Outsourcing Accounting, Bookkeeping, and Payroll: Is it Worth it?
You may think your company saves money by handling bookkeeping, accounting, and payroll services in-house, but many businesses find that’s not the case. Running a small business requires expertise and a level of commitment that only you can bring to the table. As you’ve probably discovered though, there is a ton of (boring but) necessary paperwork that comes with the territory. Among other things, bills must be paid and your checkbook must be reconciled on a timely basis. Unfortunately, there’s not many choices available to you.
- You can complete these tasks yourself, although it means taking precious time away from actually running your business.
- You can hire a bookkeeper to take care of the tasks in-house. Beyond the salary of a bookkeeper, you’ll have to provide office space, work around illness, pay any overtime wages plus fringe benefits, and find the time to oversee the bookkeeper’s work.
While both of these options could work for some businesses, they’re not a great fit for most. The good news is that there is a better way to handle your bookkeeping, accounting, and payroll needs. Many business owners rely on professionals to administer their accounts payable, keep their checking accounts in order, manage their payroll, and handle other bookkeeping chores. If you’re one of the multitude who find themselves buried in a mountain of unending paperwork, you might be interested in hearing some of the ways that outsourcing certain tasks can free up your time and energy from complex and time-consuming chores.
- You gain access to high-level accounting skills without having to hire or train qualified personnel.
- You reduce or eliminate potential errors, omissions, fraud, and other problems that can crop up by doing accounting, bookkeeping, and payroll in-house.
- The time, money, and resources can be spent on more important, profitable activities in your business.
- You might actually save money with outsourced services. Consider all the costs of doing it in-house: recruiting, salaries, taxes, training, paid time-off, and benefits. For many companies, it is cheaper to turn these important tasks over to professionals who specialize in them.
- Your business will stay in compliance with laws, regulations, and tax filings.
- Your payroll can be run according to your pay schedule, payroll deposits will be made on a timely basis, and your reports will be accurately prepared and filed to meet government deadlines and changing payroll laws.
Outsourcing services commonly include basic bookkeeping, accounts receivable, accounts payable, payroll, strategic plans and budgets, internal auditing, and more. Outsourcing bookkeeping, payroll, and general accounting can mean different things to different businesses, too. Some employers outsource all transactions and do not keep a bookkeeper in-house.
Other employers have bookkeepers on staff, but realize they have limitations and want the oversight of another professional for certain accounting transactions. In other situations, their in-house bookkeepers may not have the time or experience to take on some tasks. For example, are your books well-adjusted? You (or your bookkeeper) may or not may not know what adjusting entries need to be made and how to calculate them. That’s why so many businesses rely on their accountants for this important function.
Here are a few of the adjustments that should be entered into your books at the end of every accounting period:
- Accrued expense: These include wages earned but not yet paid. For example, if you issue paychecks for the last half of September on the 5th of October, you’ve accumulated an expense that needs to be reflected in September. The only way to show this is with an adjusting entry.
- Prepaid expense: If you write a check in September to pay for October’s business insurance, that expense should be shown in October. If an adjusting entry is not made, it may show up in September.
- Depreciation/Amortization expense: Since this is a non-cash expense, there is no function that gets this amount into your books unless you put it there. You also want to be able to take advantage of depreciation elections such as section 179. Generally, your accountant gives you these figures so that you can enter them into your books.
These are just a few examples of adjusting entries that are crucial to accurate bookkeeping. The specific entries depend on your business and its unique needs. If you’re not recording adjustments before closing the books each month, you should consult with your accountant to manage these difficult tasks.
- Ensure that bills are checked for accuracy and paid by or before their due dates to keep you in good standing with your vendors.
- Keep track of payment terms and make sure you pay within the discount period so you get the lowest price available.
- Handle vendor calls, and alert you to possible problems.
- Monitor sales tax charged (or not charged) by vendors.
- Setting up and remitting sales taxes.
- Keep your checkbook up-to-date.
- Reconcile your checking account with your bank on a monthly basis so you always know what is available to you.
- Financial statement preparation for use by both owners and lending institutions.
- Accurate and timely payroll for both employees and 1099 vendors, including quarterly and annual required filings.
Use a certified public accounting firm to manage these tasks and more. You’ll save time, money, and hassle. Contact us at Crippen & Co. to learn more about how outsourcing your accounting, bookkeeping, and payroll can benefit your business.