Every business owner would want his/her enterprise to grow. That being said, there is no doubt that every entrepreneur would always look for ways where he/she can increase efficiency and productivity in the most cost-effective way. It can be challenging to grow a business from the ground up, and one department where many entrepreneurs struggle is with accounting.
When we talk about accounting to its core, and that is documenting the ins and outs of a business’ finances, it is a simple idea to revolve around in. However, when you put those ideas into reality, you will quickly realize that it takes a lot of time to complete all accounting requirements. Bookkeeping and accounting take as much as 40% of an entrepreneur’s time because there is so much paperwork to do when completing this part of the business. And when a business owner has to focus on so many other facets of the enterprise, accounting can get daunting.
Most entrepreneurs managing startups and small businesses do the accounting on their own. It is mainly because of cost-saving, with every hire costing a lot of money for a company. And when you are a startup or small business, every cent counts. You cannot allow unnecessary expenses to creep into your accounts, because these little things may break your enterprise.
But as any business would have it, those that are successful may reach a point where an accounting department is eventually needed. You cannot go on doing everything yourself, because when you do, you may lose sight of other important responsibilities for the business. You cannot continue being the jack of all trades when your business keeps on growing. So, eventually, you would have to hire people to do other things for you.
The accounting department is tricky because it is an integral part of your enterprise. You cannot let anyone take over it, because trust is of utmost importance when you are dealing with money. A simple stroke of the hand can cause your books to blow up or to be out of balance, so you need to be careful with whom you hire.
Some businesses choose to hire an accountant, while others prefer to outsource. There are different advantages and disadvantages in choosing between the two, and the answer depends on what you want to achieve and what your budget is. There is no right or wrong decision because you have to be realistic about where you are in your business. You cannot choose to hire an entire accounting department and not have a budget for it.
Are you still thinking of outsourcing your business accounting? Here some tips to help you figure out when to outsource it:
1. You don’t have the budget to hire an in-house accountant
Do not underestimate the budget you need to hire an in-house accountant. It can be incredibly expensive, especially if you are hiring a licensed one (which is what you need!). You don’t only have to budget the monthly salary, but also all the mandatory benefits that come with the hire. If you are a startup or a small business, there is no way for you to afford this since the average base salary of an accountant per year is at $45,000. Many startups do not earn this, so make sure that you know where you at with your accounts before you dive into the hire.
Outsourcing is a more cost-effective way to manage your accounts, because, for one, you don’t need to include employee benefits into the picture. The company whom the accountant is a staff of is the one who will shoulder these benefits. You are only outsourcing your financial services, so you are not obligated to provide benefits because you are a client. You are paying for the service, so it is easier for you to manage your expenses.
Do proper research, though, because there are many accounting outsourcing services available online these days. You need to make sure that you are still getting the quality of service that you are looking for, and you get to understand what is included in the contract. If you don’t get to read the contract well, you may be paying for services that are not even needed by your company.
2. You are spending most of your time doing the company’s bookkeeping
If you have gotten to a point where you are spending more than 40% of your time doing the company’s bookkeeping, then you should consider outsourcing this part of the business. Time is money, and there is no way for you to buy that back. Therefore, instead of spending a lot of time with this one task, have someone do this for you so you can spend your energy on other parts of the business. You may want to focus on marketing or on building partnerships as these provide to be beneficial in the long run.
Outsourcing your business accounting can turn out to be the best decision you’ve ever made for your company. It is not as expensive as it seems, because doing so can even help you focus on other aspects of your enterprise.