Most entrepreneurs start their business with a passion to sell their product or service. Everything else involved in a business comes afterwards. When the firm is in its nascent stage, a company can afford to spend time on its core activities while multitasking with its non-core activities. However, as a company starts growing, it should work on building a sound customer base, company should focus on marketing, research and development, procurement, advertising and sales.
It really can’t afford to divert its activities towards the non-core activities like bookkeeping and accounting services. This is particularly true when the budget allocated to manpower procurement is limited and the scarce resources should be optimally allocated. In times like these, it makes sense to outsource your accounting services. Some studies have also suggested that the total savings for an outsourced bookkeeper versus an in-house bookkeeper is 62%. This is savings by a huge margin!
Contrary to popular opinion, outsourcing is not really costly.
You should first decide on what aspects of your financial transactions you want to outsource. With accounting service departments for small businesses being as small as they are, there is a high possibility of collusion and therefore a greater risk of fraud. Outsourcing enterprises at least offer transparency while working remotely, in a way that won’t hinder your daily activities while also ensuring that you are legally compliant.
The costs are usually very divergent.
In some cases, you can get a fixed fee project for your accounting services. You may also negotiate for a project-only, hourly rate, or a rate based on the functions that you need performed. While it is true that the cost of paying periodic fee might be burdensome, there is a flip-side benefit to this endeavor.
You don’t have to incur costs in terms of employee benefits, which usually come to around 35-40% of the payroll and the TDS on payroll which is about 10%. If negotiated hourly, given the average volume of work for accounting services of small businesses, the cost would far outweigh the cost of maintaining an in-house bookkeeper.
Besides, the remedial costs of inaccuracies and inconsistencies both in terms of bookkeeping as well as reporting to the stakeholders can be high if the in-house bookkeeper is not trained enough, the costs of which are significant too. Besides, as the company grows further, there is a need for full-scale accounting and reporting that has to be done- something that the companies would rest easy knowing that professionals are at their job.
For small businesses, the decision to outsource accounting functions often hinges on cost considerations, balanced against the value derived from such services. The cost of how much should you be paying for accounting each month can vary widely based on the depth of services required, the expertise of the outsourcing firm, and the geographical location of the service provider. While initial costs might seem higher than maintaining an in-house team, the long-term benefits – including access to specialized expertise, scalability, and potential for enhanced efficiency – often justify the investment. Small businesses should evaluate their unique financial needs, growth trajectory, and the intricacies of their operations when determining the budget for outsourced accounting. In the end, the ideal outsourcing cost is one that provides a tangible return on investment, ensuring financial clarity, compliance, and strategic guidance as the business evolves.
OHI is a leading provider of accounting outsourcing solutions across the USA, the UK and Canada, helping cut costs, improve processes and strengthen controls.
With robust systems built around sound infrastructure and up-to-date systems, OHI provides the best solutions for all your accounting and finance outsourcing needs. Choose us for a seamless outsourcing service!
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