The accounting world is persistently devising ways to be more efficient. Trending within the past five years, is a rise in outsourced accounting firms.
This article gives the 3 advantages to outsourced accounting. Then, we detail common services offered by these types of companies. Finally, we provide a cost comparison of popular virtual outsourcers. Having an informed view of services, will lead you to the right remote accounting firm.
What is outsourced accounting?
Outsourced accounting is when a business hires a remote accounting firm. This firm is autonomous from the company, but resides in the same geographical location. These finance outfits execute the same duties of an in house accounting department, with low overhead. The structure offers high class work, from a skilled group of individuals. That is why more and more businesses are looking to outsource accounting.
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.
Offshore accounting 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 firm, expect an all inclusive financial package for low premiums. Here are the three 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
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.
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.
3. Customization of Services
Outsourced accounting doesn’t come 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.
Should I outsource accounting?
Outsourced accounting delivers a network 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.
You see more and more businesses switching to finance and accounting outsourcing. It is a viable option for owners struggling to keep up with day to day reporting. Or are 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:
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 reports and statements. 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 payments are made.
- Accrual-basis Accounting: When a sale is made, or good/services are received. Not when the invoices are paid.
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.
Managerial accounting outsourcing focuses 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.
A controller is your personal liaison for accounting. They manage the accounting team and information systems. They will report any financial discrepancies to you. Basically, 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. Outsourced financial firms 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 often seek these methods of accounting to follow certain 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 the most common virtual accounting firms. It is a comprehensive list of the services they offer. All offer customization to your company procedures. 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|
|$79/month||Both||Prep||Payroll||In House + QuickBooks Online||CFO||n/a|
|$139/month||Cash Only||Prep + Filing||n/a||In House||n/a||n/a|
|$190/month||Cash Only||Prep||n/a||In House + QuickBooks Online||n/a||n/a|
|$300/month||Both||Prep, Filing, + R&D Credit||n/a||In House + QuickBooks Online||Controller + CFO||n/a|
|$399/month||Both||Prep, Filing, Sales Tax + R&D Credit||Payroll + HR||Xero + QuickBooks Online||CFO||Yes|
|$575/month||Both||Prep, Filing, + Sales Tax||Payroll||QuickBooks Online||Controller + CFO||n/a|
|$599/month||Accrual||Prep, Filing, + R&D Credit||n/a||QuickBooks Online||Controller + CFO||Yes|