A fair number of start-up owners resort to undertaking bookkeeping themselves. After all, hiring a full-time, in-house accountant can be unbelievably expensive! While outsourced accounting has been the go-to option for many businesses, for those just starting out, taking on the accounting part is a tempting challenge.
As a business owner, if you too have been taking care of your business’ finances and accounts yourself, it’s time to realize that you’ve got a bit too much on your plate.
But outsourcing accounting services is not as easy as it seems: one wrong turn and you could be setting your company up for loss!
Don’t let this worry you though; we’ve rounded up some common mistakes business owners make when outsourcing accounting services.
Not Shopping Around
Hiring an outsourced accounting firm that has been referred to you by a friend or a relative is certainly a bad idea, that is, if you don’t shop around first. Just because they’re good for someone you know, doesn’t automatically make them the best outsourced accounting provider for you!
Even if you do zero in on the best accounting outsourcing firm, it’s advisable to take some time out to research other firms. Compare services provided by each firm, go through client testimonials and reviews, and check the company’s track record.
Going for the Cheapest
While the primary motive of most companies by outsourcing accounting services is cost saving, picking a firm that provides such services for the cheapest rates might backfire. Sure, you’re looking to outsource so you don’t have to bear the costs associated with hiring a full-time employee, but bear in mind that low rates often translate to less efficiency.
Refrain from compromising on quality just to save money! Plan your budget well and stick to it so you don’t make the mistake of hiring an accounting firm that lacks the set of skills you need.
Not Communicating Clearly
Transparent communication is the key to a healthy relationship, and a service like accounting, that needs a sort of intimacy with your business, can only work for you if there is clarity at both ends. Right from the start, be honest to your outsourced firm with regards to your needs and the current state of your books.
Be sure to disclose all relevant and necessary details to your accountant- this will help them identify problems that need fixing and come up with the right solutions for all your accounting issues. Remember that the goal of communicating well with your outsourced accounting firm is to have a clear understanding of where your company stands and what can be done for the future!
Cultural differences can lead to misunderstandings, and a huge time difference can impact relationships negatively. As such, before finalizing everything, do give a thought to where your outsourced firm is located.
Note that it might be cheaper to outsource accounting services, but hiring a firm that’s based in a different country might not be a beneficial move. Culture standards can vary significantly and your team’s learning curve can cost you valuable time and money.
Believing the Outsourced Team Is Fully Equipped
Outsourcing accounting services doesn’t mean that you will have a team that is fully equipped with the knowledge and skills necessary to help you sail through all difficulties. Skilled individuals might need to undergo training for particular projects!
Moreover, if you make the wrong choice, you’re bound to face issues at later stages. For example, CPA firms have well-trained accountants and focus on audits or tax write-ups and financial advisory services. If you hire a CPA firm, your company will only benefit if the former has expertise in processing large volumes of accounting transactions in an efficient and timely manner.
Stressing over Information Transfer
It goes without saying, sending sensitive financial and tax information over e-mail carries an inherent risk. But it’s no use stressing yourself out over this- just get a secure channel to manage all your documents!
Cloud-based accounting software allows you secure and quick access to all your finance-related documents, giving you the chance to make your office paperless. Such software lets you attach scanned receipts, spreadsheets and documents to stored files easily, helping you stay organized.
Did you know that 40% of entrepreneurs spend more than 80 hours each year just managing their finances? Don’t be that entrepreneur, put your time to better use by outsourcing your accounting requirements!
With the information provided here, you now know what rookie mistakes you need to steer clear of while outsourcing. So weigh your options well and make the right choice!