As a startup owner, odds are you have a hundred tasks on your to-do list ahead of managing your business financials day-to-day.
While it is tempting to DIY all of your business administration functions to save money, the reality is that every task that diverts your attention from primary business operations is costing you money.
To put it simply: you can either pay an in-house accounting team, pay an outsourced accounting service, or pay with your own time in lost profit.
Let’s take a look at why startups are choosing to outsource their accounting.
Business Accounting Functions
Business accountants are responsible for the tracking, reporting, forecasting, and executing of financial transactions.
These are some of the most common accounting tasks:
- Recording of financial transactions
- Account reconciliation
- Report production
- Revenue recognition
- Bill payment
- Reimbursing employees
- Collaboration with tax professionals
How Outsourced Accounting Can Help Startups
Whether you are starting a small business on your own or launching your startup with the help of investors, outsourced accounting can help streamline your financial processes and ensure your accounts are in order.
What outsourced firms offer
Outsourced accounting firms have the benefit of:
- Professional accountants who are up-to-date on financial regulations and practices.
- Accounting software with high-end functionality and automation.
- Knowledgeable advisors who can help you identify cost-savings opportunities.
- Industry expertise
- Customized dashboards that provide key information in real-time
One of the most significant benefits of working with an outsourced accounting firm as a startup is establishing good financial practices from the start.
Shifting overhead burden
An oft-forgotten expense of maintaining an in-house accounting function is the cost of recruiting, training, and retaining accounting personnel. This is challenging given the current job market is red hot for accountants. Additionally, accounting software requires annual license fees, which can be considerable.
Outsourcing the accounting function moves risks associated with staffing and software costs from your company to the outsourced accounting service provider. You will never have to interview an accountant or sit through an accounting software demonstration again.
Keep in mind that an outsourced accounting service provider will assign professional accountants to your organization. You will likely have a team to rely on, with shared years of professional experience among them and access to the institutional knowledge of an accounting firm. The value of this is difficult to quantify but should not be overlooked.
Services Offered by Outsourced Accountants
Outsourced accounting is a flexible solution that can grow with your business. Most outsourced accounting firms offer various levels of service that meet your needs.
Bookkeeping
Basic bookkeeping is the most time-consuming financial function for any business. It is also among the easiest to put off until “later.”
Letting your books get away from you not only means a great deal of hassle when it comes to catching up, but that additional labor may delay your ability to secure loans or file taxes.
Outsourced bookkeepers can manage reconciling both your banking and credit accounts, record payroll, and work with your tax preparation professional.
Accounting
In addition to maintaining books, accounting-level services manage more hands-on functions including bill payments, employee reimbursements, and weekly reporting.
Timely bill payment will ensure vendors remain satisfied doing business with you.
Virtual Controllership
As your business grows, you may encounter situations where you need financial assistance that is beyond the scope of what your accountant or bookkeeper can provide. This is when a controller steps in.
In fact, controllers are often utilized during growth to ensure the company remains soluble while growing.
Virtual controllers offer project management and compliance services and often are called on to prepare financial data when applying for capital.
Virtual CFO
Not every startup needs a full-time CFO, but many startups have needs that can be fulfilled by an outsourced CFO.
A Virtual CFO can help your startup establish a growth plan and identify viable funding sources. They are also available to make financial presentations and attend board meetings to answer questions about your startup’s financial standing.
Choosing the Right Partner for Outsourced Accounting
If you’re ready to outsource your financial functions, you will want to explore available solutions to ensure you are getting the services you need.
It’s advisable to find an outsourced accounting company that specializes in working with organizations like yours. If you are a startup backed by a significant amount of venture capital, you will need different services than a mom-and-pop store or sole proprietor service provider.
If you partner with a firm that is too big for you, you run the risk of paying exorbitant fees for services you don’t need. If you choose a firm that is too small, you may not receive the depth of expert advice you need to meet your growth goals.
Learn more about Dean Dorton’s outsourced accounting services.
