Bookkeeping & Accounting: When to opt for professional help.
Apr 18, 2023 | 22 Min Read
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Bookkeeping and accounting can be complicated and time-consuming tasks, especially for small business owners who are already stretched to their limits with running their daily operations.
While it may be enticing to have everything done yourself or under your direct control, there are several benefits to opting for a professional accounting service, especially in times of business growth when financial responsibilities become more complex.
Early indicators to hire a professional accounting service:
Time-Consuming: It may be wise to consider handing your bookkeeping and accounting functions to professionals, especially if you spend too much time on these non-core functions. Professional accountants have expertise in bookkeeping for small businesses, allowing them to efficiently manage your business’s financial records. This allows entrepreneurs to focus on other vital core competencies.
Unable to keep up with deadlines: It may prove to be challenging to keep up with payments and tax filing dates when juggling several responsibilities simultaneously. Penalties may also be imposed when a deadline is missed. Therefore, having a hired professional can help business owners stay on track, giving them some peace and contentment.
Unorganized Financial Records: Another indicator to hire an accountant for your business when its’ financial data is haphazard and never up to date. By hiring an experienced accountant or accounting firm, the business can benefit from timely and accurately prepared accounting data, allowing for timely and primed business decisions.
Insufficient financial and tax knowledge: Business owners often experience confusion and stress when tax season arrives. Employing a professional for your bookkeeping and accounting services can save you from the stress of making a mistake with the ever-changing and complicated tax laws. Further, accountants can provide a greater understanding of the business’s finances especially if the owners lack accounting knowledge.
Lack of Internal Controls: An expert accounting service can assist with planning and implementing a proper set of internal controls over the financial systems employed by the business to ensure that they are accurate and secure.
Roles and importance of professional accounting service in your business
Professional accounting services play a key role in the ultimate success of a business. The following are some of their major roles:
Bookkeeping: Ensuring that all financial transactions of the business are accurately recorded, is a crucial role of accounting service providers. Professional accountants also employ the most effective technology and software for bookkeeping. Owners can now have access to real-time data allowing them to make well-apprized decisions at all times.
Financial Planning and Budgeting: Qualified and experienced accountants can create and manage the financial budgets of the business, forecast future performance, and develop effective strategies that can be implemented to achieve those objectives, while simultaneously minimizing risks. Small businesses often have limited cash resources and employing an accounting service may prove to be vital to them, as they can receive expert advice on cash flow management.
Compliance with relevant tax laws and regulations: An accountant can help ensure that the business, whether large or small, has accurately met all tax obligations on time. They also provide guidance on lowering tax liabilities as oftentimes; businesses end up paying more taxes than they should have due to a lack of knowledge of specific tax deductions.
Financial Reporting and advisory services: Another primary role of Accountants is the preparation of financial reports for the management, banks, and other stakeholders, especially when pursuing credit lines, expansions, and mergers or acquisitions. These reports provide insight into the financial performance and health of the business.
Internal Control Mechanisms: Professional accounting services are experts in detecting and preventing financial fraud. They are able to implement internal control mechanisms to minimize such incidents via segregation of responsibilities which small businesses often encounter regularly.
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Why outsourcing is better than hiring an in-house accountant
There are multiple benefits of outsourcing your bookkeeping and accounting functions as compared to an in-house accountant which are discussed below:
Availability of time to focus on core competencies: Bookkeeping is an essential, yet back-end support function of the business. Outsourcing accounting services frees up time for business owners and managers to focus on more important aspects of their business such as sales growth, rather than spending time on record keeping, tax compliance, and financial reporting.
Cost Effective: Hiring a full-time accountant or online bookkeeper increases the costs of the business in terms of wages and other benefits such as training costs, paid leaves, extra office space and furniture, and loss of time when the employee resigns. By outsourcing, you pay only for the services subscribed to, resulting in immense savings. The use of cloud accounting reduces paperwork and the need for storage space, resulting in further savings.
Furthermore, some accounting firms also make use of artificial intelligence and machine learning which can be very expensive to implement in-house owing to training and development expenses.
Expertise: Outsourcing provides access to a team of experienced professionals who can provide a range of services in addition to bookkeeping such as tax planning, financial budgeting, and risk management. They often take note of red flags in advance and inform the management of corrective actions.
This can be particularly useful for small businesses that may not have the resources to hire specialists in-house.
Flexibility: Outsourcing allows for the flexible scaling of accounting services as the needs of the business change. With in-house bookkeeping, existing employees may be overburdened during rapid growth resulting in overtime and mental stress or the hiring of a new employee who may be left unoccupied during contractionary periods.
Improved Accuracy: Inexperienced bookkeepers may produce inaccurate accounts. Professional accounting firms with proven track records are equipped with the latest technology and cloud accounting software such as QuickBooks and Xero to ensure that financial records are accurate and up to date. Multiple layers of reviews and quality checks further ensure the minimization of errors and the accuracy of financial reports.
How to choose an ideal accounting firm for your business
Deciding on a suitable accounting firm for your business is a critical decision that can impact the success of your business. Some of the key factors to consider are:
Experience: The ideal accounting firm for your business would be the one that employs trained staff such as CPAs and qualified accountants and bookkeepers, has experience with other firms in your industry, and has expertise in the specific services you require. Business owners should also ask for references from existing clients to ensure that the accounting firm has a proven track record and reputation for providing high-quality services.
Cost: It is essential to consider the cost of outsourcing your bookkeeping and accounting functions to a professional firm to ensure that a transparent cost structure is being offered and that you are receiving value for your money.
Communication and Responsiveness: The ideal firm for your business is one with strong and timely communication skills and commitment to customer service and support.
Technology: Consider the technology used by the firm and ensure that it is up-to-date and supports the needs of your business. Accounting firms with certifications and those that make use of the latest cloud accounting software such as QuickBooks and other software should be given top priority.
Size: Larger firms may be embedded with more resources but may also be less flexible and personal as compared to smaller firms that are normally more personal and flexible. Therefore, it is important to choose a firm that can provide the level of support and resources you need.
Do things the right way - Find out how Accountimize can help
Accountimize is a team of passionate CPAs, specializing in optimizing the accounting processes and procedures for small and medium-sized businesses. We employ top-notch accounting software and are certified pro-advisors of QuickBooks and advisors of Xero. With transparent cost structures and a dedicated team of professionals, our clients rest assured that their finances are in good hands while they can focus on growing their businesses.
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