Accounting Outsourcing Services

Getting it online

What most entrepreneurs love most about their business is thinking up new solutions and creating new resources.  They like taking initiative and getting things done.  Oh yeah, and even though they try to say that it’s not for the money they really do enjoy the paycheck.  What they like least about their business is the paperwork, and even worse the accounting paperwork.  Reconciling your checkbook, billing, and paying the bills are just not what get most entrepreneurs excited.  Plus, many new entrepreneurs really struggle when it comes to reading their financial records and extracting from them the essential information used to make vital decisions so that the business prospers.  Recently, a number of Accounting Outsourcing services have sprung up to help business owners take care of their finances in an effective and cost-efficient way.

What Accounting Outsourcing Does

To make the distinction absolutely crystal clear there are two main accounting related services, both that can be outsourced.  Bookkeeping is what you do to keep all your financial records correct and up-to-date; entering bills, reconciling the checkbook, and issuing invoices are all the examples of bookkeeping responsibilities.  Accounting or financial management is taking these bookkeeping records and then applying the information to create reports for filing taxes, for preparing financial statements, and for providing the essential information to improve the management and profitability of the business .  Most business owners don’t have the time or expertise to do their own accounting or bookkeeping and usually hire someone else to do it or outsource it to an accounting firm, like my own.  When you outsource your bookkeeping or accounting function you are simply hiring someone else on a contract basis to manage those functions for you.  By the way, you don’t even need to use the same firm to provide bookkeeping and accounting services, most of the major accounting software packages, like QuickBooks, will offer your accountant access through the internet to your records.  The accountant checks it out, makes changes through journal entries, and then checks it back in leaving you free to accept or decline their entries.

How It Works

Basically, you scan in your financial documents to PDF and then email them to your virtual bookkeeper.  He logs everything in to an accounting software program and then kicks it over to an accountant, who will review his work and make up the reports that you need and, when required, can take care of any tax compliance or financial statement preparation that might be necessary.  Easy!  Depending on the level of service the firm that you hire offers, you could also use your virtual accountant to handle some of the more unpleasant tasks of accounting, like calling customers to collect amounts receivable or preparing your company’s payroll.  Also, they can remind you when bills are due, send invoices to your customers, reconcile your bank accounts and even set up your accounting software.

Better Controls

Besides potentially saving you the money and the hassle of hiring a full time bookkeeper or accountant, a virtual accounting firm can also improve the controls that you have over cash and minimize the possibility of embezzlement by an employee through creating a separation of duties that would be difficult for a small business to replicate.  You see, if you hire Brenda the Bookkeeper as your full time employee to handle the finances she gets to know an awful lot about the business and how the finances work.  Usually the only person overseeing Brenda is Oscar the Owner (No one else understands what she does or really cares) and he is far to busy meeting with potential clients and thinking up new products in order to pay his boat bill to really supervise what Brenda does.  As a result, Brenda often has access to both the financial records and to cash or other assets with no one really looking over her shoulder to see what she is up to.  The results can be disastrous.  One of the first controls experts recommend that you put in place to prevent fraud and embezzlement is a separation of duties.  Since many smaller firms just don’t have enough qualified people to separate duties they may consider going to a virtual accountant or bookkeeper to protect themselves from potential fraud.

What You Want

When you finally get to rest your head upon your pillow at night you want to do so knowing that the bills have been paid, the money that you are owed is being collected, that all tax an regulatory requirements have been complied with, and that all cash and other financial records are in order.  Most importantly of all, you want to know that you and your team have accurate and up-to-date information that you and your managers can use to make better business decisions and increase profitability.  Quality financial records are knowledge, and knowledge is power, or profits.  If you don’t yet have the ability to use your financial information for decision making in house then you need to consider using a virtual accountant for that, as well.  A quality professional should not only be able to put the necessary numbers together, but also explain their significance and help you decide upon a plan of action as the basis of this information  .

Where to Get Started

90% of the time people find their virtual accountant through asking their CPA for referrals.  Chances are your own CPA can do the work for you, if that is what you want.  Increasingly, people are turning to the internet for solutions and one finding online specialists in handling their accounting needs.  Peak Virtual Accounting specializes in working online and offers a number of services from basic bookkeeping all the way up through a virtual Chief Financial Officer.  Virtual Expansion specializes in higher level professional services.  You could also try finding one through Elance or Odesk, I’ve noticed a number of Indian firms working on Elance but the quantity of business seems pretty small so far.  Finally, ask your fellow entrepreneurs who they use to get some ideas.

Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler