If there’s one thing we’ve learned after spending the past 15 years cleaning up people’s QuickBooks mistakes, it’s this:
Most small businesses do an awful job with their accounting.
We know, that’s a pretty harsh statement. But it's true. The vast majority of small business owners buy a piece of software and try to do it themselves, or hand it off to an assistant or part-time bookkeeper who doesn't know what they're doing, and that’s the beginning and end of their accounting strategy.
Unfortunately, building a solid accounting system requires a lot more effort than that. Although the software and tech tools are more amazing than ever, accounting is complex by nature. And if you don’t get the right processes in place, it can quickly become a full-time job.
If you don’t have the time or patience to master the DIY accounting approach, it might make sense to think about outsourcing some of your accounting or finance functions. Seriously. Large companies have been using this strategy for years, it's called BPO (or “Business Process Outsourcing”).
Now that the cloud is here, it’s both practical and affordable for small businesses to use the same strategy. Here are four reasons why outsourced accounting is worth considering:
#1 You don’t have to hire an employee
In our opinion, 95% of small businesses don’t need a full-time bookkeeper or accountant. There’s usually a lot of work required to get your system up and running, but once that’s done, you probably won’t have enough work for an employee.
With outsourcing, you can hire an online accountant to log in and work on your books for 30 minutes a day, or three hours a week, or whatever it takes. This is the kind of lightweight, flexible approach that makes a lot more sense for small businesses.
#2 expertise without the learning curve
When you hire a professional accountant, you’re basically hiring an experienced pro who can do the job better and faster than you can. Although their services aren't free, they do the same type of work over and over again and are very unlikely to make mistakes.
What’s more, outside accountants typically work with a wide variety of clients and can apply the lessons they’ve learned to any situation. If you're facing a tricky accounting or tax problem, chances are they’ve seen it before and will know exactly what to do.
#3 easier to manage
As we mentioned earlier, most small businesses don't have an organized accounting strategy. Instead, they hire an assortment of vendors and piece things together as they go: a part-time bookkeeper now, a payroll service later, a software or IT consultant when something doesn't work, and a CPA when tax time comes around.
The problem with this approach is that it makes your accounting fragmented and difficult to manage (too many cooks in the kitchen). But with an outsourcing strategy, you can hire a jack-of-all-trades accountant or firm to help build your system and handle all your accounting needs together: bookkeeping, payroll, financial reporting, and tax. This is far simpler than working with multiple vendors, and it’s a lot easier to manage because everything’s under one roof.
#4 A second set of eyes on the books
Last but not least, outsourced accounting provides the one thing that most small businesses are in dire need of: an independent, professional set of eyes on the books.
In addition to overseeing your system and preparing accurate financial reporting, an outside accountant can help you interpret your numbers, spot problems and patterns, and provide useful advice when needed. This type of “independent advisor” role is far superior to what an in-house bookkeeper or employee can provide.
The Bottom Line
In our opinion, outsourced accounting is a complete game changer for small businesses. It provides a better, faster, and easier way of handling your accounting operations than ever before. In addition, it enables you to work with an experienced accountant right from the start and avoid the rookie mistakes that most small businesses make: poorly designed systems, bad bookkeeping, haphazard financial reporting, etc.
If you still want to handle your accounting in-house, we don’t want to discourage you. But we’ve been in the game for a long time and we feel that a cloud-based system + a monthly outsourced accounting service is the ideal one-two combination for most small businesses. If you need professional accounting on a part-time basis, and you don’t want to hire an employee or build your own accounting department, it’s the perfect choice.