How and When to Outsource Small Business Accounting – Local vs Online Accounting Outsourcing

Accounting and financial planning are critical to any business. But If you’re like most business owners, dealing with accounting tasks is probably not something you enjoy.

Fortunately, you can outsource accounting. Not only will it save you time, but your business results will see an improvement thanks to better financial planning, tax savings and other efficiencies.

In this article, we’ll discuss how you can take accounting off your to-do list and find more time to focus on running your business by outsourcing accounting and bookkeeping to professionals.

Benefits of accounting outsourcing

Getting help from an outsourced accounting professional can lead to some major benefits that go far beyond just saving your time. The following are the top reasons why you should outsource your accounting and bookkeeping:

  1. Outsourcing accounting saves you time since you don’t have to do the work yourself. Hiring an outsourced professional will give you more time for the important parts of running a company, like growing it and serving clients/customers. It also saves time on managing in-house accountants or bookkeepers.
  2. Outsourcing accounting saves money since you don’t pay someone a salary if they’re not working for your company on a daily basis, and there are no additional benefits or taxes associated with hiring an employee of your own. It also reduces your overheads, and you can save on hidden costs such as fraud, fines and errors.
  3. You can expect accuracy from outsourced accounts which will protect you from penalties related to tax filing or other CRA regulations.
  4. Outsourcing can also help you save money on taxes. Experienced accounting professionals can help reduce your tax liabilities and increase your odds of getting a tax refund when filing.
  5. With outsourced accounting, you gain access to trained and experienced experts. You can take advantage of specialized accounting, tax and financial planning services, which will help you grow your business with expert advice.
  6. Outsourcing your bookkeeping provides better insights to make business decisions. For example, you might get deeper insights into your cash flow that can help you make strategic business decisions in the long run.
  7. When done correctly, outsourcing can increase your profitability by keeping accurate records of all financial activity, helping you make important business decisions.
  8. Outsourced accounting scales with your business. As your business grows, there’s no need to hire extra staff. Virtual accounting firms often offer a full team of experts that can handle all your financial management for you.

When should you outsource accounting

You should consider outsourcing your accounting if you are too busy or do not have the necessary accounting skills. You should also outsource your accounting if you cannot afford an in-house accountant, which would be very pricey for a small business owner. Outsourcing is typically cheaper than hiring someone on staff because it does not require benefits and equipment.

Typically, business owners start by doing everything themselves. And that’s OK. But as soon as your financial activity outgrows simple bookkeeping, you should consider outsourcing accounting. So, instead of having to oversee day-to-day bookkeeping, you can delegate financial management to expert professionals while you focus on building the core business.

What do outsourced accountants do

Outsourced accountants will typically do the tasks that a small business owner would normally have to do themselves, such as bookkeeping and record keeping. They can also offer tax planning advice since they are more familiar with the current state of taxation legislation than most small businesses owners could ever be.

The following are the most common tasks that outsourced accountants do:

  1. Bookkeeping
  2. Payroll
  3. Tax preparation and filling
  4. Tax planning
  5. Paying bills and invoices
  6. Processing accounts payable and receivable
  7. Creating financial statements like balance sheets and income statements
  8. Financial statement analysis
  9. Managing bank accounts
  10. Reconciliation of financial statements
  11. VAT Returns/Payment schedules
  12. Ensuring tax compliance
  13. Financial controller tasks like doing draft financial statements, updating your ledger, processing cost accounting paperwork, budget expenses, and analyze financial data.

How to outsource accounting

When looking to outsource your accounting, you have a few options available: hiring a local accountant or hiring a virtual/online accountant.

Hiring a local accountant can be good in terms of having someone to go and meet with face-to-face. This can be important if your business is dealing with a lot of paper records (i.e. receipts or invoices).

Local accountants typically charge an hourly rate, which is $150–$400 per hour, depending on their expertise and level of service. However, hiring a local accountant may come at an extra cost if they don’t live close by or you have to travel back and forth for meetings.

Local accounting firms are usually more suitable for bigger businesses, that do require physical presence and don’t mind the added cost that comes with it.

On the other hand, hiring a virtual/online accountant is a perfect solution for small and medium-size businesses, especially if your business deals mostly with online banking and credit cards, online transactions, online invoicing, and can do most (or all) accounting in Xero, QuickBooks Online or similar online software.

Virtual accounting firms offer a full range of financial services, including bookkeeping, accounting and tax planning.

It’s often a much more affordable solution since virtual accounting firms charge a flat monthly rate which is typically much lower than that of a local accountant. The added benefit is the cost predictability, so you don’t need to worry about surprise extra costs.

Most small businesses see the advantage in hiring a virtual CPA. Other businesses like e-commerce or small tech start-ups also benefit from the flexibility, lower costs and a full range of financial services that online accounting firms offer.

So, if you’re already comfortable handling financial tasks online, then outsourcing your accounting to a virtual CPA firm may be the perfect solution for you.

Conclusion

As a business owner, chances are you’re extremely busy or you are not a financial expert. So, accounting is one of the first things you should look to delegate and outsource.

In short, outsourcing accounting can give you more time to focus on growth and customer service while saving money by not having to hire and manage an in-house accountant or bookkeeper. It also gives you access to accurate information which will protect you from penalties and taxes, as well as help reduce your tax liabilities.

At Bronte Bay, we offer outsourced accounting services to small and medium businesses. You can get access to a dedicated team of virtual accounting, bookkeeping and tax experts that work with you 1:1, helping you keep your finances in check.

Contact us for a free consultation today!

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