The early days of a business mean taking on the lion’s share of all the work. You talk with customers, deal with inventory, and handle things like bookkeeping. If you’re like a lot of business owners, you quickly discover that bookkeeping routinely gets pushed until later or tomorrow.
You probably also discovered that pushing that bookkeeping came with some consequences. At the least, you can end up with working capital locked up in invoices that went out late or not at all. Not to mention the stress involved with getting the paperwork in order by tax time.
As your revenue soars into the $2M and up range, it magnifies those problems. That means experienced business owners with profitable companies different solutions. One solution is outsourcing the work, which brings a lot of benefits to the table.
When you outsource a small company, you typically get someone with a limited amount of experience and expertise. They might hold a bookkeeping certification, but that’s likely it.
When you outsource bookkeeping for a multimillion-dollar company, you’re almost always outsourcing to an accounting firm. Odds are good that the same company will deal with your general accounting and taxes as well. That means you’re enjoying the benefits of their enhanced accounting education and experience.
That kind of business will make sure your books stay in order because they don’t want a mess when you come in for accounting and tax business.
It Lets You Pursue Other Business Goals
If you must handle the bookkeeping yourself, it’s time you lose from other duties. As a business owner or CEO, it’s on you to build the business.
For example, you likely take the lead role in most major negotiations with other businesses. You can only delegate so much of that work. At a certain point, you must be in the room.
You also take a lead in developing new ideas and opportunities. Specifically, you’re the person who will greenlight any new ventures. You can do that far more effectively if you know the books are in order and can get a sense of your available capital at a moment’s notice.
For higher-revenue companies, dealing with bookkeeping can prove a full-time occupation for business owners without the right support in place. Handing the entire task off to a professional firm leaves you free to devote yourself to new ideas and opportunities.
In a perfect world, you could trust that the people you hire will not leak your financial data to others. Yet, people gossip around the watercooler. They talk with their spouses.
The financial state of your company is often a topic of interest for your employees, which makes your bookkeeping staff a weak link in the security of your financial data. Even worse, it’s very difficult for anyone to prove that someone in-house talked about the financial data.
Even worse, a disgruntled employee might leak the actual data to a competitor or the public.
When you outsource your bookkeeping and accounting, you actually shore up the security of that information. If the information leaks, you can make a pretty solid assumption that the leak came from your bookkeeping company. If the information was just gossip, it’s bad for the company’s reputation.
If they leak actual data, they may face legal action.
Knowing all of that, accounting and bookkeeping businesses put a high priority on confidentiality and security.
Virtually all businesses file quarterly taxes. The weeks leading up to those filing dates can prove nightmarish if your bookkeeping is slipshod or just not up to date.
Imagine tracking down a discrepancy from two months ago. How many transactions does your business process in an average day? If you’re pulling in a couple million in annual revenue, it’s probably a substantial number.
Now, multiply that number by 30 days.
When you outsource the work, you never worry about those problems because the company must reconcile the books at least once a month. That means you get clean numbers you can just hand your accountant when tax filing rolls around.
One of the first things business owners do when bookkeeping falls behind is look for someone to hire for the job. Yet, bringing on a full-time bookkeeper comes with a lot of expenses, such as:
- Base Salary
- Ad costs
- Employee time spent on interviews
All of that isn’t necessarily a solid use of your funds. Plus, you must always worry about the personality and culture fit issues. Someone can look good on paper and interview well, then clash badly with other key players in your organization.
Outsourcing to a professional firm means you avoid the hiring process entirely and largely avoid personality or culture fit issues.
Saves You Money
As your revenue grows into the $2M and over range, your bookkeeping will get more and more complicated. You’ll likely get money through multiple revenue streams, some of them online and some of them offline. All of these revenue streams compound the work a bookkeeper must manage.
Instead of needing one in-house bookkeeper, you can find that you need a team. All of those people need salaries and full-time employees need benefits.
A solid outsourced bookkeeping company will routinely maintain solutions that let you scale up your services as needed. Yet, it will ultimately help reduce cost when compared with in-house staff.
Business Owners Should Outsource Their Bookkeeping
Business owners often keep things like bookkeeping in-house so they can maintain absolute control over the process. Yet, keeping the process in-house can often prove more troublesome than beneficial.
Your financial data security can suffer. The books may not get reconciled in a timely manner. You may even find it necessary for you to manage it yourself.
Outsourcing can actually leave you with a cheaper, more efficient, and more reliable bookkeeping process. All of which makes you more productive as a business owner. It also makes tax time less stressful.
Are you tired of problems with your in-house accounting or bookkeeping process? Contact Sterling Tax & Accounting today for information on our business bookkeeping services.