There’s a million and one ways to approach your accounting – that includes outsourcing. However, like with everything in life, there are pros and cons to outsourcing your accounting. Depending on your situation, outsourcing may or may not be the best option for you. Various factors can come into play that will affect you financially, so it’s important that you are aware of the advantages and disadvantages. Fortunately, that’s why I’m there. Whether you’re a small business or major corporation, here’s why you should or shouldn’t outsource your accounting.
Pro: Outsourcing Saves Time
As a business owner, I know you’ve heard the phrase, “Time is Money”. That holds true when it comes to your accounting. Crunching the numbers can take a considerable amount time – time that could be better allocated elsewhere. By outsourcing your accounting, your resources can be focused on other aspects of your business while someone else does the heavy lifting. Depending on your company’s size, it may cost more but the flexible schedule will open up better opportunities for growth.
Con: Lack of Access & Control
Unfortunately, when you outsource your accounting, there is a certain amount of control that you will be expected to relinquish. Because your accounting department isn’t right down the hall, chances are you won’t have as easy access to your financial information than if it was. That means making calls, sending emails, or scheduling meeting to find out how you’re doing financially. Outsourcing may save you time but control is something that might have to be sacrificed.
Pro: Cuts Overhead Costs
Payroll taxes, benefits, office space, a weekly paycheck – these are all things that you’re going to have to cough up if you hire an in-house accountant. On the other hand, you bypass these overhead expenses by outsourcing. While bigger companies may be more economically inclined to establish their own accounting departments, most small businesses cannot afford to. Finding space in the budget for an accounting service is much more efficient than building a department from scratch, at least it is for some. It all depends on your unique situation.
Con: Increased Level of Risk
As previously stated, outsourcing comes with lack of control. That being said, your financial information is at a slightly higher risk of being compromised in someone else’s hands compared to your own. While it can be assumed that your accounting firm can be trusted, you’re not there to keep an eye on things. That adds a sense of uncertainty, especially when it comes to your financial data. With your accounting being performed in-house, you can keep a closer eye on your company’s finances and out of malicious hands.
Pro: Guaranteed Professionals
Sometimes, professionalism is priceless. When outsourcing your accounting, you know exactly what you’re paying for. Accounting firms employ of some of the best financial professionals in the industry. These individuals make it their priority to provide the highest quality of service at a fair and cost-effect rate. The margin of error in regards to accounting is so small that only a true expert should be handling your finances. That’s exactly what you’ll get by outsourcing your accounting. These guys and girls don’t believe in cutting corners and neither should you.
Con: Potential Changes in Structure
Remember that an accounting firm is a business, just like you. They have their own financial and structural matters to contend with in addition to handling your accounting. That can potentially mean changes within their business, which can affect the quality of your services. Corporate restructuring audits by the IRS, your accountant leaving the company; these are all things that can occur within an accounting firm that will have a direct effect on you. This alters how fast you receive information or if anyone is keeping an eye on your finances at all. It’s uncertainty at its best but unfortunately, it comes with the territory.
In the end, your decision to outsource your accounting should be determined by whether or not the pros outweigh the cons and vice versa. Outsourcing isn’t for everyone but it does have its perks. I hope I was able to swing you one way or another today and if not, there’s always tomorrow. Keep in mind that accounting is a pivotal part of managing any business so if you’re going to do, you might as well do it right. Best of Luck!