As a small business owner, you likely find it challenging to utilize your time efficiently. According to a survey conducted by the National Small Business Association, approximately 40% of entrepreneurs spend more than 80 hours each year managing their finances.
If you’re in any type of business outside of accounting, you probably did not become an entrepreneur to meticulously keep track of financial records. Managing finances is one of the hardest things about running a business and mistakes can be costly.
Is Accounting Software Enough?
Business owners often turn to accounting software solutions to help manage their financial accounts. There are great packages available for small businesses, but even the best accounting software is no substitute for the expertise of a qualified accountant. You still need someone who understands how to accurately install and set it up for your specific needs. Precise data entry is critical. Interpreting the data is another requirement. Software updates will be periodically required
This can all be time consuming and frustrating for anyone unfamiliar with accounting software and practices. Unless there is someone else qualified and dedicated to this work, it falls on the shoulders of the business owner to manage.
Benefits of Outsourcing Your Accounting
The Small Business Administration recommends outsourcing because it allows small business owners to get more done without significantly increasing their full-time staff. Outsourcing certain aspects such as accounting, human resources, and marketing allows business owners to control costs, increase efficiency, and focus their efforts on the things they do best.
Small business owners are sometimes hesitant to outsource their bookkeeping and accounting but the truth is that relinquishing that control has many advantages. According to the National Federation of Independent Business, most new businesses fail due to a combination of problems including a lack of planning and failure to seek professional advice. Unless you are a financial expert, managing your business finances on your own can result in costly mistakes.
Hiring a full-time accountant is usually cost-prohibitive for most small businesses, but when you outsource, you have access to a high level of expertise at an affordable cost. Benefits of outsourcing your accounting tasks include:
1. Cost Effective
Many new business owners think of outsourcing as a big expense but the alternative is paying the salary of an in-house accountant or trying to do it yourself. If you try to tackle bookkeeping, accounting, payroll and tax filings on your own, you'll likely make mistakes that can end up costing you money.
An experienced business accountant will be able to minimize your tax liability, increase your profitability and ensure that you always have access to accurate financial statements and reports.
2. Efficient Use of Time
Time management is key to business success, especially in the beginning when you can’t afford to hire a lot of staff. Reviewing your spending, writing reports, dealing with payroll, and collecting receipts takes a lot of time that could be better spent growing your business.
When you outsource to a reputable and experienced accounting firm, you’ll have peace of mind knowing these tasks are being completed accurately and in a timely manner. You will be able to focus on the aspects of your business that you do best.
Even people who successfully manage their personal finances are challenged by the accounting requirements of running a business. An experienced accounting firm has worked with many types of businesses and will have the expertise to handle all aspects of business accounting. These tasks can include bookkeeping, payroll processing, and tax management. Having this expertise on your side results in more effective financial management for your business and allows you to make better decisions.
4. Checks and Balances
Hiring an external accounting firm offers more data security for your business. Accounting firms have systems and procedures in place to provide internal controls that reduce the risk of fraud or theft. A layer of review ensures there are fewer mistakes, saving time and frustration. With established processes and multiple checks and balances at every step, your financial records will be accurate and timely.
5. Access to Expert Financial Advice
An experienced accounting team can work with you to provide a deeper understanding of your business beyond just the numbers. Outsourcing your accounting can help improve your productivity, forecast and plan for business cash flow, and implement effective tax strategies.
The advice of an experienced business accountant will help you develop a better understanding of your finances and give you the information you need to make the right decisions as your business changes and grows over time.
6. A Customized Plan
If you are a small or medium-sized business, you can get the accounting services you need by outsourcing instead of hiring full-time staff in-house. When you outsource your accounting, you can specify the amount of work you need, whether it’s full-time support, occasional bookkeeping services or a level of service that changes throughout the year. As your business grows and changes, you can adjust your service plan to get the support you need.
At Nolan Accounting Center, our team of accountants and CPAs provide accounting, tax preparation, bookkeeping and payroll services to small business owners in Southeast Wisconsin including Milwaukee, Greenfield, New Berlin, Muskego, West Allis and Waukesha. We look forward to helping you with all of your accounting needs.