Outsourcing Accounting Services for Small Business Firms: The Ultimate Guide


Today, outsourcing accounting services for small business firms has become a common practice. Why?

This is because business owners can access a trained and knowledgeable virtual accounting team at lower costs. More importantly, external accountants can help your small business grow faster and run better by letting you focus on your core business functions.

However, there are a few things to look out for before hiring a team offering outsourced accounting and outsourced bookkeeping services. It is also a good idea to sort out the accounting services you wish to outsource. 

On that note, let us explore the advantages of outsourcing bookkeeping services when it would be a good time to do so, the things you should keep in mind before outsourcing, and which services you can outsource. 

Outsourcing Accounting Services

To outsource accounting and bookkeeping services means hiring a third party to perform your accounting tasks. 

The external team you hire may collaborate with your in-house staff. Alternatively, they may also offer 360-degree accounting services, so you can hire them without having any employees for this job. 

When Should You Consider Outsourced Accounting and Outsourced Bookkeeping Services?

Outsourcing accounting services for small business firms may look like a good option when:

  • Your small business firm cannot find a suitable candidate to be hired as a full-time employee at affordable costs. 
  • Your full-time employees are on sick leave, going on a vacation, or taking holidays for any reason.
  • Your company is growing and looking for opportunities to scale its bookkeeping and accounting services.

5 Benefits of Outsourcing Accounting Services for Small Business

Why outsource accounting and tax preparation services

Here are some of the advantages you can experience after outsourcing:

1. Saves Time

With your business’s growth, you will find yourself spending less time scaling your business and more time focusing on your revenue and your expenses. 

Instead, you can focus your time, effort, and resources on creating and implementing business strategies by outsourcing accounting, bookkeeping, and other administrative tasks. 

Not only will this practice bring in more revenue but it will also help you build stronger relations with your customers. 

2. Access to Expertise

Another advantage of outsourcing accounting services for small business firms is that it offers you the possibility of hiring a professional with a high level of expertise in the field. To stay relevant and keep ahead in the race, outsourced accounting and bookkeeping firms keep improving their skills and qualifications. 

Furthermore, outsourcing this service opens the gateway to a team of experts specializing in accounting. You can rest assured that your bookkeeping and accounting tasks are in knowledgeable and reliable hands.

3.  Minimizes Costs

Many businesses make the mistake of thinking that outsourcing services will incur additional, and therefore, unnecessary costs. However, that is not so. 

Outsourcing accounting services lets you reduce your expenses without reducing the service quality. Additionally, you can save the money otherwise paid on the salaries, office supplies, benefits, and taxes for full-time or part-time employees. 

On top of that, the process of hiring in-house staff is a rigorous job, eating away at your costs and resources. 

Therefore, hiring an outsourced accounting team is often more cost-effective than hiring in-house employees for the same work.

4. Less Chance for Fraud

Small and medium businesses are likely to have just one person at the helm of their accounting tasks. They blindly trust that employee without any accountability or internal controls in place. This may increase the chances of writing fake expenses or manipulating the books. 

On the other hand, outsourced accounting services allow multiple people to look through your transaction reports and books, reducing the chance of fraud. 

5. Higher Chance to Scale Accounting

If just one person is assigned for your firm’s accounting, he or she is bound to feel overburdened with work before long. In this case, the chances of this employee spotting an anomaly in the books may be low. 

With a dedicated team of accountants, though, you will have greater chances of spotting anomalies because of their expertise in accounting best practices. 

Besides, the external team will have enough availability and manpower to scale your services easily, without any delay whatsoever. 

What To Look For In Outsourced Accounting Services 

So, you have decided in favor of outsourcing accounting services for small business firms. Great! 

The next step involves choosing a company that will be a good fit for your goals and your work ethic. In other words, their performance quality must align with your objectives. 

At the same time, it is only when they showcase professionalism and build trust that you can depend on them to look after your accounting books. 

How do you choose the right bookkeeping firm, though? Here are a few questions to ask yourself before signing up for an outsourced accounting service:

  • Do you need basic accounting and bookkeeping services, such as manual journal entries or financial bookkeeping? Or do you require additional services, such as payroll runs or tax filing services? (more on that further below)
  • What payment scheme does the outsourced accounting firm follow - charging every month, by the hour, or any other method?
  • What is your monthly budget for accounting and bookkeeping?
  • Does the company you want to hire have the right qualifications and experience? Have they delivered consistently high-quality results in the past?
  • Does the accounting services company sync with your preferred accounting software, such as Xero, QuickBooks, Wave, or FreshBooks?
  • Are they flexible enough to adjust to your changing requirements in the future?
  • Do they maintain privacy and data security when handling their clients’ accounting and financial data?

What Accounting Services Can You Outsource?

The accounting and bookkeeping services you can outsource include, but are not limited to:

  • Year-end Accounting

This involves preparing year-end reports to be presented at general meetings and sent to shareholders. More specifically, you may need to gather your financial statements and receipts, adjusting entries, and plan your budget for the next year. 

The end of the financial year is the busiest time of the year for most companies. Hence, outsourcing your year-end accounting requirements may help you avoid any last-minute bottlenecks.

  • Payroll

You might need to prepare salary statements of employees, calculate bonus payments, and pay out commissions. By outsourcing payroll administration services, you can ensure you never miss tax compliance or payroll deadline. 

  • Preparation of Tax Returns

An external accounting firm can prepare your sales tax, periodic tax, and other returns. They can also facilitate tax processing and planning, quarterly returns, and multiple filings. 

  • Ledger Management

You can minimize the risk of incurring customer debts by outsourcing accounting services for small business firms. Particularly, the virtual bookkeeping firm can help you with short or fixed-period sales ledger management. 

Full-service ledger management can also be on their agenda. Because they use the latest ledger management tools and software, they can deliver the best-quality accounting services for your business.

  • Internal Audit

Outsourcing your internal audit requirements opens the doors to top-notch internal audit function setup services. 

When you hire internal audit consultants from outside, they can also help with procedure and policy manual creation, strategic performance reviews, and accurate efficiency improvement reviews. 

  • Cash Flow Management

You can rely on an outsourced accounting services firm to understand your projected sales and expenses first. Then, they will identify problematic areas by analyzing accounts payable, accounts receivable, credit policy, inventory, and other components. 

This task will help them forecast all cash inflows and outflows for your business over a period of time. In turn, these cash flow projections can help you in fund-raising, budgeting, and business planning

  • Valuation Advisory Services

You need to keep in mind the best valuation practices to meet your business’s complex tax and financial valuation reporting requirements. Again, performing this task may not be possible for you due to a lack of time. 

An outside valuation advisory team offers quality valuation services for intangible assets, intellectual properties, taxes, and your business on the whole. They can also provide a valuation for derivatives, share-based compensation, and equity awards, among others.

  • Excel Accounting

It is crucial to remember that accounting solutions are never a one-size-fits-all thing. Different businesses will have different quantities of financial data. Accordingly, it may get difficult for in-house accounting managers to perform manual Excel entries or show data properly in Excel. 

Outsourcing this job ensures you get personalized solutions, such as workbook integration with external data sources. 

Importing Excel data into the cloud-based software and automating manual repetitive work by creating macros are everyday tasks for outsourced Excel accountants. 

  • Financial Reporting

Financial reports give you insights into your business’s performance during a certain financial year. That is why analysis and reporting have become crucial tasks for businesses today. 

You need to prepare and analyze profit and loss statements, balance sheets, bank reconciliation statements, cash flow statements, business analysis reports, and operations analysis reports. Due to your scarcity of time, you can outsource these tasks to an outside team of experts. 

Outsourcing your financial reporting tasks can also give you access to bonus services. These may include the preparation of sales tax reports, sales reports, and purchase reports.

  • Invoice Processing

To streamline your business operations, you should consider the number of invoices handled per month, the number of people involved in invoice processing, the time taken to process invoices, and other key metrics. 

However, you may end up spending thousands of dollars per year only to address problems in matching invoices to respective purchase orders, responding to vendor queries, or other defects in invoice processing. 

An external accounting team, instead, can help you validate invoice data, scan paper invoices, log transactions, create receipts for supplier invoices, and more.

  • Accounts Reconciliation

This service helps you confirm whether the actual account balance matches that in the corresponding bank statement. 

The outsourced account reconciliation team will verify each account’s accuracy by identifying errors and inconsistencies and duly correcting the final balance. 

Finally, the team will hand you a full reconciliation report containing outstanding items, exceptions, and checks paid.

  • Manual Journal Entry

As a small business owner, you may not have the required personnel to perform manual journal entries. An external manual journal entry team can accurately enter journal transactions into ledgers. 

Besides reducing errors in this type of work, they can suggest improvements on questionable or problematic journal entries.

The Takeaway

Bookkeeping and accounting are vital functions for every business, but they are complex, too. Not only do these jobs require time but also expert knowledge. Without proper accounting and bookkeeping experience, there may be several errors, and before you know it, your business may even go bankrupt. 

Outsourcing accounting services for small business firms, though, has significant benefits. These include cost-effectiveness, scaling the number of tasks, and flexibility in terms of agreements and contracts. 

To avail of these and other advantages, get in touch with the dedicated Accounting Experts at MyTasker. Apart from maintaining your accounts, they can improve cash flow, transform your finance functions, and help your business grow.


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