Accounting and bookkeeping—whether we care to admit it or not—are often the lifeblood of running a business. When a business’s primary concern is improving its bottom line, the accounting decisions, strategies, and systems it develops can have a tremendous impact on its ability to succeed.
Because the need for developing these sorts of systems is simply unavoidable, all businesses will need to begin by making several important decisions. Abstaining from bookkeeping is simply not an option. Even in the very early stages of running a business, the owner will need to decide whether it makes sense to keep these functions in house or to reach out and hire an outsourced accounting firm.
Full-service accounting firms can help your business with all things financial. This includes data analysis, back-office accounting, tax preparation, statement generation, financial forecasting, and more. While some business owners will want to maintain control over their books for personal reasons, there is no doubt that hiring a professional firm can be very beneficial.
If you are a business owner, you might find yourself wondering, “Is it time for me to finally hire an outsourced bookkeeping service?” Naturally, before you can answer this question, it will be important to take a look inward and evaluate the state of your business. Below, we will discuss six common signs that it might be time to make this crucial change.
One of the most common reasons that thousands of business owners choose to outsource their bookkeeping needs is the need to save time. Even simple bookkeeping can require owners to dedicate 3-5 hours every month and, simply, that is often time they simply don’t have.
If you’re hoping to have some time to focus on other components of your business, such as the components that actually generate revenue, then hiring an outsourced accountant might be your best bet. In many cases, the amount of revenue you could generate during the time that would be spent doing bookkeeping can offset (or at least significantly reduce) the hourly cost of hiring an accountant.
According to the Tax Policy Center, about one-quarter of all earned income tax credit (EITC) claims were “improper”—and this is just one of many tax credits that business owners might consider applying for. Errors on your financial statements and tax filings can be a very big deal. These errors can result in financial losses, missed payments, and even legal consequences.
Accounting is not always intuitive. If you have had errors on financial documents affecting your business in the past, it might be a good idea to take a step back and hand pass of your bookkeeping needs to an experienced professional. They’ll be able to ensure that all information and claims are entirely accurate and, furthermore, help reduce your personal liability.
About 73 percent of businesses are sole proprietorships and this business structure is especially common for newer businesses. However, there are many situations in which a business owner might consider undergoing some sort of structural change. Switching from a sole proprietorship to an S Corporation, for example, can help reduce tax, financial, and legal liabilities.
Enduring a significant change can be challenging, which is why you’ll want to be sure to have an experienced accountant (or fractional CFO by your side). Beyond simply restructuring your business, you might also want a professional to help while you open a second location, add new employees, or make a significant purchase in the name of your business (such as real estate).
One of the ways that accountants can help their clients save money is by finding opportunities to reduce their current tax liability. Your business will almost always need to pay some amount of taxes every year, but the amount you end up paying can vary depending on the specific accounting choices that you make.
A good accountant will help make it easy to itemize deductions, identify revenues and expenses, and help find legal ways to reduce the taxes your business ends up owing. In many situations, reducing liabilities is easier than increasing cash flows, meaning taking a good look at your taxes might be the best way for you to improve your bottom line.
As any experienced bookkeeper will surely tell you, data is essential to making business decisions. If your business is unable to determine how much liquid cash you currently have access to, it will be impossible to weigh the pros and cons of new financial opportunities as they inevitably emerge.
“The numbers have to be right and there are specific accounting methods that are necessary for eCommerce and technological companies,” claims one leading eCommerce accounting firm. Investing in additional resources and taking the time to ensure you’re working with the best data available will help position your business for long-term success.
The future is full of uncertainty and, for most business owners, having access to someone who can make sense of this uncertainty can be extremely valuable. A good bookkeeper can help your business quantify your long-term goals, identify relevant variables, and help you create a clear roadmap that can take you from where you are in the status quo to where you want to be.
When meeting with a prospective outsourced accounting firm, take some time to learn about how the company creates projections, models, and future plans. They’ll be able to answer your questions and, at the same time, also learn a little bit more about your business. The more your business can do to prepare itself for long-term change, the more likely these goals will actually come to fruition.
The best accounting solutions for your business will depend on many factors, including the structure of your business, your personal skills and constraints, and who you hope to eventually become. But if your business is currently facing one or more of the challenges presented above, it may be time to consider hiring an outsourced accountant.