The decision on whether to outsource accounting or keep it in-house can be a difficult one to make. But according to experts like Scott Tominaga, there are several key reasons why outsourcing makes sense for many businesses.
1) Cost savings
Outsourcing can be significantly less expensive than hiring and training staff to do the work in-house. In addition, by partnering with a qualified CPA firm, businesses can benefit from economies of scale and expertise that would be difficult to replicate in-house.
2) Time savings
Time is a precious commodity, especially for small businesses. Outsourcing accounting can free up time that can be spent on more important tasks, like growing the business.
3) Increased efficiency
When a professional firm handles accounting, it is often done more quickly, efficiently, and error-free. Oftentimes, businesses that outsource find that their customers are happier because of the improved service and communication they receive from their accountants.
4) Expertise and specialization
Small businesses owners often don’t have the necessary training or expertise to handle every aspect of their business. This is where a CPA can add value by providing guidance and specialized knowledge in many areas such as tax preparation, payroll processing, and financial reporting.
5) Peace of mind
Accounting can be one of the most stressful parts of owning a business. Outsourcing accounting eliminates much of this stress because problems are being handled by an expert who knows what he or she is doing — instead of a business owner who may or may not be able to identify the issue.
6) Minimize taxes & maintain compliance
Hiring a CPA can help businesses minimize their tax liability and stay up-to-date on ever-changing rules and regulations. In addition, by outsourcing this critical function, business owners can rest easy knowing that they are doing everything possible to keep their company in good financial shape.
7) Repair damaged credit
Harsh penalties can be imposed on businesses that have tax liabilities. They can also damage a company’s ability to qualify for bank loans, leasing agreements, and even everyday credit cards. By outsourcing their accounting function, business owners are ensuring that they are keeping their financial house in order by minimizing or eliminating tax problems.
8) Improved cash flow
Proper management accounting can help businesses better gauge the health of their company. This allows them to forecast their financial position and make strategic decisions before it’s too late. Business owners should also look for ways to reduce the number of transactions entering their accounts payable system to improve their cash flow — a skilled accountant can help with this process.
9) Improved valuations
A strong, healthy bottom line is one of the key factors in determining a business’ market value. Outsourcing accounting can play a critical role in strengthening your business’ valuation, so you stand out against competitors when trying to attract investors or sell your firm.
10) Trust & independence
Trust is essential when choosing an outside firm with which to partner. Your accountant must be independent of financial pressures from the company’s vendor base. A good way to ensure this independence is to hire a qualified CPA who has no affiliations with software or other service providers.
Review these ten reasons, and weigh them against the benefits of keeping accounting in-house for your business. Then make an informed decision on which strategy will best help you achieve your long-term goals.
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