The term “outsourcing” has a bad reputation, because it usually means taking a job from a person and giving it to a person who charges less, knows less, and is located offshore. Outsourcing is more than that, though. In reality, it’s any move to take a business area you’re weak in to a professional who’s not in your company.
You do this every time you change your oil or get your house cleaned or read a movie review. You trust someone who knows what they’re doing to do their job so that you can focus on doing yours. If you’re the kind of person who hates numbers, outsourcing the finance function of your business isn’t the only way to go, but it can be a great fit.
Here are the benefits to outsourcing your accounting, along with some of the pitfalls to watch out for.
The benefits of outsourcing
Outsourcing checks a whole list of boxes. You get expertise without having to manage and train an employee. You don’t have to worry about turnover or managing HR bits, like benefits. You can put more energy into your projects by spending more. There’s very little lag time between developing an accounting need and being able to hire a firm.
If you look back over that list, you’ll see that the there’s a theme running through it – flexibility. Outsourcing has always been a way to do things quicker, cheaper, and with less planning.
When to outsource
If you’re thinking about outsourcing, you’re in one of two situations. Either you are bad at accounting – maybe you’re bad at math in general, I’m not judging – or you just don’t have the time to learn how accounting works. If it’s the former, 1) you’re going to have to hire someone eventually and 2) I lied and I am judging you.
So let’s say you just don’t want to learn how to do accounting. It’s not an easy skill to pick up, it can break your entire business if done wrong, and it gets progressively more difficult as your business grows. Hiring an in-house accountant certainly has its upsides, so you shouldn’t completely overlook this solution.
However, there’s a real sweet spot for small businesses that don’t have the resources to take on a full-time accountant, but who need more than just the occasional bit of QuickBooks self-help. Once you hit that sweet spot – you’ve got somewhere between ten and fifty employees, multiple locations, or another complicating factor – it’s time to get serious about finding the right folks for the job.
When you decide to hand over your accounting to a professional, you’ll have a few options about how close you stay to your numbers. On the far end of the spectrum, you have services that just take right over on everything. You mail them receipts, you give them your bank statements, and every so often, they give you reports or updates.
These full-service businesses turn accounting into a utility. It runs in the background, but you don’t have to worry about how it gets done or if it’s going to be working the next day – you just pay the bills to keep the lights on.
On the other end you’ve got hands-on CPAs. I count this as outsourcing, even though there’s a part-time nature to it. What you’re doing with a small CPA firm is hiring someone who knows accounting, knows taxes, and who can get to know you. You might still do a lot of the manual entry – though that’s dying down, these days – and you might even manage your books. The firm just provides oversight, specialization, and extra help when things get busy.
In the middle of those two extremes are all sorts of different options.
Three online outsourcing options
If you decide to take your books online, you’ll have to figure out how close you want to stay to your books. For small businesses that just want to ship bookkeeping off and be done with it, Autopilot from LessAccounting has received good reviews. The service works with a CPA – your existing CPA or one from their network – and does all your bookkeeping.
If you’d like to stay a little closer to your numbers, inDinero is a winner. The service is much more like hiring an in-house financial expert, and can handle everything from invoicing to financial reporting. Users have access to specialists and a dashboard of reports, giving them more details about what’s going on inside their business.
While inDinero bills itself for companies anywhere under 100 employees, folks on the smaller end of the spectrum might have a more straightforward experience with Bench. Bench doesn’t do taxes or payroll, but you can also get on board for $125 per month. Bench is somewhere between LessAccounting’s hands-off approach and inDinero’s power.
For small business owners, I think outsourcing your finances can be a perfect solution to your accounting and bookkeeping problems. The worst thing you can do is ignore your accounts, leaving them to gather dust. A strong financial plan can keep a good business alive in bad times, and having an expert on your side is a step toward having that plan in place.
Header by Rachel Wille
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