Owning a business isn’t easy. One of the most complex aspects of running a company is making sure your financial house is in order. Accounting can be extremely complex. That’s one of the reasons why accountants must obtain so much schooling and training.
With this in mind, it may sometimes be a good idea to outsource. Outsourcing accounting is nothing new. According to Forbes, accounting was one of the first business functions that was outsourced. However, would your company benefit from outsourcing accounting? Below are three signs that it would probably be a good idea.
1. You Need to Slash Expenses
One situation in which a firm should consider outsourcing accounting is when a company is being overwhelmed by expenses at a time when revenue isn’t as high as you would like. In such a crisis, you’re going to be forced to trim a lot of fat from your organization. One of the targets for downsizing you should certainly consider is the accounting department.
Licensed accountants are certainly expensive to keep on the company payroll. According to the Bureau of Labor Statistics, the average accountant makes $63,550 a year. However, what may shock you is the amount of time when the accounting department really has nothing to do. After they finish their bookkeeping for the week, they may be left with no busy work. If you want to create a more efficient and cost effective company, outsourcing those accounting tasks for a much cheaper price is probably a wise decision.
2. You Handle Your Own Accounting and Hate It
Other companies, typically small businesses, may not employ accountants or have accounting departments. Instead, all the accounting is handled by the sole proprietor in his or her office. For most people who aren’t math geeks, performing bookkeeping and other accounting tasks can be a real pain in the butt.
Even worse, it may eat up so much of your time that it takes away from your ability to actively manage your small business. It can also seriously stress you out especially when you discover you have made mistakes. Outsourcing your company’s accounting can remove this stress and free up your time so you can focus on tasks more directly related to the products and services you provide to customers.
3. You Are Planning an Expansion
The goal of most business owners is to eventually expand their company to more locations and customers. However, with rapid expansion, there can be significant changes to the finances involved. If you are able to handle your accounting before such an expansion, you may no longer be able to do so when your company grows significantly.
This is especially the case if you do your own accounting. You may no longer be able to handle the work load. If you have an accounting department, the rapid expansion may cause that department’s expenses to sky rocket. Overall, outsourcing this aspect of your company can help facilitate growth while keeping expenses in check at the same time. It can allow you to stay better focused on the goal of a smooth expansion instead of being focused on minor details like accounting.