Many businesses rank accounting as the number one most important service to their success. Accountants rank above IT managers, bankers, lawyers, and other staff, by a margin.
It's because you entrust them with all your company's financials; hence, they are responsible for keeping things on track.
For a long time, in-house accounting was the traditional form of business accounting and bookkeeping. Today, businesses are increasingly turning to alternative solutions such as virtual accounting and software services.
So you must have probably wondered whether to hire someone onto your business, outsource the accounting work to an agency, or invest in accounting software. The difference between the three options makes a significant impact on the outcome of your projects, your daily work activities, and your bottom line.
Since each of the three options comes with its pros and cons, it can be challenging to know which type is the right fit for your business. Fortunately for you, this post explains the benefits of each solution to help you make the right decision for your business.
Situation One: In-House Accounting
In-house accountants are employees on your payroll.
Benefits of an Employee
- Your accounting needs may be specialized, specific, or unusual. Hence, outsourcing may end up costing you more than in-house accounting.
- When you hire an employee, you are free to set their tasks. Outsourced services usually come in a package, which may not always fit your present needs.
- The skills and knowledge developed by working on projects are kept in-house and are available for later use.
- An employee has a greater buy-in to your business and brings loyalty to the table. An outsourced accountant may have other clients who share their attention.
- Proximity is your ally. An employee is within your working environment, or just next door, which makes things a lot easier and quicker than contacting outsourced services through email or phone calls to another city.
- Multi-tasking is common in a growing company. Therefore, having an employee means that their function can evolve with your business and easily adapt to fulfill your new needs.
- Hiring an employee gives you greater cost control. Thus, if a project goes overtime, the costs remain the same.
- Employees have greater familiarity with your organizational culture because they are onsite daily.
Situation Two: Virtual Accounting (VA) Services
Virtual accounting (VA) services refer to accounting, bookkeeping, and other financial services provided remotely by either one or a team of accountants.
Benefits of a Virtual Accountant
- VA services fit your schedule. You save time on appointments and travel by uploading your documentation to your VA and leave them to take care of the rest.
- You become paperless. Receipts fade over time, accounting papers become misplaced, and you can lose hard copies of your files. When you work with a VA, you will upload all your information and store it in the cloud, and back it up.
- VA services lower your overhead costs.
- With VA services, you will enjoy real-time financial reporting whenever you need it, and you can access your financial records 24/7 from anywhere in the world.
- Flexible hiring. You can hire VA services on a need-basis, especially in those months when your accounting needs are high such as tax season. This saves you the cost of a full-time employee.
In today's age of digital transformation, accuracy and speed reign supreme. Hence, many businesses are automating arduous tasks that don't require extensive brainpower. Advancements in cloud accounting technology have proved useful in reducing the hours spent on bookkeeping tasks such as organizing financial paperwork, tracking inventory, computing payroll, and preparing tax income returns.
Benefits of Accounting Software
- Optimized business operations. Accounting programs allow you to work smart, not hard. By eliminating manual calculations and remedial tasks from your daily list, the software speeds up your processing time and enables you to keep your books updated without cluttering your workspace.
- Improved accuracy. Accurate records of your finances are crucial to monitoring your business' progress. Accounting programs help simplify accounting aspects prone to errors. They automatically make calculations as you transfer funds, adjust assets, and enter data. They also generate analyses, reduce the chances of oversights, and enable you to find and correct miscalculation before finalizing reports.
- You have reduced operational costs. When you install software, you save on employee and outsourcing costs without compromising quality accounting reports. It further saves your printing and paper costs and lessens your carbon footprint.
- Secured database. Accounting software is password protected hence prevents unauthorized access to confidential company information. Since your data stored in software, you facilitate its quick access as well as file search and retrieval. It is also safe from data loss and natural disasters.
- Synchronized files. As your company grows, so does the amount of paperwork and accounting. Accounting software enables you to access information across multiple platforms and search computerized data without hassle.
- It simplifies tax compliance. Tax planning features of accounting software allow the storage of invoices, receipts, and financial statements in one convenient platform. Some programs allow for integrations, which let you compare ITRs or adjust calculations as per new policies.
- Accounting software allows automated record-keeping, which can be labor-intensive and confusing at times.
How to Make a Decision
There is no clear cut delineation of when to hire in-house, outsource to a VA, or use accounting software. As you can see, each situation has its advantages and is unique, so you must assess your decision based on your specific circumstances to ensure that you get the right fit for your business.
The good news?
There is a clear cut definition of the benefits between the three options; ergo, making a decision is merely dependent on working out what you need.
Some signs you should employ in-house are:
- It's a vital competency function for your business
- You have a specific work culture, which must be evident in every aspect of your business
- You have grown into a large organization and have a strong employer brand
- Your accounting activities involve highly confidential information (or trade secrets)
Signs you should outsource to a VA
- It's not a core competency function of your business
- You are a relatively small business that's establishing itself in the market
- You don't have enough accounting work to justify an ongoing position
Signs you should use a software
- You have grown into a large organization
- You are losing track of customers and your records
- You are adding more employees
- Invoices are a burden
- You require faster access to information
To learn more about your accounting software and outsourcing solutions, contact us today at LUXA Enterprises.