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!

5 Common Accounting Mistakes Small Businesses Should Avoid

As a small business owner, it’s important to have an efficient and error-free accounting system. It gives you a clear view of how your business is performing, helps you plan strategically, and eases you through the busiest time of the year — tax season. 

That being said, it’s not easy to process such a large volume of data and transactions every day without making any mistakes. That’s why you should be proactive and take precautions. The more aware you are of the most common accounting mistakes, and ways to avoid them, the more likely you’ll be able to prevent any major issues from occurring. 

The following are the top five most common accounting mistakes that small businesses make and how to deal with them. 

Operating without a budget 

A budget is an essential tool to track when and how you earn or spend money. It helps you set realistic financial goals, trim costs to prevent overspending, and make more informed financial decisions. Without a budget, your business wouldn’t have a baseline to adjust financial activities accordingly, meaning you wouldn’t know if you’re overspending or underspending, and when to stop before getting into too much debt. Also, you wouldn’t be prepared for emergencies or unexpected expenses, likely leading to poor decisions. 

In other words, a business budget offers you a path to meet your financial goals.

See also:

Not following a proper accounting procedure 

Many small business owners, self-employed individuals, and freelancers assume that only big corporations need an accounting procedure. This is incorrect because despite having fewer transactions in a month, lacking an accounting procedure still increases your chances of making errors or miscalculations, costing time and money every time you need to fix them. It’s best to set up formal, documented, and detailed procedures for managing bookkeeping and accounting procedures. In addition, to enhance your accounting consistency and accuracy, you may want to create standardized forms and checklists for each activity. For example, below is a checklist of information you have to enter into your accounting software whenever you have a new vendor:

  • Vendor’s name
  • Vendor’s address
  • Telephone number
  • Employer Identification Number (EIN) 
  • Insurance certificates
  • Letters of recommendation
  • Signed contracts. 

At first, you may think this is too complex, unnecessary, and takes up too much time. But in the long run, you will have a smooth and efficient accounting system with minimized accounting mistakes.  

See also:

Neglecting documentation procedures

You may end up losing a lot of money if you fail to document business expenses required for tax deductions. Without the right supporting documentation, the IRS can disqualify your tax write-offs or even penalize you. Here are a few tips to help you maintain a productive documentation system: 

  • Set up new policies: you can  introduce regulations to encourage your employees to store receipts and relevant documents better. For example, your company can only agree to reimburse expense reports if receipts are attached.
  • Go paperless: Paper documents, especially receipts, are easily lost or damaged. That’s why more and more businesses opt to use technology to convert all paper receipts into digital and have them stored securely in the cloud. Shoeboxed — one of the most popular choices on the market — can help you with that. With Shoeboxed, you can digitize every paper receipt in seconds and have your data automatically extracted and categorized. Switching to digital makes documentation procedures a breeze!
  • Only pay when receiving a bill: it’s not that uncommon for a vendor to request payment before issuing an invoice. It is inadvisable to make payments prior to receiving documentation, however,, as it can always be used against you. More importantly, if a dispute arises, you’ll likely lose that money.

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Doing bank reconciliations infrequently 

Another common accounting mistake is not doing bank reconciliations regularly. This mistake is often made by small businesses because they assume that only big companies with a large number of transactions need to do reconciliations. 

Bank reconciliations are vital to every business’s success – it’s the process of comparing your accounting books to bank statements to ensure the data on both documents match and are accurate and correct. By performing bank reconciliations frequently, you can catch mistakes in a timely manner, big or small, and take immediate measures before they get out of hand. A few other benefits that bank reconciliations will bring to your business are: 

  • Prevent fraudulent activities 
  • Keep track of your cash flow 
  • Identify and report bank errors 
  • Detect payments that have bounced or failed to post.

Remember, the longer you go without doing bank reconciliation, the more difficult it will be to catch up, which ends up taking a lot of time, money, and resources. 

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Failing to back up your accounting data 

What would happen if the device on which you kept your company’s financial data was lost, hacked, or stolen, and you didn’t have a backup? You would lose all of your confidential financial data.  

This kind of problem can occur at any time, to anyone. That’s why you should be well prepared in advance by having a backup for your accounting data. It’s quite easy today as many small business accounting software programs allow you to set up an automatic backup of your data. It’s also a good idea to  go through your backup files every now and then to ensure they are all working. That way you know you have everything you need to continue operating your business, even in an emergency situation. 

Final thoughts 

Whether you do your own accounting or hire a professional, making accounting mistakes can result in serious problems for your company. It is better to address and avoid these issues before they escalate and cause far more damage.

Shoeboxed can help you with that. 

Shoeboxed is a helpful receipt scanner software for freelancers, small business owners, and DIY accountants. It helps you clear your piles of documents and turn them digital with ease. Shoeboxed automatically extracts and categorizes important data from your receipts, which then gets manually checked and approved by a team of data experts
Go paperless for FREE with Shoeboxed!

3 Practical Tips to Become a Successful Freelance Accountant

Working as a freelancer is a dream come true for many accountants. You get to choose the hours you work, where you work, who you work with, and how you work. The good news is becoming a freelance accountant has never been easier, thanks to the mass online transformation of modern business. 

If you are interested in becoming a successful freelance accountant, read on to find useful and practical information that will help you achieve your career goals.

What is a freelance accountant? 

Just like a corporate accountant, freelance accountants help manage their clients’ money so that they can allocate resources and run their operations more efficiently. 

Listed below are some common examples of a freelance accountant’s tasks and responsibilities:

  • Record financial transactions on digital ledgers 
  • Prepare invoices and send them to their client’s customers on time 
  • Process and distribute payroll for client’s employees
  • Create financial statements and tax reports 
  • Ensure their client’s financial operations are compliant with the law
  • File tax returns and assist business owners with finding ways  to minimize their tax 
  • Create a budget for a business

See also: 4 End of Year Tax Tips for Freelancers.

3 Practical tips to become a successful freelance accountant 

These 3 tips will help steer your freelance accounting career in the right direction. 

Check them out!

1. Assure your customers that you are qualified 

You should obtain at least one accounting-related qualification before starting your freelance business. Not only does it give you the necessary knowledge to perform your work, but it also serves as proof to your potential clients that you can handle the job. The more accounting qualifications you have, the greater the chance that you’ll snag a client at a competitive rate. Here are three common ways that a freelance accountant can show that they are qualified: 

  • Have a Bachelor’s Degree 

While a bachelor’s degree in the field is preferred, any business or accounting-related degree that involves accounting, auditing, tax courses, or credits is also beneficial.  

  • Get Certified or Licensed 

Although it’s not compulsory, many businesses will only work with freelance accountants who are either certified or licensed (some clients want both!). Some professional certifications that can help you stand out are: Certified Management Accountant (CMA), Certified Internal Auditor (CIA), and Certified Information Systems Auditor (CISA).

  • Acquire Experience

Working experience is a great way to prove that you know what you are doing! On your online profiles, make sure to include in detail any of your accounting work experience such as what your tasks were, which company you worked for, how long you worked there, etc. 

As important as your qualifications are, you should also constantly update your knowledge whenever you can with webinars, networking events, and professional courses.

See also: What Are The Differences Between A Bookkeeper And An Accountant?

2. Invest in equipment, software, and online tools 

Once you’ve decided to go freelance, you have to be prepared to spend a considerable amount of money on a laptop, a stable Internet connection, and accounting software and tools. There are many online accounting software on the market today, and you should choose carefully based on your accounting specialty and budget. You might want to consider some popular accounting software such as Quickbooks, Xero, Freshbooks, and Bench

When working as a freelance accountant, you usually won’t actually work in your client’s office space, so it will likely be up to you to provide the infrastructure needed to store paper files. This can be inconvenient, especially if you have a smaller living space. To solve this problem, use Shoeboxed. Shoeboxed is a software that helps you digitize your documents, especially financial receipts, in a snapshot. They will then be securely stored in the cloud, where you can go back and search for your files anywhere, anytime.    

See also: The Digital Accounting Era: Five Steps For Accountants To Succeed.

Advertising is the way to connect you with potential clients. Start small with the traditional way – word of mouth. Tell your family, friends, and former colleagues about your freelance business and what you have to offer. Next, you can create social media profiles, purchase advertising space or create marketing campaigns that show your skills and services. Advertising can have a massive impact on the growth of your freelance career, especially at the start.

See also: Financial Services Marketing: Definition, Benefits and Best Practices for Small Businesses.

Where can you find freelance accounting jobs? 

Many new freelance accountants get their first jobs through friends, family, or networks from their previous workplaces. But if that option is not for you, don’t worry. There are many freelance job websites that can help you find clients. 

Listed below are the biggest and most well-trusted websites for freelance accounting jobs:

  1. Fiverr: On this platform, freelancers can post and advertise details of their services. Potential customers looking for a freelance accountant will scroll through and choose a suitable one. When you register as a freelance accountant on Fiverr, you can classify your services into basic, standard, and premium packages.
  1. Paro: Paro is more specific to financial services, and accounting is listed among jobs such as bookkeeping, financial analysis and planning services, and even CFO services. According to Paro, only the top 2% of finance freelancers make it through their rigorous vetting process, which includes a skills assessment, interview, test project, and reference check. 
  1. Upwork: Upwork is pretty much the same as Fiverr. Millions of jobs are posted on the site, and there are over 5,000 skills on offer, including accounting. One downside of being on a platform this size is that you have to really stand out against thousands of competitors to get clients.

Final thoughts 

Becoming a freelance accountant is a pretty straightforward process. If you constantly improve your knowledge, acquire modern accounting tools, and put yourself out there online, you will soon be able to build a successful freelance business. 

What’s Shoeboxed? 

Shoeboxed is an application that lets you digitize paper receipts in just a few seconds. It automatically extracts and categorizes important data from your receipts, which then gets approved by a team of data experts. Quick, reliable, and trustworthy, Shoeboxed guarantees to organize your piles of documents in the best way you can imagine! 

Go paperless for FREE with Shoeboxed