Why Small Businesses Should Handle Bookkeeping Professionally?
Modern global markets are becoming highly competitive; whereby companies are outsourcing their bookkeeping transactions a serious prioritization in order to have their internal accounting functions standardized, streamlined and fully functional.
To Outsource or NOT
In small businesses, owners often tend towards bookkeeping functions in-house. It can be quite a dilemma to consider outsourcing this function. Unfortunately a lot of small businesses consider only the cost while making this decision and not the benefits. However, there are some highly positive aspects related to outsourcing which must be weighed against the costs.
To outsource or not: The real question to think about is: ‘what can you do with the extra time you will have, if you outsource?
- Can that time be used better, to bring more revenue by meeting, networking and building relationships with your customers?
- Do you have the necessary skills to do the job, or would it be better to outsource to someone with the right skills who can do the same job in less time and in a more cost effective way?
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Witness The Benefits of Outsourcing Bookkeeping
Bookkeeping is much like going to the dentist—no one really wants to take the time out to do it but neglecting the issue can lead to serious repercussions. For the most part, this is why business owners just want to hire someone to do it and not have to think about it themselves until March or April.
Simplifying and standardizing bookkeeping processes is a key characteristic of well-run companies, and by hiring a professional bookkeeping services will help your company achieve a variety of good outcomes.
There are certain cliché-ridden phrases, such as cost reduction, improved process, access to best talent resource, focus on core competencies and faster turnaround time which essentially drive industries to consider outsource bookkeeping:
Cost reduction – Industries have long attributed imprecise and cost-burgeoning aspects of bookkeeping functions to their failure to understand the importance of bookkeeping. To state otherwise, businesses believe that if they had externalized bookkeeping processes in early stage of their business, they would probably have reduced operating costs and improved business productivity level significantly.
Efficiency-driven Results – To say the least, streamlined bookkeeping transactions really drives the efficiency and improved business performance to any organization. Due to increasingly tough outsourcing market worldwide, outsourcing companies face the pressing need to adopt latest technologies and client-satisfaction-centric business strategies. In view of the circumstances, client companies can expect efficiency-driven results for their outsourced projects, as vendors can’t afford the risk of losing clients by providing substandard services.
Access to Best Talent Pool: Undoubtedly, if you outsource bookkeeping process to a vendor, you invariably get an access to vast talent reservoir, effective and useful for your business to scale up. Start-up, small and medium size organizations usually make a cost-efficient business strategy so as to get their accounting functions streamlined.
Faster Turnaround Time: In brief, outsourcing enables an organization get quality services within the deadline, thus helping it many ways. A client gets service within the deadline as its outsourcing partner has all requisite resources essential to streamline client specified bookkeeping process with faster turnaround time.
Focus on Core Competencies: As a rule of thumb, when a client outsources process, it actually gets relieved from the tension of concentrating on that particular project.. Thus, it saves ample time to actually focus on its core competencies.
Cost Savings: Since bookkeeping processes are too complicated yet very substantial parts within an organization, staffing an entire account department with new workforce will involve budget-draining recruitment and training processes. To avoid this, an organization outsources entire or part of the whole accounting functions to save considerable amount on operating costs.
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Now that you are convinced of outsourcing your bookkeeping transactions to a professional outsourcing bookkeeping service providers, you’ll have other queries on your mind related to bookkeeping.
Below mentioned are important FAQs That Will Give You The Clarity on Outsourcing Bookkeeping Services:
I am thinking to start a new business, why do i need to outsource bookkeeping services?
There are many important decisions that need to be made with the help of someone experienced in complex bookkeeping and accounting issues. For example, the preparations of financial projections which need to be included in the business plan. These projections are used to formulate a financing strategy and upon funding a tax strategy, to minimize taxes. After funding, there are several other issues that need to be immediately addressed such as establishing budgets, implementing policies, procedures and authorizations, registering the business with the appropriate local, state and federal agencies, and establishing a month-end closing schedule to ensure timely and accurate bookkeeping statements.
I have just started my startup, why do i need professional outsourcing bookkeeping services?
There are several issues that need to be discussed and actions to be taken after starting a new business. Some examples include relevant policies and procedures, establishing a month-end closing schedules to ensure timely, accurate financial statements, compensation strategies, establishing a filing system (believe it, this is extremely important).
Outsourcing bookkeeping experts in all of these issues and can provide you with efficient, affordable answers and solutions.
I have already hired a bookkeeper- Why should i outsource?
Most of the bookkeepers do a great job. Remember though, they usually do not have the experience to address many of the complex issues that small businesses face today. Many of these issues do not surface until they become a problem. These issues, which are aplenty, will inevitably “rear their ugly head” at the most inopportune time, if ignored or are not properly addressed.
Bookkeepers record transactions, but often do not know the full implications of the transactions for financial statement and tax purposes. Also, many business owners do not have the background to properly train and supervise a bookkeeper.
Bookkeepers can make bad decisions if there is no one to answer complex financial questions. Professional outsourcing bookkeeping services helps you from such hassles, as they have expertise bookkeeping accountants to work on your bookkeeping transactions.
Can i outsource few bookkeeping tasks or do i need to outsource my entire bookkeeping?
The decision to outsource only a part of the project or the entire project is totally left to you. Once outsource bookkeeping service provider receives your requirements, they will design a custom workflow and designate a team to work on your project.
Will i lose control?
Your bookkeeping transactions are stored on servers that are physically secured, virtually protected via firewall, multiple redundant back-ups and consistently maintained via system patches, software updates and structural upgrades.
Since professional outsourcing bookkeeping services only manages your information on paper (they don’t have authority or access, to move money in your bank accounts) your money is still safe and in your control. As your outsourced bookkeeping solution, they do all the data entry, provide appropriate analysis and set up all the data for you to review and approve.
What about my financial data security?
Professional bookkeeping service providers have a secured data network and it is reliable. They use secured Virtual Private Networks (VPNs) and firewalls to maintain security of your financial data. Also, they sign a Non- disclosure Agreement (NDA) with their employees. There is a strict avoidance of any external storage devices like CD drives, Floppy drives, USB ports etc. on the PC workstations. Regular Antivirus updation is one of their computer users Policy.
How much does it costs to outsource bookkeeping?
Outsourcing is cheaper than hiring an employee because:
- It saves time spent managing the bookkeeper
- It saves health insurance, pension or other benefits
- It saves employee liability or other legal problems
- It saves office space needed; convert that desk to a sales position
- It saves money on phone lines, computers, software or other overhead costs
- It saves hiring and training costs, no replacements during vacation
- It saves wasted time on non-revenue generating activities
- It eliminate employee drama and management headaches.
- It saves money on vacations, holidays or sick days
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Different Types Of Bookkeeping Services Explained in Brief and Widely Outsourced:
- Maintaining general ledger
General ledger reconciliation refers to the process of maintaining the final entries of the debits and credits of the accounts of an organization. Terms like liabilities, fixed assets, revenues, expenses, losses and gains form a part of general ledger reconciliation. These items have to be accurately categorized either in the form of debit or credit transactions, according to the transacting amount. The accuracy of general ledger reconciliation is critical to any business hence hiring outsourcing bookkeeping experts make sense.
- Preparing & Analysis of Financial Statements
Maintaining error free books of accounts is essential for any business enterprise as this helps the stakeholders keep a track of the flow of business transactions for effective decision making.
Maintaining proper accounts also enable a business avoid last minute rushes especially during the tax season and quarterly filings. Any professional outsourcing bookkeeping services provides preparing and analysis of financial statements which generally include reconciling the un-reconciled, classifying items in the correct category; review the taxes and performing ratio analysis to ensure the trends represent the actual business scenario.
- Accounting payable
Organizations need to comply with regulatory necessities that are very perplexing, apart from attempting to accomplish the highest value from expenses and to decrease costs. Lower processing costs, better controls, best service levels and higher business intelligence can only be achieved by following all the business regulations in a most efficient manner. Due to this reason, outsourcing bookkeeping services can offer clients the capacity to change over their procedures for accounts payable into an effective and structured framework.
- Accounting receivables
Accounts receivable is an amount of money owed to an individual, company, organization for the goods / services provided to them. It is a current asset of a company and represents the amount that customers owe to a business. Accounts receivable are payable by the customers within a year from the date of sale of goods / services.
Accounts receivable service is a vast area and includes:
- Accounts receivable recognition
- Accounts receivable valuation
- Accounts receivable disposal
These processes can be cumbersome and time consuming therefore large organizations either use accounting software or outsource the process to professional accounting firms. This helps to manage it in a better way. Outsourcing the accounts receivable provides the following Benefits like ensuring internal control, effective expense administration, timely reconciliation of accounts receivable, saving time and man hours, and preventing fraudulent invoices.
- Inventory reconciliation
Inventory reconciliation & management is necessary to have a well-organized control over the finances relating to the business. Small-medium companies need to make sure that their cash flows and financial statements give the actual position of the company activities done on a cyclic basis. By outsourcing Inventory Reconciliation Services to bookkeeping experts can be really beneficial.
With the help of outsourcing bookkeeping experts inventory& accounting management along with our widespread experience permits us to provide effective and robust solution for inventory management of companies of varied position and size.
- Income Tax preparation
Bookkeeping services for small business also includes preparing periodic financial statements is critical to small businesses as it has to take many important business decisions during the initial stage. They are also mandated by regulatory authorities to have financial statements in place built on Generally Accepted Accounting Principles and they also depict businesses’ financial health at different point of time.
Outsourcing preparation & analysis of periodic financial statement can save you resources and gives you the time to focus more on other critical aspects of your business.
- Cash flow management
Effective cash flow management strategies are essential to managing your small business. Professional outsourcing bookkeeping services offer flexible, convenient cash management solutions which are tailored to meet your needs and give you maximum control over your business finances.
- VAT calculations
Value added tax (VAT) is a very overwhelming task for an organization to handle, requiring skilled manpower. Outsourcing VAT return services will be beneficial as their skilled bookkeeping services team can provide you with the expert VAT return services at a cost-effective price.
- Bank & Credit reconciliations
Reconciling credit card statements with your bank statements at the end of each month can be tedious, time-consuming and complicated; and may even leave you frustrated. Without precise and up-to-date bank credit card reconciliations, you run the risk of either overdrawing your account or underestimating your finances. Accurate bank reconciliation outsourcing services will keep a track of your current financial position and gain a clear perspective of where your organization stands financially.
- Most importantly – provide unlimited consultations
Outsourcing bookkeeping service providers are always available to spend time with you so you fully understand how to interpret and utilize the financial information they provide. Their consultations are already included in the price, hence feel free to call whenever you have a question or concern.
SME Joinup boasts of having expert and experienced bookkeeping service providers on-board that provides you with desired results. To get connected with our top outsourcing bookkeeping service providers – Request For An Expert
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