Accounting for business transactions is a must for all businesses whether small or big.
We understand that a good knowledge of accounting is needed for accounting, record keeping and the preparation of financial statements of your business. Unfortunately many entrepreneurs do not possess this skill. Few entrepreneurs with accounting skills do not have enough time to write their own books. It is possible that their businesses have not grown to the level whereby they can employ a skilled person to carry out the accounting for them. If that is the case, accounting outsourcing can adequately bridge the gap.
Accounting outsourcing involves the hiring of an independent accountant or accounting firm. The firm will take care of the accounting needs of your company such as balancing of your account books, etc. Hiring a full time accountant may be too expensive for you. Instead you can hire independent accountant. The person will only come at an agreed interval to maintain your accounting records. A small but specialized accounting firm would be the best option for you if you are just starting out. Hiring a professional who can give you expert assistance throughout the entire financial management process. This will help you maximize your investments and minimize your expenses.
This approach is not yet popular here in Nigeria. In Western countries, it has become a common practice. Depending on the scope of the engagement, accounting outsourcing firm can help you:
- Set up the initial accounting system – assets, liabilities, equity, sales/revenue transactions, balance sheet, debits and credits, double/single entry accounting for transactions, accounts receivable, accounts payable.
- Create a budget – how much do you need to operate your business? How much should you get paid? How much should be invested back into the business? How much for expenditures?
- Record day-to-day transactions, journal entries, general ledger, trial balance.
- Close books monthly, quarterly or annually.
- File taxes monthly, quarterly or annually.
- Prepare financial statements.
The benefits of accounting outsourcing are enormous. Few of them are mentioned below:
- It is cost savings.
- It gives you access to highly talented professionals.
- You have reliable accurate financial report.
- The professional accountant can help you build stronger internal control system.
- It ensures compliance with laws and regulation.
- Improved efficiency and effectiveness of your accounting/reporting functions.
- It eliminate issues with staff turnover or sick leave.
- You enjoy flexibility.
- You may not need to purchase Accounting Software.
- Staff Training & Development are eliminated.
- Reduced audit Fee as a result of quality bookkeeping.
- You don’t need separate office space for the accountant.
- Acquisition of Desktop or Laptop is avoided.
- You enjoy off-site back-ups of your financial information.
- Peace of mind.
However, it is not automatic that you will stand to enjoy all the benefits listed above. The benefits are dependent on choosing the right person or firm to handle the accounting for you.