Introduction to Outsource Your Accounting
Deciding to outsource your accounting and hire a CPA firm versus hiring a person to do your bookkeeping and accounting is an important decision! When the company is small, it could be appropriate for one person to wear the accounting hat. However, when the company starts to expand, or if the owner(s) want to know if they can expand, it might be a good time to consider outsourcing your bookkeeping and accounting to a CPA firm.
Pros – Reasons to hire a CPA Firm:
The beauty of hiring a CPA firm for your bookkeeping and accounting is that you have many resources to handle reports, audits, management, consulting, wealth planning, and more at your fingertips. An entire team of individuals will know your business and your goals. So, while you might think you are mostly just paying for an individual service at hand (e.g., a P & L, a bank reconciliation, or a cash flow statement), you’re accessing the people who can interpret those numbers and advise you about your business.
For example, if you need guidance determining whether the business should purchase or lease a large piece of equipment, a CPA firm would be able to do that analysis quickly and in a cost-efficient manner since your financial data would be keyboard-close. On the other hand, if you were doing your own books, you might not feel confident in your analysis or your in-house accountant or bookkeeper’s calculations. If you chose to go to an outside CPA firm for this one-off evaluation, it could easily cost more by the time that firm gets familiar with your business’s current financial position, and it would most probably cost you more for that one analysis. Here’s why: gathering the data takes time. But also, learning the company in its industry with its competition, its strengths, weaknesses, opportunities, and threats (SWOT) takes even more time. Purchasing versus leasing or expanding versus acquiring, say, are huge decisions. You may not want to risk your own evaluation (it could be biased!), and your existing accounting department may not have the experience.
Further, almost always, in-house bookkeepers’ books are not exactly the way the CPA would want them for tax planning purposes or bank financing purposes. So, mid-year consulting takes longer because we have to dig through someone else’s work to get adjustments made, just so you can determine your real financial position.
Cons – Reasons to Wait
You might not be big enough… YET. You’re worried you’ll lose control. You don’t know what you don’t know. You’re not sure if you have the cash flow to pay for outsourced accounting. Or you’re not sure how to evaluate outsourced accounting. We can help you with this part. See our blog posts:
- What Level of Outsourced Accounting Support is Right for You?
- What to Expect Your Controller to Do for You & Your Business
- What to Expect Your CPA to Do for You & Your Business
Summary and Recommendations
We may be biased, but we believe it is actually a better value to have the CPA firm involved all along the way. For more articles relating to outsourcing your accounting, please check out the blog post links above.
Outsource Your Accounting