By Rachel Phillips
In business, accounting is the day-to-day tracking of financially operations, both in the short term and the long term.
Not only does accounting serve the purpose of tax compliance and record keeping, but also recording metrics used for evaluating business performance. As such, it is a vital function for success in business.
However, with improving technology and the internet, it has become easier than ever for certain business tasks to be done remotely. As a result, recent years have seen an increase in businesses using outsourced accounting services.
When a business outsources accounting, they hire an outside professional to organize and evaluate their books and records.
Accountant and bookkeeper Lisa Daly of Daly Accounting in Queensbury said outsourced accounting can be a smarter financial decision for small businesses.
“The cost of hiring an employee to perform the accounting function in-house is an obstacle that many small businesses choose not to absorb,” she said.
Along with cost savings, Daly said outsourcing accounting frees up time for business owners to focus on running the business and generating revenue.
Kevin O’Leary, CPA, managing director of Marvin and Co. that serves Saratoga and the North Country, said outsourcing accounting tasks can be a cheaper alternative for small businesses.
“Some smaller companies might not feel they need a full- or part-time employee to handle the operations … As businesses grow, both financially or otherwise, their internal person might not be able to handle the growth. At that point, it might be nice to outsource to help the internal person do the day to day stuff.”
Daly said having an objective third party involved, who has experience in many different industries, can be beneficial to small business owners who might not have as much experience with accounting.
“I strongly recommend that a new or start-up business owner seek out an accounting professional right from the start. New business owners can benefit greatly from the extensive experience of the accounting professional and subsequently, avoid making costly mistakes,” said Daly.
O’Leary said outsourcing accounting tasks can be a great way to supplement and corroborate an in-house bookkeeper or accountant’s work.
“They could get someone with some higher skills to give them a little extra help,” said O’Leary. “If they’re outsourcing it to a team, they’re not necessarily depending on just one person to do it.”
According to O’Leary, even with the popularity of programs like QuickBooks that allow small businesses to manage their finances more easily than ever before, it’s still a good idea to have a professional with an accounting background look over a business’ books and records.
“If the work is being outsourced, maybe the [outsourced] person has more of an accounting and taxation background. You get more consistency, and less risk than just depending on one person.”
O’Leary cautioned that it’s still important to have someone managing a business’ numbers every day.
“I think one of the main disadvantages to outsourcing is that not having someone internally there in the trenches with you isn’t good for a lot of business,” said O’Leary. “I think accounting is essential for all businesses. There’s no difference between outsourcing or having someone internally, but you just need someone to look at those numbers regularly to make sure you’re seeing them. If you’re outsourcing, you’re not going to be their only client, so you need to find someone who’s really going to commit the time to get to know your business.”