How Outsourcing Bookkeeping Services Can Help Your Startup Grow
Did you know that 90% of companies fail? What’s more surprising is that 16 percent of them fail because of inadequate financial and accounting administration.
As startups have limited financial resources, it is critical that they handle their money correctly. You may have a fantastic startup idea, but if you don’t handle your money correctly, you won’t last long in a competitive work environment.
Startups compete with well-established corporate brands at the top. As a result, they need accurate and expert-level accounting services within their limited budget.
That means a company needs high-quality, inexpensive, and comprehensive accounting services. In summary, a startup needs accounting outsourcing services that can help it grow. They need assistance from an accounting outsourcing firm that can provide monetary planning, payroll, business licensing, cash flow analysis, and other services.
What Exactly Is Bookkeeping?
Bookkeeping is the activity of documenting and arranging all business transactions that occur throughout the course of a business. Bookkeeping is an essential component of accounting that primarily focuses on documenting the business’s day-to-day financial activities.
All financial activities, such as sales, revenue, taxes, the interest generated, payroll and other operating costs, loans, investments, and so on, are documented in books of accounts.
The reliability of the entire accounting process that the company follows is determined by how the bookkeeping is handled. Hence, bookkeeping ensures that financial transaction records are up to date and, more significantly, accurate.
The words bookkeeping and accounting are often used interchangeably; however, accounting refers to the entire process of managing a business’s or individual’s finances, while bookkeeping refers to the duties and procedures involved in documenting financial transactions.
Common Bookkeeping Tasks
The person(s) in charge of accounting for a company would record all relevant transactions, including but not limited to:
- Payments to suppliers for expenses
- Payments on loans
- Invoice payments from customers
- Keeping track of asset depreciation
- Making financial reports
Why Is Bookkeeping Important?
While it may seem self-evident, comprehensive and accurate bookkeeping is critical for companies of all sizes. Bookkeeping seems to be simple at first glance, but it rapidly gets more complicated with the addition of tax, assets, loans, and investments.
The real goal of accounting is to track a company’s financial operations, which enables you to maintain an up-to-date record of current incoming and outgoing amounts, amounts due by customers and the business, and more.
The Advantages of Outsourcing
As mentioned above, it’s crucial for startups to make the most of the limited funds that they have. Hence, by outsourcing their bookkeeping needs, they can benefit from multiple advantages like:
Leverage Technological Advancements
It’s no secret that the bookkeeping and accounting sector has undergone a technological revolution. As their job was mostly paper-based, a bookkeeper used to come to the office in person. Furthermore, the program was operated on a local computer that was only accessible from the workplace. However, this process has been permanently altered with the introduction of cloud applications!
Get rid of the need to collect, organize, and store receipts. Extend an invitation to your books being remotely reconciled every month on the dot. You will never again be restricted to sharing your records with your accountant at the end of the year, usually too late for optimal tax planning. Instead, you’ll be able to provide your accountant remote access to your online account throughout the year, ensuring you have sufficient time for effective tax preparation.
Save Time & Overhead Costs
Taking care of your own books while running a company is not an effective use of your time. Sitting on the sidelines and inputting invoice information and making entries will consume your valuable time. Accounting and bookkeeping are both full-time jobs. Managing your duties independently is beneficial, but it should not come at the expense of your main work schedule.
Bookkeeping should never be the responsibility of the CFO or non-accounting employees. Account management is difficult for everyone, and your company was not designed to spend time on bookkeeping. Untangling errors may also be time-consuming and a pain in the neck when you have a normal job waiting for you.
In such a case, having an experienced outsourced accountant and bookkeeper who can handle your accounts effectively and without mistakes is always a good idea, and all of this falls under the category of outsourced bookkeeping services.
Scalability and Continuity
You may be reading this because your bookkeeper, controller, or CFO has recently given notice. You suddenly realize you just have two weeks to find someone to fill this critical position. Will you be able to complete payroll or issue bills on schedule in two weeks if you can’t locate a suitable replacement? Would you have the direction and support to execute on a plan if a key member of your management team left at a time when you were contemplating a major move for your business?
Unfortunately, competent bookkeepers, controllers, and CFOs are in limited supply. The finest and simplest option is to outsource to a company with whom you can collaborate on a long-term basis, like CharterCPA.
Reduce The Chances of Fraud
Fraud is an issue that affects every company, no matter how big or little. The proprietors of the business must set aside resources for avoiding fraud and dealing with mistakes. Fraud is unavoidable, but it may be greatly minimized with the help of outsourced accountants. Accounting services are outsourced because the responsibilities are handled independently by experts, which aids in the prevention of fraud and malpractice in a company. A team of experts overseeing a single company ensures that there are no discrepancies in reporting and transaction management.
Expertise at Reasonable Prices
Startups often employ part-time or unskilled accounting specialists because they lack the funds to pay experts. Now, a less skilled bookkeeper can only assist to a limited degree. You can’t depend on a part-time bookkeeper for specialized services like tax preparation or company analysis. You need someone with extensive financial and accounting knowledge and expertise.
As accounting outsourcing firms allow startups to employ or remove services at any moment and only pay for the services that they utilize, obtaining expert services on a budget is feasible with outsourced corporate assistance. At CharterCPA, we have a staff of accountants, bookkeepers, and other financial experts that can give the finest services for the right amount of money.
Complete Dedication and Support
Your part-time bookkeeper is dealing with a lot of customers at the same time, therefore they won’t be able to concentrate on your job for long. It may be difficult for you, particularly if you need work done quickly.
On the contrary, while working with an outsourced accounting service provider, you may call them at any time, and someone will always be ready to assist you. Outsourced businesses have big teams that are ready to assist you throughout normal business hours.
Furthermore, if you wish to offer outsourcing firms additional work in a month, they always have the capacity for extra work.
Better Tax Season Preparation
Your in-house accountant or bookkeeper may have devised a methodical strategy for managing your day-to-day operations. However, when tax season arrives, you will need the assistance of a team of accounting experts.
Outsourcing accounting service providers already have a large number of tax specialists on staff, and they have the capacity to complete your book on time. As a result, when the tax season crunch begins, you may utilize accounting services for small companies that are outsourced.
Burnout is a word used to describe an excessive expenditure rate. If you continue to spend at a high pace, your company will have to close down shortly. It is critical for startups to determine their burnout rate in order to increase their revenue scale. A skilled accountant can only assist startups in determining their burnout points.
When a startup outsources accounting, it may come with many advantages. They can reduce the turnaround time, save expenses, get access to experts, and do so much more. Overall, it is safe to conclude that outsourcing may help companies thrive and develop in a variety of ways.