Tracking finances is every business’ core necessity. It helps in taking important decisions based on the financial status of the business. While large businesses do consider services like accounting and financial bookkeeping as important business parts, often small businesses consider doing their own bookkeeping and accounting. However, as small businesses grow, at some point of time, accounting becomes so crucial that they need professional help rather than handling their own bookkeeping.
Here we are going to discuss in detail as to when a small business needs accounting & bookkeeping services and why outsourcing is the best available option:
While many small businesses go for professional bookkeeper’s services from the very beginning of their business, reaching $1 million in revenues is considered as a standard to bring in expert accounting and bookkeeping services that are well-trained with the best accounting practices and aggregate financial data across the business.
As a small business grows so does the team. While it may be easy to handle payroll and other expenses for a small team by self, it is better to include professional accounting and bookkeeping services to ensure employee statutory compliance and payroll are in order and there aren’t any tax discrepancies. Also, according to national.biz, “52% of business owners think they pay too much in taxes” and therefore small businesses need to avoid such unnecessary tax expenses and invest in growth instead.
Managing your own finances can help you save accounting costs but once outside investor capital starts flowing in, a steady cash-flow management strategy becomes a top priority. From Accounts receivable to Accounts Payable to Auditing, each process needs to be well on track and this is where professionals come in handy.
Small businesses spend the initial years in stabilizing and building a marketplace for themselves. However, once a business enters the growth stage of the business lifecycle, management accounting becomes one of the pillars of growth. During the growth stage, businesses need to spend wisely and since around 30 percent of SMEs place accountants at the top of their list of trusted advisors for their business (ICAS report), why not seek their help.
Financial reports like balance sheets, cash flow statements, payroll statements, etc. are used to determine the financial position of a business and help in making informed financial decisions accordingly. Accounting and bookkeeping services are needed as a business starts growing financially and studying financial data asks for expertise.
Technology has become a core part of every business as it helps in reducing both cost and increasing efficiency. 78% of SMEs are expected to be completely relying on cloud technology, by 2020. While a business owner may not be well-versed with accounting-related technology, an accountant (or accounting services) very well knows about the latest technology trends and knows how to better use them to get the desired results. Knuula is a great example of accounting software that can help accountants save a great deal of time. 50% of accounting tasks can be now automated through the currently available technologies and small business owners need to leverage technology to grow.
When getting started with a dedicated team for Accounting and bookkeeping services, some small businesses hire an in-house team of accountants, others prefer to outsource this work, considering the benefits of outsourcing. Some of the key benefits of outsourcing your accounting and bookkeeping services are:
Small business owners that invest their time in maintaining their own books can save enough time by outsourcing professional accounting and bookkeeping services.
While businesses can hire an accountant or in-house team, they would have to invest in taxes, employment benefits training and developing them, etc. But by outsourcing, they can reduce all these costs as the outsourced firm takes over all such responsibilities for them.
Many small business owners prefer keeping their accounts and transactions confidential which can come out if there is an in-house team managing your accounts. However, with outsourcing, you outsource bookkeeping services, you can sustain confidentiality.
Some other benefits include:
- Seek professional advice
- Enough time to provide more value to your clients
- Risk Management and Accuracy
- Regardless of your busy schedule, it gets done
Statistically speaking,”82% of the failed businesses consider cash flow problems an issue” and therefore, every small business owner needs to realize the importance of accounting and when it’s time for them to seek professional help. While above were some important points describing when it’s time, it’s better to make wise decisions as early as possible.