Many small and medium government contracting businesses subcontract their bookkeeping services to accounting firms. In fact, it has become a common practice, and as a result, the bookkeeping services market size in the United States is $60.4 billion as of 2022.
Bookkeeping is a highly crucial aspect of successfully operating a company or business, tracking and recording the financial resources and expenses of the organization. However, many companies are unable to manage bookkeeping in-house and contract with outside resources.
Giving access to sensitive information to a third party can seem risky. Hiring an established, reliable and professional firm that strictly follows relevant data laws will keep your data secure. Using a trusted certified public accountant (CPA) firm that performs multiple areas of financial services can provide extra future benefits for tax preparation or guidance for company growth.
How To Outsource Your Bookkeeping
Bookkeeping is labor intensive and can be complicated unless you have the time and passion for accounting. Many startups and businesses are not aware of details that require special attention until a problem arises. Fortunately, using the below steps, any size business can successfully outsource its accounting needs to a trusted accounting service. Government contractors, in particular, are subject to even more stringent requirements.
Step#1 Determine Your Goals For Outsourcing
The first step is determining why you need outsourcing and what your expectations are from the service provider. You may be facing the following issues:
- Your records are not accurate
- The bookkeeping process is too time consuming
- You are confused with how to read financial statements
- You overlooked some cost-effective tax-write offs
- You are unsure or your organization’s taxes
- You are unsure with how to ensure your business is government compliant
Bookkeepers provide accounting services, including financial reports, cash flows, balance sheets and income statements. Keeping accurate and easy-to-access records throughout the year also makes tax filing easier. When hiring an external party, always inquire about the range of their services.
Step#2 Check And Compare The Cost
Typically, for many businesses, hiring and maintaining an in-house bookkeeping team costs more than outsourcing. Hiring an experienced bookkeeper or accountant requires not only their salary and benefits but also necessary training to ensure they are current with all laws and filing requirements.
Accounting and bookkeeping tasks should be done with the most up-to-date software systems for accuracy. Staff will also require the training needed to stay current with software and updates.
For small businesses, this staff may be one or two people. In the event one or both of those people are out due to illness or one leaves a position, the business becomes seriously compromised. If outsourcing to an accounting freelancer, a similar situation arises. Consider the benefits of using a certified public accounting firm that operates with current technology and software systems.
Your service needs and requirements will determine the cost of service. Ask yourself the following questions:
- Is your business accounting basis or cash-basis
- How many financial accounts do you want to connect
- When and how do you need the financial planning and reports
- How complex are your financial models
- Do you have reporting requirements for internal or external stakeholders
Step#3 Select The Right Outsourcing Company Or Individual
A reputable service provider will not only perform excellent bookkeeping but will also maintain confidentiality. Your aim should be to form a strategic partner with the firm or person as if hiring an employee for your company. To benefit your company, shortlist the best candidates and analyze the following elements to help make your decision:
- Business Goals. Consider your provider’s short- and long-term business goals to see if they align with your roadmap. If they do, set realistic deadlines and explain your expectations.
- Barriers. Assess for any cultural or language barriers which can happen when outsourcing to overseas firms. Barriers can lead to delays and communication errors because of time and language differences. Enlisting the services of a regionally local provider can ensure familiarity with local and state laws and requirements and create more ease of communication.
- Technology. Always ask the service provider what technology, software and hardware they use. This can enable you to share data quickly and safely. Moreover, their technology usage will tell if they can manage extensive projects. Most importantly, ask about data security, privacy, reporting, and other sensitive information.
- Reviews & Track Records. Qualify providers based on the customer experience and track record. Check the testimonials, and don’t hesitate to ask for any information. Remember that you are sharing sensitive data about your business. Take no risks in security and safety.
Step#4 Creating The Working Relationship
Once you have chosen the right outsourced accounting service for your business, it is equally important to lay the foundation for a long term working relationship. Review the following points of interest with your service to ensure an equal understanding of expectations.
- Processes that are to be corrected
- Timeframe for any changes that must be made
- Requirements of the business to the provider
- Billing procedures for the outsourced firm
By starting the working relationship with a clear understanding of goals and expectations, future services enlisted and suggested will be more easily attainable and more successful for your business.
Diener & Associates Are Experts In Bookkeeping And Accounting Services
When enlisting the services of trustworthy bookkeeping resources, contact Diener & Associates. We provide consulting, financial reporting and other quality financial services to help you grow your business and securely manage your finances.
We have been a trusted firm supporting and advising businesses of all sizes, including government contractors, since 1989. Call Diener & Associates at 703-386-7864 to learn more about how our services can benefit you.