounting and Audits
Providers will file income taxes, make necessary payments, study tax law for your niche, and prevent loss. Additionally they follow rules and regulations when archiving your financial records. This is a protection mechanism in the event of an audit–which they too will help you navigate.
Back Office Support
Accounting services crossover into all departments. Financial outsourcing solutions will integrate into your client database to send invoices, resolve payments and maintain records. Some firms will take on: inventory management, information system management, and HR.
Generally Accepted Accounting Principles (GAAP) and International Financing and Reporting Standards (IFRS)
Publicly Traded Companies seek GAAP accounting standards. Outsourced accounting teams ensure compliance locally and internationally. This helps level the playing field for investors. So they can compare “apples to apples,” when determining which company to invest in.
Cost of Outsourced Accounting
To save you time, here is a price comparison chart of popular virtual accounting firms. It is a comprehensive list of the services they offer. All will customize to your company operations. The monthly premiums start at the prices shown. Keep in mind these are NOT the only options out there. A simple google search will populate local outsourced accounting firms.
| Company | Price Starts At | Accounting (cash or accrual) | Taxes | Payroll + HR | Software | Controller + CFO | Back Office |
|---|---|---|---|---|---|---|---|
| botkeeper | $79/month | Both | Prep | Payroll | In House + QuickBooks Online | CFO | n/a |
| Bench | $139/month | Cash Only | Prep + Filing | n/a | In House | n/a | n/a |
| Merritt | $190/month | Cash Only | Prep | n/a | In House + QuickBooks Online | n/a | n/a |
| bookkeeper.com | $285/month | Both | Prep | Payroll | QuickBooks Online | n/a | n/a |
| inDinero | $300/month | Both | Prep, Filing, + R&D Credit | n/a | In House + QuickBooks Online | Controller + CFO | n/a |
| Bookkeeper360 | $399/month | Both | Prep, Filing, Sales Tax + R&D Credit | Payroll + HR | Xero + QuickBooks Online | CFO | Yes |
| Ignite Spot | $575/month | Both | Prep, Filing, + Sales Tax | Payroll | QuickBooks Online | Controller + CFO | n/a |
| Pilot | $599/month | Accrual | Prep, Filing, + R&D Credit | n/a | QuickBooks Online | Controller + CFO | Yes |
