Let’s face it. Accounting is not the exciting part of running a business. Compared to expanding product lists, dealing with customers, discussing with suppliers, or managing colorful personalities in the human resources roster, keeping track of debits and credits is just not as exciting. It might be time to outsource accounting.
Who wants to look at spreadsheets all day?
But as a savvy business owner, you also realize the importance of balancing your books. Being on top of cash flow keeps your business healthy and viable. When businesses lose money, that’s when they close and shutdown.
A majority of businesses fail within the first five years. According to a recent study, poor cash flow management or poor understanding of cash flow attributes to 82% of those failed businesses. In other words, businesses fail when bookkeeping has gone haywire, making it a struggle to keep up with suppliers’ invoices, company expenses, daily operating expenses, and the like.
How can business owners keep the books pristine? For many, it’s a matter of learning to let go and to delegate bookkeeping in order to keep the business alive. Being a jack-of-all-trades may seem like an ideal cost-saving scenario. However, when it could adversely affect your business, it’s time to consider outsourcing your accounting needs. Here are eight warning signs that you need an outsourced accountant:
You are experiencing burn-out
As the big boss, your plate is a veritable buffet of endless to-dos — from managing employees and keeping tabs on daily operations to being on top of the inventory list and taking care of customers. When you already have a head full of plans, adding tasks that require meticulous attention to detail will only distract you from focusing on the more important aspect of growing the business and ensuring profits. It is easy to succumb to burn-out. Outsourcing bookkeeping is a sure fire way to give yourself some much needed downtime. Hiring a virtual CFO, an off-site Certified Public Accountant (CPA) or outsourced accountant will give you more time to focus on more important aspects of the business.
You have zero accounting experience
Do not bite more than you can chew.
As a business owner, undoubtedly you can handle simple math. After all, you wouldn’t have been able to start your small company if you did not know it. However, balancing ledgers and a host of other details is best left to a professional accountant. It may seem like basic addition and subtraction, but accounting is much more than that!
When you hire a professional accountant or a CPA, they have the educational background, the training and the experience to complete not only basic business accounting functions but also a variety of other financial and business management services as well. For instance, only a CPA can legally generate financial statements and documents that can be used to secure bank financing. Additionally, they can represent you during an IRS audit.
These professionals have been playing the numbers game with great precision. It is very easy to make errors when you’re not familiar with what you’re doing. Erroneously putting one wrong digit or one misplaced decimal point changes everything and with possible detrimental consequences. This kind of mistake is not welcome in any business, so it is best to leave accounting to the professionals.
You are faced with cutting costs
If the idea of hiring a professional accountant while seeking ways to cut costs seem counter-productive, think again! A professional accountant will cut costs by minimizing errors and promoting productivity in your business. After all, when your time is freed up to work on your business (instead of in your business), you can focus more on how to increase revenue.
The right professional accountant also will provide helpful interrelated business services, including:
- Strategic business planning
- Succession planning
- New business formation
- Tax planning/preparation
- Budget preparation and monitoring
- Trend analysis
- Assistance in defining long-range plans and the quantification of goals
- And more
Additionally, outsourcing accounting as opposed to hiring a full-time accounting staff will save your business the cost of employee benefits, payroll taxes and health insurance.
Your business is experiencing rapid growth
When we speak of growth in business, this is an exciting period. Expansion plans and development projects are always welcome because it means a bigger client base and more revenue.
However, more staff hired and more work means more numbers to track. At a critical juncture like this, it is important for business owners to keep focused on operations.
Hiring a professional accountant will ensure that your company grows by leaps and bounds. An experienced outsourced accountant will improve your business by preventing blunders in your business. When business owners are forced to divert their attention during periods of growth, these rapid changes make it more difficult to track the details that matter.
Enter an outsourced accountant who knows which areas of the business to keep an eye on and who can expertly guide their clients on a path to success with increased business intelligence.
You are a one-man show
When only one person is handling all the business’ finances, it’s time to find other key players to share the burden.
If working on the company profits and liabilities is too time consuming, which causes a business owner to neglect other business functions, then it is high time to call in reinforcements.
Outsourcing accounting gives you a professional and objective third party view of your bottom line and access to large resources without having to hire and train new financial staff.
Your ‘bookkeeper’ is pulling double duty
When you ask a staff member to oversee finances and track ledgers as a side function, you are not putting your finances where they should be: up front and center.
The whole point of running a business is to make money. When your so-called in-house accounting staff isn’t focused on revenue streams, cash flow and budgets, business owners can’t make the necessary decisions to grow their business, let alone run their business.
Even if the in-house staff seems to have everything under control, who is going to perform quality control? These crucial company positions require professional checks and balances. It’s essential that business owners not become complacent about the financial foundation of their business. It may seem efficient to hire a bookkeeper and forego higher-level support. In reality, this puts your company at a great risk.
You need help with taxes
Tax preparation and planning is the No. 1 reason to outsource your company’s accounting tasks. Taxes can be very complicated, especially for business owners who have a lot of details to consider.
If you don’t want to be anxiety-ridden during tax season, hire a professional who is well-versed in dealing with the intricacies of doing business and the IRS. A virtual CFO or CPA also is attuned to the latest changes in complicated tax law. They can provide the necessary advice on how to prepare and to plan for tax season.
In short, hiring a professional accountant to get the job done right takes an immense load off your shoulders. If the IRS audits your business, you can have peace of mind that a professional accountant has your books in check.
You struggle with data access
Does this scenario sound familiar to you? When you attempt to organize your company’s database, you hit a wall. Perhaps you’re struggling with finding complete closing and financial reports, because the reports have not been correctly submitted. Perhaps you have received a few key financial reports, but there are parts missing and it’s very difficult to see the whole picture of your company.
When you struggle to access basic accounting reports, don’t waste time. Hire a qualified outsourced accountant. They have the experience, the know-how and the professional accounting software to generate regular in-depth reports that track key performance markers indicators that will help you make strategic decisions.
Yes! I am interested in a year-round CPA.
Are you preoccupied working in your business instead of on our business? If you are an entrepreneur you know what this means. It’s the proverbial business owner juggling act that takes you away from what you do best: running your business. Contact Chris Hervochon CPA today to see if outsourced accounting is a good fit for you.
I’m gracious you brought up the importance of hiring a bookkeeper if you are a one-man business handling everything on your own. My significant other and I want to help my father, who has been struggling with his business. I’ll be certain to get into contact with a professional third party service provider to aid him.