Is your business growing, but you’re running out of time?
For many entrepreneurs, accounting starts as a DIY task and turns into a hidden liability. Maybe you’re spending late nights trying to untangle a spreadsheet. Or worse, you’re not even sure things are being done right.
In this article, we’ll break down why outsourcing your accounting might be the smartest move you make this year, and how to tell when it’s time to make the switch.
Why Outsource Accounting?
If you have time and are good at keeping the books, then keep going. You’re better off hiring to cover weaknesses than strengths. But if it drains your energy, or other priorities are falling through the cracks, that may be your sign.
At any given time, we have about 500 concurrent clients. We find that business owners often come to us because of a crisis. As CFO Brian Johnson puts it: “People don’t actually care too much about accounting until it becomes a problem.”
Low-quality accounting can seriously damage a business. Bad information leads to bad decisions, incorrect taxes, and trouble getting affordable bank startup financing.
Conventional creditors want to see financial statements before they loan money. Without them, business owners are often forced to turn to bad-credit lenders, who ask fewer questions but charge higher interest rates. And if your business or partner has a history of bad credit, poor accounting only magnifies the issue by making you look even riskier to lenders.
In short, you should outsource accounting because a little proactivity can pay off. As one business owner puts it:
“I find it a massive weight off my chest. I first got an accountant when I was doing about $150k a year, but it was a luxury at that point. Now I’m doing over a million, and it’s so helpful to have them help with everything. Sure, I could have my staff do it, but I can pay off my accountancy fees for the month by having them work on client projects instead.”
Not every business is ready to outsource. The cost has to make sense for where you are in your growth. But if managing your finances in-house is starting to slow you down or introduce risk, it’s time to take a serious look. When done right, outsourcing pays for itself.
Benefits of Outsourcing Accounting
Outsourcing can take care of administrative tasks that business owners perhaps shouldn’t be doing. After all, your time is usually better devoted to growth. There are other compelling reasons as well:
- Specialized Knowledge: While being a jack of all trades has merits, professionals dedicated to a single domain will have industry-exclusive expertise. For instance, the switch from cash to accrual accounting often saves business owners considerable amounts of money.
- Full-Stack Offerings: Most companies that hire internally can only afford the salary of a junior-level position. By outsourcing, you get access to a full suite of services, at every level of expertise, for less than the cost of a full-time employee.
- Cost Savings: Hiring in-house comes with payroll taxes, benefits, and training costs. Outsourcing gives you access to a team without the overhead.
- Perspective: Outside professionals work with a broad range of clients. That diversity can bring fresh insights and new ways to solve old problems.
- Scalability: External services can expand or shrink to suit your needs. They can grow with you or easily cut back during bad times.
- Accuracy: A good accounting partner doesn’t just file taxes. They’ll catch errors and give you confidence in your numbers.
- Safety: This situation is rare, but delegating accounting to an internal team member carries a higher risk of fraud or embezzlement. Outside organizations bring built-in checks and accountability.
- Internal Staff Development: When you bring in outside experts, core staff will pick up new skills and perspectives just by working alongside them.
What Do Outsourced Accountants Do?
People outside of finance often lump accounting into one big category.
In fact, prospective clients often ask about CFO services when all they need is bookkeeping help. That’s why it’s important to book a consultation with a trustworthy expert before hiring anyone. Some services are considerably more expensive than others, and dishonest providers might take advantage.
It varies from firm to firm, but here’s what we do:
- Bookkeeping: Keeping records accurate with day-to-day tracking of income, expenses, and transactions.
- Business Taxes: Preparing for federal, state, and local tax returns, along with strategic planning to minimize liabilities while staying compliant.
- Accounting: High-level financial analysis, including preparing financial statements, which can be used for strategic decision making as well as pursuing business loans and investment.
- Fractional CFO Advisory: Help with forecasting, budgeting, fundraising, and more from an experienced CFO on a part-time basis.
- Payroll Services: Managing employee compensation, including wage calculations, tax withholdings, while ensuring timely delivery and compliance.
How Much Does Outsourced Accounting Cost?
A typical range for Upwork bookkeepers is between $20 and $50 an hour. Similarly, Upwork accountants cost an average of $40 to $70 an hour. But the cost to you will depend on the specific services, complexity, and size of your business.
However, it’s not wise to hire the cheapest option. Poor accounting can create barriers to securing loans and investments later on; if your budget is tight, continuing to DIY may be a better choice.
Our rates for essential bookkeeping and reporting begin at $750 per month, with packages including accrual accounting management starting at $1250 per month. We also offer custom services tailored to your specific needs.
For a quote, reach out for a free consultation. We’d be delighted to learn more about your business, and would appreciate the opportunity to share how we can bring you peace of mind while freeing you up to focus on growth.
