The first five years of any business are crucial – especially from the accounting perspective.
This is also when leaders succumb to pressure and get overwhelmed by the number of responsibilities on their shoulders.
They lead the strategy, handle core business functions, and manage day-to-day operations like bookkeeping and accounting, which are particularly important but equally time-consuming.
Now because their attention is divided, they often face delayed payments and poor financial management causing more harm than good.
While it isn’t wrong to perform most of these duties yourself in the initial stages of your business, realizing when to delegate and outsource some of that load is a make-or-break decision.
Let’s look at the 6 cost-effective accounting solutions you should outsource when the time comes.
Key Takeaways
- 60% of business owners feel they have limited financial and accounting knowledge.
- 20% of small businesses fail within a year without accounting software.
- Bookkeeping, tax compliance, payroll management, and financial controller services are top priorities for businesses looking for cost-effective accounting solutions.
- Enhance your data security and save time by outsourcing your accounting responsibilities.
Role of accounting for small businesses
Accounting is undeniably important for any business.
Lack of knowledge leads to poor control, and ultimately, financial losses.
Understanding the role of accounting helps you track your financial records and monitor all transactions to identify growth opportunities.
The right accounting methods allow you to maintain data accuracy for effective decision-making.
In addition, businesses save a lot of money by staying tax-compliant and fulfilling all tax obligations on time.
By properly managing your cash flow, you regulate all financial activities. Accounting software and third-party integrations support small businesses in managing their finances more efficiently.
See, it’s important for you to know that as your business grows, the volume of data will grow with it.
This is a crucial period for you as you must think about delegating this responsibility to someone else.
While accounting software is of immense help, hiring a dedicated accounting resource well-versed in accounting systems becomes essential for a holistic approach to financial management.
45% of business owners claim automation has reduced repetitive and time-consuming tasks like data entry, helping them focus on their core business operations and strategies.
Most business owners hesitate to delegate as they believe it would be too costly.
And this is where a shift of perspective is required because delegating this responsibility will only help them save more money.
Not just that, their accounts will be up-to-date leaving no room for guesswork.
Now hiring a full-time resource to handle your accounting can be expensive.
Outsourcing your accounting is the next best option.
This way, you have a dedicated team of accountants handling your accounting needs at a much lower cost.
6 accounting services that your business can benefit from
Now, you may wonder exactly how your business can benefit by outsourcing its accounting needs.
Let’s look at the 6 accounting services that are necessary for your business.
1. Bookkeeping
Recording daily transactions is essential.
Bookkeeping helps with paying bills and disbursing employee salaries on time.
You can risk financial mismanagement by neglecting your bookkeeping for long.
By outsourcing this responsibility, you can free yourself from monotonous and time-consuming tasks, focusing all your attention on core business operations.
Bookkeeping increases financial data transparency, helps create detailed and accurate financial reports, and improves financial decision-making.
2. Tax compliance
It may be surprising that in-house finance departments often lag and fail to keep up with the latest tax guidelines.
As a business owner, it is your responsibility to provide ongoing support and employee training to ensure they stay on top of every change.
But again, as a small business owner, your hands are tied due to limited financial resources.
You can’t invest in employee training and development until and unless you reach a place that is more secure.
Such activities also take a huge chunk of your budget.
One way to ensure you have employees with the latest technology and understanding of accounting and tax regulations is to outsource.
Outsourcing helps you get control over your tax preparation and filing tax returns smoothly.
3. Accounts payable management
It is a red flag when you come across mismanagement of account payables as it leads to bigger and more significant organizational issues.
You can outsource this responsibility to a reliable source so that you know you are receiving all payments on time.
Moreover, it improves your relationship with your clients and employees as they receive payments on time as well.
4. Comprehensive financial support
One of the best ways to make the right financial decision is by ensuring that your data is accurate.
Accurate and timely financial analysis helps with informed decision-making leading to productive results and efficient workflow.
This is why you need to start outsourcing your reporting.
Accounting services have access to advanced tools to extract accurate financial data and provide you with financial reports on time.
29% of business owners have no idea about their company’s poor performance.
This stops them from taking any action to improve business performance or increase their earnings.
Outsourcing helps you track the financial performance and trends of your business. They have the tools to measure your growth and potential more effectively.
5. Payroll management
Most businesses struggle with payroll management, making it one of the most popular financial services that get outsourced.
The role of payroll management cannot be undermined. They help reduce HR costs and increase data security.
Whether you want to track employee hours and attendance or simply need help calculating their salaries, this accounting service can be of immense help.
6. Financial controller services
Financial controller services help businesses manage their accounting and bookkeeping duties along with extensive financial management.
By getting a financial controller on board, you increase the efficiency of your business. Your workflow becomes more efficient as proper financial planning is implemented.
2 reasons why your business needs cost-effective accounting solutions
There are several reasons why you should outsource your accounting needs.
Let’s explore the top two reasons.
1. Data security
Inconsistent or disorganized data leads to business mistakes.
Counter this problem by outsourcing your accounting responsibilities to a reliable accounting service that understands your specific business needs and is flexible enough to accommodate growing business demands.
The world is embracing remote working conditions, giving to a wider acceptance of digital or cloud computing and recording keeping.
87% of businesses experience a boost after incorporating cloud accounting processes into their system.
It ensures your data remains secure and consistent across channels.
2. Time-saving
Regular bookkeeping and accounting are time-consuming and mentally draining. You have to pay attention to details because even a single mistake can cost you thousands of dollars.
Considering the role and importance of this task, you can’t completely neglect it.
However, as a business owner, you don’t always have the bandwidth to add yet another task to your daily routine.
You already have to manage core business functions and strategize the next business move.
Outsourcing this responsibility makes the most sense in this situation.
Not only do you save time but you can use that time somewhere else – away from your desk but closer to key decision-making.
2 actionable tips for choosing the right accounting solution for your business
You’ve understood how outsourcing your accounting can help your business.
Now you may question how to choose the right accounting solution for your business.
Well, here are two actionable tips for you.
1. Leverage technology
Manual bookkeeping and accounting involving pen and paper are a thing of the past.
In order to sustain and successfully run your business, you need advanced technology and modern tools.
Whether it is NetSuite implementation or Financial technology, automation is the way to go. It ensures your business processes run smoothly, providing you with accurate data.
Before you outsource your accounting, ask them about the accounting tool they use.
The accounting software should have features that match the needs of your business.
The software should be a cloud-based technology offering high-quality security and data capacity.
2. Financial reporting and analysis
Reporting and analysis is the most important part of your business accounting. They help you visualize the actual financial position of your company.
Balance sheets, income statements, and cash flow statements are the three most important financial statements.
They reflect how well your company is doing and where it is experiencing loss.
This is why they must show accurate financial data.
Make sure that the service provider you hire has a keen understanding of financial reporting.
The bottom line
Accounting services help your business grow, identifying financial opportunities and ensuring tax compliance.
Bookkeeping, tax preparation, and payroll management are some of the common accounting solutions for businesses.
These services ensure data security and help you save time and money.
It is important to leverage technology and prepare accurate financial reports for informed decision-making.
Ledger Labs has 12+ years of experience helping businesses of all sizes and industries.
We employ the latest technology and exercise as per the current accounting principles.
Book an appointment today to find out more.
