Business StrategyStrategy & Operations

How To Know if Your Business Is Ready for Outsourced Accounting Services

Stephan Miller Headshot
Written by:
Stephan Miller - Guest Contributor

Published | Updated on
6 min read
Header image for the blog article "How To Know if Your Business Is Ready for Outsourced Accounting Services"

Outsourced accounting services can ensure accurate financial records, helping make informed business decisions.

Small-and-midsize-business (SMB) owners often have to juggle multiple roles, from marketer to accountant, to manage their company finances. However, time constraints may force you to put unorganized data in spreadsheets, compromising easy data analysis. 

Investing in outsourced accounting services could be the solution for you. Outsourcing will provide access to financial experts, allowing you to focus on other important tasks.

This guide will explain outsourced accounting and why it's essential for ambitious SMBs. It’ll help you assess how partnering with accounting specialists benefits your business and empowers strategic growth.

What is outsourced accounting?

Outsourced accounting is a strategic partnership with financial experts who manage your business’s finance-related functions, including payroll, bookkeeping, and tax calculations. Hiring external accounting professionals to tackle these functions will give you access to expert guidance, allowing you to focus on other important tasks.

Outsourced accounting also provides access to advanced tools that may be costly for an SMB. These tools can help you efficiently manage your financial data, track expenses, and generate crucial reports, enabling you to make informed decisions based on real-time, accurate financial data.

An outsourced accounting team stays updated with the latest accounting practices, tax regulations, and industry trends, ensuring your finances align with best practices and providing guidance and insights to help you identify growth opportunities.

Types of accounting services often outsourced

The beauty of outsourced accounting lies in its flexibility. You can choose the services you need to match your current requirements and budget. Here are some common service offerings:

Bookkeeping and recordkeeping

This involves tracking all your financial transactions, categorizing them accurately, and maintaining organized records for financial reporting purposes.

Tax preparation and filing

Outsourced accountants can handle all your tax needs, from gathering necessary documents to filing returns and ensuring compliance with regulations.

Payroll processing and compliance

This includes managing employee payroll, withholding taxes, and ensuring accurate and timely payments, all while adhering to relevant labor laws and regulations.

Accounts payable and receivable management

This involves managing incoming and outgoing payments, ensuring timely bill payments and invoice collection, minimizing late fees or penalties, and maintaining accurate records of accounts payable and receivable.

Financial reporting and analysis

Outsourced accountants can generate comprehensive financial reports, including income statements, balance sheets, and cash flow statements. They can also analyze these reports to provide insights into your financial health and performance.

Advisory services

This encompasses broader strategic financial guidance and support. Outsourced accountants can help you with budgeting and forecasting, investment decisions, cost analysis, and financial planning for growth or expansion.

What are the benefits of outsourcing accounting services?

Managing all accounting-related business functions can be challenging for small business owners. You can benefit from hiring outsourced accounting services instead of risking mistakes in handling your business’s accounting needs.

Access to finance and accounting experts

Outsourcing gives you access to a pool of experienced accountants and bookkeepers armed with expertise beyond basic bookkeeping. They understand the intricacies of tax codes, can navigate complex financial regulations, and offer strategic insights to optimize your financial health.

Save costs

Outsourcing can save you money, allowing you to forget the hassle of hiring, training, and equipping an in-house accountant. It eliminates the need for office space, software licenses, and payroll benefits, potentially trimming your overhead significantly. Plus, outsourced firms often offer flexible packages customized to your needs, ensuring you only pay for the services you use.

Save time 

Outsourcing your accounting functions frees up your time to focus on core business activities, strategic planning, and customer engagement. Delegating accounting responsibilities to experts can help you alleviate the burden of managing complex financial processes. The outsourcing service provider takes care of all or some of these tasks, such as bookkeeping, financial reporting, and payroll processing, allowing you to dedicate more time and energy to growing and improving your business.

Increased flexibility

Your business isn't static, and your accounting solution shouldn't be either. Outsourcing offers incredible flexibility, allowing you to scale your services up or down as your needs evolve. Accounting service providers can design your adaptive financial plans according to your requirements.

Access to better tools and processes

Outsourced accounting firms often have access to state-of-the-art accounting software and technologies that might be out of reach for SMBs. These tools can automate tedious tasks, enhance data security, and streamline financial workflows. When you outsource your accounting, you have access to these cutting-edge tools and can give your financial management a high-tech upgrade.

Improved security

Ensuring financial data security is important for every business. Outsourced accounting providers prioritize data security and implement robust security measures to safeguard your sensitive information. They employ encryption, secure data storage, and backup systems to mitigate the risk of data breaches or loss. Also, outsourcing reduces the potential for internal fraud or embezzlement, as external providers adhere to strict professional standards and undergo regular audits.

Signs it's time to outsource your accounting

Outgrowing DIY accounting is a common milestone for scaling businesses. If managing finances in-house now hurts more than it helps, outsourced services may be the growth catalyst your business needs. Here are some signs that it's time to outsource.

Lack of time

SMB owners managing their business’s accounting needs themselves often drown in invoices and chase late payments, neglecting their core business. According to the 2022 Capterra Services Users Survey, 44% of SMB professionals outsource services because they don't have the bandwidth, even when they have the expertise.* Outsourcing can free up your precious hours to focus on what you do best, focusing on business growth and innovation.

Rapid business growth

Rapid growth is a boon for any business. But it can also bring growing challenges, including the need for more robust financial management. Hiring and training an in-house accounting team to handle the surge can be expensive and time-consuming. Outsourcing offers a flexible solution, allowing you to scale your accounting services up or down as your business evolves without the burden of additional overhead.

New investors

Landing new investors is a major milestone, but it also means your financial house needs to be in impeccable order. Investors expect meticulous records, accurate reports, and expert financial guidance. Leveraging the expertise of experienced accounting outsourcing services can keep your financials accurate, compliant, and ready for scrutiny.

Changing accounting methods

Considering a switch in accounting methods or navigating new tax regulations may get overwhelming. Outsourcing with a firm specializing in your industry or chosen accounting system can provide the expertise and guidance you need to make this transition smoothly and efficiently.

Loss of key employees

Losing key employees in your accounting department can leave a significant gap in your financial operations. If you're facing challenges in finding qualified replacements or experiencing high turnover, it may be a good time to consider outsourcing your accounting. Outsourcing provides a stable and reliable solution, ensuring continuity in your financial management even when faced with employee turnover.

Is your business ready to outsource accounting?

Outsourcing accounting can save you from the hassle of managing spreadsheets, tracking invoices, and feeling overwhelmed by financial complexities. You don't have to do it all yourself.

Struggling with accounting is a time-consuming obstacle that hinders your business growth. By freeing yourself from accounting tasks, you unlock many benefits, including regained time, strategic insights, financial expertise, and the confidence to navigate your business to new heights.

If you're ready to get started with outsourced accounting, now it's time to:

  • Do your research: Explore the top accounting outsourcing firms, compare their services and pricing, and read client testimonials.

  • Ask questions: Discuss your specific needs, budget, and expectations with potential firms. A good firm will happily address your concerns and customize a plan that fits your business.

  • Make your decision: Once you've found your ideal partner, trust the process and let the pros handle the numbers. Focus on what you do best—building your business—while a dedicated team guards your finances.


Methodology

*The 2022 Capterra Services Users Survey was conducted between July 25 and August 23 among 1,078 past services purchasers (defined as those who have purchased or commissioned a qualifying service in the last 18 months) who work at an SMB (defined as a company with fewer than 1,000 employees and between $5M and <$1B in revenue) in the U.S. Respondents must have spent at least $10,000 on their most recent service engagement to qualify.


Looking for Accounting software? Check out Capterra's list of the best Accounting software solutions.

Was this article helpful?


About the Author

Stephan Miller Headshot

Stephan Miller is a freelance writer and software developer specializing in software and programming. He has written two books for Packt Publishing.

visitor tracking pixel