Whether you want your business to have a single owner forever or you're actively seeking investors, you need to have accurate financial statements. Your financial statements can help you get lower interest rates on loans, better forecast your cash flow, and make informed decisions for future growth.
Because strong information is the key to any business decision, your financial statements need to go beyond the minimum requirements. The new standard of outsourced accounting and bookkeeping services often give you the most accurate picture of your finances.
In many smaller businesses, the owners or managers do most of the accounting. Even when a CPA does the taxes or end-of-year reports, most of the day-to-day bookkeeping may be done by someone with many duties that go beyond accounting. This creates several problems:
First, the people preparing the books may not have advanced accounting knowledge. If they lack knowledge of accounting rules, they may report transactions in the wrong period or make other errors.
Second, when an owner or employee has other duties, accounting often takes a backseat. Accounting reports that managers use to make decisions can quickly become out of date. Needed documents may also be misplaced before the designated "accountant" records them.
Finally, when accounting is viewed as an undesirable chore, there is added incentive to rush through it. This also increases the likelihood of errors.
Even when you prepare your books carefully, there is always the risk of human error. Even a single missed or transposed digit can throw off your books.
Outsourced accounting services can often be directly integrated into your inventory, point-of-sale, payroll, and other bookkeeping systems. Each time a transaction is made, your accounting systems are automatically updated. This virtually eliminates the possibility of human error in data entry.
Provide Expert Review
Virtual outsourced accounting and bookkeeping isn't done entirely by computers. A CPA is still reviewing the entries and checking for errors.
Many errors are difficult to spot without extensive accounting experience but still have costly consequences for your business. If your CPA sees something that doesn't look right, he or she can investigate further to see if an error was made and where it occurred.
This gives you peace of mind that your books are accurate which you typically can't receive unless you have the budget for a dedicated in-house accounting department.
Use Best Practices
If you do your accounting in house, you probably find a way that gets the job done and stick with it. Often, this won't be the most efficient, cost-effective or accurate way, but you may not have the time or expertise needed to improve your processes.
Virtual outsourced bookkeeping and accounting services have dedicated accountants who are constantly trained in the latest best practices. Because they're serving numerous businesses, it's in their best interests to invest in constantly improving the accuracy and efficiency of their processes.
Make a Larger Team Available
When you're making a special asset purchase or trying to take advantage of a tax credit, your in-house accountant may need to spend time learning a reporting procedure he or she has never seen before. This could take significant time away from your accountant's standard duties, and his or her lack of experience increases the risk of errors.
Outsourced accounting and bookkeeping services have a much broader range of expertise available. While you may typically only use standard bookkeeping services, other specialists are ready to step in to offer their knowledge when you need additional services.