Small business owners and nonprofits often have a lot on their plates. If you’re a small business owner, you may be developing your business strategy or hiring new team members. As a nonprofit, you may be managing grants and board reporting requirements. Wearing many hats deprives you of the focus you need to run your organization successfully. Your daily activities are reasons why outsourcing accounting services can benefit your small business or nonprofit.
Leaving the accounting tasks to the professionals lets you maintain accurate financial records while having more time to focus on tasks only you can do. Outsourcing can also be more cost-effective than hiring an in-house accounting team. Instead of paying for training and benefits, you can allocate the resources to other business activities. Nonprofits can focus on allocating their funds to other causes.
How Outsourcing Accounting Services Benefits Small Businesses and Nonprofits
The benefits of outsourcing accounting services are centered on streamlining your processes, reducing costs and helping you make informed decisions. An experienced accounting firm can help you:
1. Reduce Administrative Tasks
Your limited time and resources make it essential to focus on high-level activities. Outsourcing frees up your time from administrative tasks, such as managing payroll, preparing tax documents and reconciling accounts. With more time on your hands, scaling your organization is easier. You can concentrate on big picture tasks, such as product development, service expansion or innovation.
Accounting services are also more equipped to handle compliance issues. Their expertise ensures your books remain accurate and protects you from legal repercussions. For instance, professional accountants can file and pay your taxes on time, preparing you for IRS audits. They also protect businesses from interests, penalties and reputational damages.
2. Improve Efficiency and Cost Savings
Many accounting firms have adopted innovative technologies, such as enterprise resource planning (ERP) and payroll systems, that improve and streamline accounting processes. These technologies automate routine tasks and reduce errors, optimizing for efficiency. As a small team, hiring in-house accounting professionals may not be your top priority. Full-time staff can be a considerable expense, considering the salaries, benefits, training and infrastructure costs.
Outsourcing accounting services lets you access the expertise, technology and infrastructure without the same amount of investment. It also enables you to scale effortlessly without needing to resize your own team. For now, you may only need payroll processing and general ledger maintenance services. However, as your organization grows, you may need to consider tax filing and compliance support.
3. Provide Smooth Transactions
If you’re a small business, the state of your finances can seep through the experience of your clients, vendors and lenders. System improvements can lead to smooth transactions, increasing your company’s trustworthiness. For instance, lenders and investors typically consider accounts payable (AP) and accounts receivable (AR) when making their decisions. Professional accounting services can better manage your AP and AR, offering a clearer overview of your company’s financial health.
Clients and vendors also need timely invoices to pay your organization the correct amount promptly and maintain cash flow. Manual payments and inconsistent financial data can lead to delays. External accountants who work with innovative technologies ensure you get paid accurately and on time. Timely payments are essential for maintaining your business operations.
4. Access Comprehensive Insights
Established professional accountants have diverse experiences, which allow them to provide comprehensive financial insights. Accounting firms that have worked with small organizations and enterprises can guide you through each phase of your growth. They can help you navigate economic downturns or plan successful exits. They can also offer practical advice and strategies to successfully scale your operations.
Outsourced accountants work with timely and accurate financial data due to their advanced technologies. They offer detailed financial reports and trend analysis that indicate if you’re reaching your organization’s goals. Professional accountants can also help forecast your future performance. These insights make data-driven decisions possible, so you can optimize your cash flow, identify the best time for expansion and cut costs as needed.
Financial insights also help you anticipate challenges and determine solutions before they arise. Managing these risks while you spot growth opportunities gives you a competitive advantage.
Is Outsourcing Your Accounting Activities Worth It?
Considering the benefits of outsourcing accounting services, they can be worth it, especially for small organizations. Outsourcing is a proactive strategy that lets you get on top of your finances instead of reactively putting out fires due to compliance violations and tax penalties. Professional services keep you on top of deadlines, such as payroll, tax filing due dates and audit requirements. They can also address financial discrepancies right away, reducing the stress on your end.
Managing accounting activities yourself or through a small team can lead to inconsistent data, leaving room for errors. Also, your team might not be knowledgeable about generally accepted accounting principles (GAAP) and account classifications. The lack of modern accounting technology can lead to paper and spreadsheet systems, resulting in decentralized data. Inconsistent payment tracking may even lead to delayed invoices.
If you’re scaling, then your work becomes trickier — with different tasks vying for your attention. To avoid chaotic books, missing receipts, mismatched invoices and irregular entries, it’s better to invest in professional services that can do the work for you. Outsourced accountants can also offer an additional layer of oversight, which protects you from unintentional errors and fraud.
How to Choose an Accounting Service
Accounting services differ in size and expertise. You may find freelancers, medium-sized firms or large and established accounting companies. To maximize the advantages of outsourced accounting, consider persons or companies who offer:
- Personalized service: A company shows genuine commitment to your goals if it offers services tailored to your needs. Consider companies that take the time to know your organization and the strategies they can employ to achieve your financial objectives. For instance, if you’re a nonprofit, you may want to work with companies that offer grant writing strategy and alignment services. If you’re a growing business, you might want cash flow projection services.
- Technological advantage: Some accounting companies are more forward-thinking than others. Consider those who are technologically advanced and can offer efficient, accurate and timely financial data through their processes.
- Effective communication: The company must have effective communication systems in place to offer sufficient and reliable support. Clear communication ensures they understand your financial needs, leading to a smooth collaboration.
- Proven track record: A proven track record shows whether the company is trustworthy and capable. It showcases their expertise and reliability, which is essential when handling your organization’s finances.
- Robust security measures: Accounting companies must secure your financial data. They should comply with industry regulations and have sufficient security protocols, such as ISO 27001 and SOC 2 Type II certifications.
- Transparent pricing: Accounting companies should help maintain and grow your finances — not secretly take from them. You can avoid hidden fees by reading the fine print. A trusted provider should offer a detailed breakdown up front.
Scale Your Organization Easily With Mangen & Associates
Knowing what the benefits of outsourcing in business are, it’s easier to decide to work with accounting firms. At Mangen & Associates, we can help you through our personalized service, tailoring our financial and strategic practices to your organization’s goals. You may need help with day-to-day accounting activities, payroll and compliance. You may also need to improve your cash flow management as your organization grows. Whatever phase you’re in, we can help.
Startups may benefit from our Essentials services, where we manage AR, AP, payroll and balance sheets, among others. Scaling businesses may consider our Growth plan that offers tax filing and compliance support. Larger companies may benefit from our Strategy package. Nonprofits also benefit from any of these services.
For over two decades, we have been delivering professional accounting services that drive efficiency, clarity and growth for our clients. To learn more about our service, schedule a consultation today.
