While some companies can easily afford paying accounting services to handle their figuring, others think that any expense that can be eliminated is a wise move. This decision is not always clear cut. Factors involved included: experience with accounting in the company, cash flow, available time, potential work elsewhere, etc.
There is really only one draw-back to paying to have accounting services done by someone else. Money invested, is still money not able to be sent somewhere else. This detractor is a big one because the whole reason of running a business is to make as much money as you can, not spend it.
There are many valuable benefits to spending money for accounting services that may make it worth the expense. When another group of people calculate income and expenses, you do not have to spend time doing it. This allows more time to either spend in relaxation or developing other areas of your operation.
If you are ambitious and want to spend that extra time in your company, there are many productive things to do. More time allows focus to be used on more important tasks to make procedures and processes more efficient. Developing new customers or solidifying existing customers is a wise objective. In this decision implicit costs, also called opportunity costs, must be considered. If your time is worth $ 40 / hr then is spending 5 hours a week worth doing it yourself, equaling $ 200. Could you be doing something more valuable with those 5 hours? An accountant may make more per hour, but consider that it would take them half the time.
With an accounting service, the accuracy of the figures does not have to be questioned. Correctly calculating accounting numbers quickly for a client is their sole purpose. In most cases, expensive software is utilized to ensure proper formulas calculated correctly every time.
Because double checking is already done for you and not needed again by you, reliability is an asset. A good service makes a name for themselves with dependability.
Come tax time, already having an accounting service in place, saves money with applicable deductions. Since they are fully aware of your type of business and your operations, their in depth knowledge can offer tax advantages year after year.
Another benefit of having professionals know the ins and outs of the company is in the event of an audit. Audits are done selectively by the IRS and some insurance companies require payroll audits every year or even quarterly. If accounting is illustrated in-house, this process can take weeks out of productivity. If accounting services are employed, they are wholly responsible to comply with any records requested and methods of calculations.
Either answer can be the right one for different companies. There is no one answer for every situation. Some companies have sufficient capital and revenue from sales or services that the cash flow can support paying for accounting services and some do not. After reading this article the generic answer should be: If there is sufficient money to substantiate outsourcing accounting services then it will pay off in the scheme of things.