Owners and managers often ask the question: to whom and how to entrust accounting? Should they hire a full-time accountant, or is outsourced bookkeeping a good decision? Or a combined option? Let’s figure out which is better.
Outsourced bookkeeping for organizations
Pros.
Let’s list the main advantages of outsourced accounting.
1. Cost reduction and optimization.
An outsourced accountant performs specific tasks of the client, so his services are several times cheaper than a full-time accountant.
With outsourced bookkeeping services, you do not need to think about the payment of wages, the accountant’s workplace, the purchase of expensive computer equipment, software, equipment, literature. You can save money on this.
Outsourcing firms work with multiple clients at the same time. This allows them to make a profit and keep the cost of services at a level acceptable to the client.
An important advantage of outsourced bookkeeping is that the company does not need to pay for (pension, 401 (k), 403 (b), there is no need to accrue vacation and sick pay. Maintaining the staff, even with minimal expenses, incurs significant annual costs for the business.
How can the customer reduce his tax? The customer can take the issued invoice for accounting services as expenses.
2. Quality of bookkeeping is better.
In such companies, there is also a periodic internal audit of the quality of accounting to identify errors, and possible additional charges by government agencies. The performance of the accountant is kept track of, and you, as a client, are given recommendations on possible legal business optimization.
Outsourcing companies are obliged to ensure the high quality of their work:
3. Responsibility, and accountability.
The advantage of outsourcing is also the high responsibility of the contractor for the result. If errors on the part of outsourcing are identified in the course of work, the payment of penalties falls on the outsourcing company.
In the case of the work of a full-time accountant, the process of identifying his errors is much more complex and time-consuming.
4. Confidentiality
when outsourcing bookkeeping, the contracts usually have a non-disclosure clause. This means that the specialist cannot discuss the affairs of the serviced company with anyone, transfer any documents to third-party organizations and persons. Therefore, the risk of information leakage is minimized.
All information on the client is stored in several copies and when an employee is dismissed, it is fully transferred to another employee, who simply continues to interact with you. You don’t have to deal with employees with malacious intent.
In this case, only the contact person on the part of the company serving you changes.
5. Smooth operation.
The activities of an outsourcing company are not suspended due to sick leaves, vacations, etc.
Cons.
Outsourced bookkeeping also has a few disadvantages.
1. Loss of constant control.
You don’t have to delve into secondary tasks. But sometimes this becomes a minus. After all, you will not know about the state of your company’s accounting if you do not have access to the database.
But this disadvantage can be avoided by using the sharing feature.
2. Only strict fulfillment of the obligations prescribed in the contract.
On the one hand, such relationships with the company you outsource to are advantageous.
On the other hand, you will not be able to entrust the employee with the solution of additional tasks. To do this, you will have to draw up a new contract or additional agreement and discuss its clauses.
The outsourced bookkeeping company will usually do some extra tasks at no additional cost, to maintain their online reputation in fear of retaliation from the clients, but they aren’t legally obliged to do so.
3. Dubious benefit for a large organization.
With a large amount of documentation and a large staff, it will be cheaper to hire an accountant in the office than to pay money for the services of an outsourcer.
4. Not always “at hand”.
Heads of companies are accustomed to the fact that an accountant can be called at any time to resolve issues. With outsourcing, this is difficult since the employees of such companies work remotely. They may be in a different time zone. Always make sure of it before drafting the bookkeeping contract.
Disadvantages, as a rule, arise only in one case – when your expectations do not coincide with the result you want to get. To avoid such a situation, the format of work is discussed “on the shore”, and the obligations of the parties are clearly spelled out in the contract with the accounting outsourcing company.
What does hiring a full-time accountant do for your organization?
Now let’s talk about the advantages and disadvantages of a full-time specialist.
1. Control of the manager.
A full-time employee is always “in sight” of the head of the company, which has a positive effect on their interaction, creates a trusting atmosphere and allows you to control all accounting processes.
The director of the company will be able to monitor the correctness and timeliness of all processes performed by a full-time accountant. At least until the moment of establishing trust between the manager and the accountant.
2. A single cause.
An accountant on staff who will work in the company for a long time will become part of a single team and will be more motivated to achieve the goals and even exceed the plan for the benefit of the company than an outsourced employee.
3. Efficiency.
The main advantage of having your own accountant in the company’s staff is the ability to quickly resolve all issues, since the employee is on site.
Cons
1. Additional expenses.
For an accountant, you need to equip a workplace. This leads to costs associated with the work of a specialist.
You will also need to spend money on:
2. Vacation or illness.
If there is only one accountant working in the company, then another disadvantage is that problems may arise when he goes on vacation or is sick.
3. Later identified problems.
Finally, another important disadvantage of accounting by your accountant is that he can create problems that will not appear immediately, but after he leaves the company. In some cases, such problems can lead to fines and other financial costs for the company. In this case, there will be no one to complain to.
Conclusion
A competent approach to business and a thorough analysis of the pros and cons will help you choose the most suitable format of interaction with the accounting department for your company. You always have the option to reduce risks and protect yourself from unnecessary work with the help of an outsourced accountant. If you decide to try to work with an accountant on staff, it is important to consider all the nuances and risks described above, and then the work will be of high quality and effective.