All You Need to Know About Outsourced Accounting Services

Not every business owner has the time and energy to manage every aspect of a business. It’s understandable if you are not able to handle all of the responsibilities of running a business. In such cases, outsourced services have become a more common solution for small businesses. 

This article will introduce you to outsourced accounting services, one of the most popular types of outsourced services, and help you decide whether your business needs to use outsourced accounting services or not. 

What are outsourced accounting services?

Outsourced accounting services are a third party that provides a full accounting department experience for small businesses. 

An outsourced accounting service handles day-to-day transactions, accounts payable, accounts receivable, financial statements, taxes, payroll, financial reports, and many other accounting tasks like a regular accounting department. 

Most outsourced accounting services provide a wide selection of packages; you can decide whether you also need a bookkeeper or an auditor. To remain competitive in the market, outsourced accounting service providers must constantly enhance their abilities and certifications. You can rest assured that your books are handled well by finance professionals. 

However, keep in mind that even if you hire an experienced and qualified accountant, you’ll still need to be involved in authorizing invoices, making payments, evaluating timesheets, etc.

The benefits of outsourced accounting services

Cost-saving

Hiring an outsourced accounting service is often cheaper and more cost-effective than hiring in-house staff to handle the finance function. 

By outsourcing, you can save your money on costs that hiring an employee would generate, such as paid leaves, health insurance, retirement, vacation, bonuses, and sick days. You just pay for what you require. 

Furthermore, accounting and bookkeeping services are charged on an hourly basis. It means that you can increase or decrease the number of hours without interruption.

Time-saving 

As your company expands, you’ll realize yourself focusing more on the business’s core value rather than handling administrative tasks. 

As a result, using outsourced accounting services allows you to concentrate your attention, energy, and resources on developing a business strategy. This will then help you increase the business revenue and enhance the relationship with your customers. 

Reduced hiring processes

The hiring process requires many resources. For example, it takes time to develop a recruitment policy, interview, and expenses for onboarding and training new employees. This process usually costs your business a significant amount of time and money and distracts you from other important tasks. 

Outsourced accounting services can help you eliminate hiring and training costs as the service providers already did it for you. All you need to do is choose the most appropriate package for your business, sign the contract, and pay for the plan. 

Accounting scaling made simple

Outsourced accounting service providers can expand their services dramatically in order to compete with their competitors. 

In particular, if your bookkeeping and accounting activities require more than an accountant to handle, you can easily demand more staff from the service agent. 

Automation technologies

Most outsourced accounting services have adopted accounting automation technologies to save time. It also reduces human errors and helps business owners eliminate hazards. 

Moreover, automation technologies will lower the likelihood of internal fraud. You’ll have multiple pairs of eyes on your transaction processing and reports, which provides increased internal controls. Having a dedicated team with expertise in accounting best practices will be far more likely to spot an anomaly than one person who’s probably overburdened and overloaded with work.

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When should you consider using outsourced account services?

Outsourced accounting services are most effective when:

  • A small company doesn’t need a full-time accountant, but it demands someone with higher accounting knowledge and skills than a regular office staff or secretary.
  • A business that can’t afford to hire a full-time accountant with the necessary skills.
  • Temporary services are required, such as extra assistance with end-of-year reports or when a full-time worker is on maternity leave, sick leave, etc.

The bottom line

Choosing outsourced accounting services is not just about handling your accounting activities. It also helps you drive profits, improve cash flow, and grow your business in the long term. You can always discuss with the service provider to design a package that suits your business needs and budget, brings you the peace of mind, efficiency, and actionable financial intelligence you need to succeed. 

About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

Receipt Management: Five Major Cons of Paper Receipts

It’s not new to businesses, accountants, and even individuals who want to keep track of their expenses that receipts are extremely important. In the business world, paper receipts, though dominant, are losing popularity due to an alternative, digital receipts.

A digital receipt can solve all the pitfalls of a physical one, thus proving itself a superior solution. But where exactly do traditional methods fail?

This article lists three major disadvantages of paper receipts. Also, you’ll find suggestions for finding the right receipt management software for your business. 

Why is receipt management important?

A receipt is a document that acknowledges something has been transferred, in other words, a transaction between one party to another. Ownership is changed as a result of receipts. Typically, a receipt includes the following information: 

  • The date and time the transaction happens
  • The number of items purchased or the service performed and the price
  • The time and location of each party
  • VAT charged, if any
  • The method of payment

All the necessary information within a transaction is present on a receipt. Therefore, this creates a transparent transaction and should prevent any misunderstandings and disputes between parties. You may have noticed that a receipt is a precedent if you want a refund or exchange. 

Regarding tax payments, receipts are even more important as they serve as proof of expenses. Countries vary in their tax reporting, but most require some document to prove how much you have paid. In the US, the IRS requires receipts for certain expenses when filing taxes. 

There are several types of important receipts, see also if you are interested: 

Receipt management.

How are businesses doing receipt management? 

There are five receipt management systems that individuals and businesses normally use to handle their receipts: paper receipts, photo/scan solutions, apps with receipt capture technology, apps with auto-match, and direct receipts. According to a study, the time spent on receipt management with each method is as follows:

  • Paper receipt: 13.9 second
  • Photo/scan solution: 9.2 second
  • App with receipt management technology: 4.9 second
  • App with auto-match: 2.8 second
  • Direct receipt: 1.3 second

Except for the first one, all of the other methods are digital. The norm now is that many businesses are digitizing their receipt management, which saves them a potential amount of time. 

Cons of holding onto a physical receipt

A physical receipt may be practical and simple, something we have been too familiar with. And old habits die hard. Every store provides its customers with paper receipts, so why bother changing to digital receipts? Plus, a person may be more likely to look at and examine a paper receipt, double-checking if anything goes wrong with the transaction. 

But resorting to paper receipts brings more troubles than benefits. 

1. Take up much physical space

One receipt might sit well in your pocket. But five receipts do not, let alone a hundred receipts. 

Eventually, with hundreds of thousands of receipts that businesses, even small ones, come into every year, it is indeed very space-consuming. 

With too many in one place, they are more prone to getting lost. One receipt is too small for us to immediately acknowledge that it is gone, too little for anyone to come across it to remember. Going digital, you need only one device to keep all the receipts. 

2. Deteriorate over time 

Receipts are made of thermal paper, with some layers of special coating. Still, they fade away with time, like many other kinds of paper. There are several tips on storing them correctly, thus, preventing them from fading.

A physical receipt may be practical and simple, something we have been too familiar with. And old habits die hard. Every store provides its customers with paper receipts, so why bother changing to digital receipts? Plus, a person may be more likely to look at and examine a paper receipt, double-checking if anything goes wrong with the transaction. 

But resorting to paper receipts brings more troubles than benefits. 

3. Take up much physical space

One receipt might sit well in your pocket. But five receipts do not, let alone a hundred receipts. 

Eventually, with hundreds of thousands of receipts that businesses, even small ones, come into every year, it is indeed very space-consuming. 

With too many in one place, they are more prone to getting lost. One receipt is too small for us to immediately acknowledge that it is gone, too little for anyone to come across it to remember. Going digital, you need only one device to keep all the receipts. 

4. Deteriorate over time 

Receipts are made of thermal paper, with some layers of special coating. Still, they fade away with time, like many other kinds of paper. There are several tips on storing them correctly, thus, preventing them from fading.

These tips can only delay the fading process, storing the receipts for a few more years. Thermal paper deteriorates anyway. Going digital, you do not have to do anything special, and receipts are still there after years. 

5. Difficult to find a specific receipt

It’s hard to find the right piece of paper in a pile containing thousands of others. Even in the most organized workplace, it can still puzzle anyone searching for things, slowing them down. 

A digital document archive with a powerful search function will greatly improve one’s productivity. Receipt management software helps you cut off lots of time finding documents, thus staying focused and engaged in more important tasks.

Finding the right digital receipt management for your business!

There are many digital receipt management software on the market to choose from, Shoeboxed, Expensify, and Zoho Expense, to name a few. With several choices, you may wonder what software is the right one for your business. The answer doesn’t lie only in the software features but also in your business model and needs.

The receipt management software developed by Shoeboxed is an ideal tool for small business owners and managers. 

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

You might also be interested in: Top 5 Receipt Scanner and Organizer Apps for Small Businesses in 2021

The bottom line

Space-consuming, susceptible to deterioration, and difficult to access are paper receipts’ three most visible cons. Now that you know the disadvantages of physical receipts, it is now the time that you switch to digital solutions. This may be the best solution that you make for yourself and your business. 

Most Famous Tax Court Cases In IRS History That You Might Want to Know

Everyone wants to save money, especially when it comes to taxes. It is not illegal to reduce or minimize business or personal income taxes by legitimate accounting methods. There are, in fact, many exemptions and deductions available under state and federal tax codes to help you minimize your taxes. 

However, when you use deceptive or dishonest methods to save money on taxes, you risk facing significant penalties and perhaps jail time. Even if only a tiny fraction of returns are audited each year, the fines are not worth the risk. 

This article will introduce you to the most famous tax court cases to show how high a price you can pay for this crime.

The differences between avoiding taxes and evading taxes

There is always a clear line between the creativity in minimizing your taxes and breaking the law. Avoiding taxes is legal and understandable, but evading taxes comes with tough consequences. 

Tax avoidance means using legal accounting methods to lower the amount of taxes owed. For example, you can deposit your money into an Individual Savings Account (ISA) to avoid paying income tax on the interest you earn on your cash savings. You can also invest money into a pension scheme or claim capital allowances on things used for business purposes.

On the other hand, tax evasion occurs when a person or business uses illegal means to escape paying taxes. Some common examples of tax evasion include withholding from the IRS the tax you owe, keeping your business off the books by doing transactions in cash with no receipts, or using an offshore bank account to hide money, stocks, or other assets. 

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Most famous tax court cases in IRS history

Al Capone

Al Capone’s case is possibly the most famous one in IRS history. Though this notorious gangster had committed various illegal acts, including bootlegging, prostitution, and murder, only one landed him in prison––income tax evasion.

Under Capone’s leadership at the Chicago Outfit, the organization generated an estimated $100 million annual income. He was convicted on five counts of tax evasion from 1925 to 1927 and willful failure to file for 1928-1929. He was sentenced to 11 years in Federal Prison (including the notorious Alcatraz) and paid $80,000 in fines and outstanding tax bills.

Joe Francis

Joe Francis is a talented American entrepreneur, film producer, founder, and creator of Girls Gone Wild’s entertainment brand. He was accused of criminal tax evasion in 2007 for allegedly filing fake business tax returns. Francis is accused of submitting fake company expenses totaling more than $20 million to avoid paying taxes. He was able to avoid the felony accusation by accepting a guilty plea.

However, he didn’t seem to have completely avoided his tax problems. The IRS issued Francis a $33.8 million tax lien in November 2009.

Walter Anderson

Anderson’s case was probably one of the most famous tax court cases in IRS history. Walter Anderson, a former telecommunications executive, was accused of using aliases, offshore bank accounts, and shell businesses to conceal his earnings. Anderson pleaded a guilty plea in 2006, admitting to concealing nearly $365 million in earnings. He was condemned to nine years in prison and ordered to pay $200 million in compensation.

Anderson avoided the majority of the taxes owed due to a typo mistake in the amount of the federal government’s judgment. In this case, the IRS agreed to pay taxes and penalties for three years. Anderson is, however, still liable for $23 million owing to the District of Columbia government. 

Wesley Snipes

Wesley Snipes, the famous American actor, film producer, and martial artist, has been charged with numerous offenses by federal prosecutors. 

The “Blade” star is accused of hiding money in overseas accounts and failing to file federal tax returns for years. Snipes’ federal tax debt is reported to be approximately $12 million.

He was only convicted of misdemeanor charges in 2008 after being acquitted on felony tax fraud and conspiracy charges. 

Douglas P. Rosile, his accountant, and tax protester Eddie Ray Kahn were also accused as co-defendants. Rosile received a four-and-a-half-year sentence, and Kahn was given a ten-year sentence. 

Leona Roberts Helmsley

Leona Roberts Helmsley, an American businesswoman has accumulated a multi-billion dollar real estate portfolio. The “Queen of Mean” and her husband, Harry, were charged with invoicing millions of dollars in personal expenses as their business in order to evade taxes. Helmsley was convicted of three counts of tax evasion in 1989. She was sentenced to 18 months in federal prison. A fun fact was that she was sentenced to prison on the income tax deadline day for that year, April 15, 1992.

The bottom line

Evading taxes can lead to serious consequences. As you can see from the US’ top tax court cases listed above, it’s critical to understand what happens if you cross the line between legal tax avoidance techniques and unlawful tax evasion. If you have tax questions or have received a notice from the IRS, it’s a good idea to consult with a tax professional to discuss your situation and your choices moving forward.

About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!