Outsourcing Accounting Services for Small Business

Outsourcing Accounting Services for Small Business

If you’re an entrepreneur, you’ve likely considered how to procure accounting services for your small business. Maybe you’re currently doing your own bookkeeping. Maybe you’ve researched topics like “online accounting services for a small business” or “how much does an accountant cost for a small business” to see what options are available at what price point. While some entrepreneurs can successfully manage their own books, having a knowledgeable accountant on hand can be a powerful tool for a growing business.

But few small and mid-sized businesses can justify hiring a full-time, in house accountant to manage finances. That’s where outsourced accounting services come in. The outsourcing of business services like accounting and HR is becoming an increasingly common practice. In fact, an estimated 8 in 10 small businesses plan to outsource at least one business function in 2021. Let’s take a deeper dive into outsourced accounting services and how they can help your business.

Do I need an Accountant for my Small Business?

To take your small business to the next level, you likely need someone who is skilled in accounting to manage your small business’ financial health. But before you start searching “how much should I pay an accountant for my small business,” let’s take a look at some facts.

In the United States, the average accountant makes a base salary of almost $52,000 a year. The average CFO? Closer to $136,000. And those numbers are salary alone. Multiply those numbers by 1.25 to 1.4 to get a true understanding of base salary plus benefits for these types of positions. The truth is, until your business is large enough to need the services of an accountant 52 weeks a year, it probably doesn’t make financial sense to bring someone on in a full-time capacity.

That’s where outsourcing can help. Outsourced accounting services offer a much more affordable option, with packages closer to $1,000 to $10,000 annually. According to the Outsourcing Institute, many small businesses use outsourcing as a way to avoid the risk and cost of hiring an additional employee as well as to gain outside expertise that they couldn’t otherwise afford. So do you need a full-time accountant for your small business? Maybe not. But do you need accounting services to help manage and grow your business? Yes.

Outsourcing Accounting Services for a Small Business

Outsourced accounting is a professional suite of services that a third-party firm provides to businesses. These services typically include bookkeeping, financial statement preparation, financial strategy, and more. Outsourced accounting, like any other outsourced service, is designed to fit your company’s specific needs. You won’t pay for services you don’t need. Instead, you’ll have the option to choose from a variety of professional services, like the ones listed below, to help make smart decisions.

Bookkeeping

Bookkeeping is the most basic, foundational financial function for a business, and it’s an essential part of every business. It involves recording and preparing all financial transactions and other financial operations to track revenue and spending. When outsourcing bookkeeping, look for services such as: processing vendor invoices & credit card transactions, reconciling bank & credit card accounts, payroll, maintaining customer invoices, and processing customer payments & collections. It is important to choose a provider who can sync with your chosen accounting software, like QuickBooks Online for example.

Monthly Accounting

Monthly accounting is the next step up from bookkeeping. It involves all the monthly steps a business should follow to keep accounting data organized and provide business insights. When outsourcing monthly accounting, services will likely include: finalizing the month-end close and reconciling balance sheet accounts. Higher-tier services may include a monthly financial review meeting to understand current operating results and an executive dashboard to track the most important key performance indicators (KPIs) for the business.

Cash Flow Forecasting

Cash is the lifeblood of any organization. Whether you are trying to navigate a turbulent economic climate or proactively manage your growth, the ability to forecast your cash flow can mean the difference between success and failure. By intentionally reviewing a company’s cash inflows and outflows, an outsourced accounting provider can help business owners avoid surprise bills or shifts in income that can spell disaster. Outsourced cash flow forecasting services should include: rolling forecasts (which may be short-term or long-term), scenario analysis, and syncing with software like QuickBooks Online.

Outsourced CFO

If your small business is experiencing large growth, resolving a challenge, or is in need of a project-based consultant, an outsourced CFO might be a good option. An outsourced CFO is a financial advisor and strategic consultant that provides services to a company on a part-time or project-based level. When selecting an outsourced CFO, look for someone with the unique understanding of owning, growing, and operating a small business. Outsourced CFO services provide things such as overseeing the finance function, providing guidance on strategic financial decisions, participating in management and board meetings, budgeting and forecasting, and leading big financial initiatives like raising capital or buying or selling a business.

Operational Support

Getting information to make smart decisions for your business doesn’t happen by accident. It takes experience to streamline processes and optimize financials. Operational support is a service to assess current practices and implement new systems and processes to optimize your financial operations. Operational support includes functions like: defining processes & procedures, evaluating internal controls, developing financial reporting & dashboards, setting up new systems and technology applications, and providing ongoing training & support.

Operational support can also help you determine what is the best online accounting software for your small business. The best outsourced accounting services firm will help you optimize your existing technology tools and implement new tools when it makes sense. At Milestone, our tech stack includes best-in-class tools like QuickBooks Online, Bill.com, CashFlowTool, Tallie, Fathom, Dext, Gusto, and more.

What Accounting Services Does a Small Business Need?

Outsourced accounting services are not a one-size-fits-all solution because each business has their own unique set of needs. With outsourced accounting, you get to pick and choose which services you need now and in the future. So how do you figure out what services you need to maintain or grow your business? Consider the following:

Your Needs and Goals

When deciding which types of accounting services to procure for your small business, first consider your needs. What do you need assistance with and how often? Are there any major projects or deadlines coming up that your team could use assistance with? Don’t forget about your business goals, too. The best accounting services go beyond keeping the books to help you make smart financial decisions for the future.

Your Budget

The right outsourced accounting services will fit within your budget. And remember, with outsourcing, your services can grow as your business grows. If you’re starting out and are in need of foundational accounting services, like bookkeeping and financial forecasting, it can be as affordable as $250 a month. Growth-focused accounting services can be more costly, starting at around $750 a month, but these services are designed for growing businesses with more complex financial needs.

Your Workplace Culture

Bringing in outsourced services is a big step, so ensuring a good fit is important. Will the individual(s) who will work on your account fit in with the rest of your team? With your company culture and values? Will they have an understanding of the industry you serve? These are all important aspects to consider.

How to Find Accounting Services for a Small Business

If you’re wondering how to find an accountant for your small business or how to find outsourced accounting services, there are many ways to go about it. While an entrepreneur’s first instinct may be to go with whatever is cheapest, there are several other factors to consider, including:

Sufficient Experience

Not all financial accounting is equal. Some services, like bookkeeping, can be handled by entry-level professionals. Other work, like cash flow forecasting or outsourced CFO work, must be handled by experts. Before selecting a firm, ensure their personnel have the experience you need to make sure you’re in capable hands.

Domestic Staff

Global outsourcing is a common practice. And while there’s typically a cost savings involved in overseas online accounting services for small business, relationships can be much harder to build and maintain when there is a language barrier or significant time difference. If relationships and accessibility matters to you and your team, choose a firm whose staff is located within the United States.

Wide Spectrum of Services

If you’re just starting out, it might be tempting to choose a firm that only offers bookkeeping. However, consider how your needs will evolve as your business expands. It can be helpful to choose a firm that offers a wide variety of services so you can stick with the same team as your business grows.

Competitive Pricing

Pricing isn’t everything, but it is important. It’s a good idea to research pricing models and competitive pricing estimates within your region. Packages between $1,000 to $10,000 is likely a good ballpark estimate to shoot for.

Smart Technology

Basic, repetitive tasks like accounts payable are increasingly being automated through artificial intelligence, freeing up time for more thoughtful work. When choosing an outsourced accounting firm, look for a progressive firm that “gets” technology and will leverage best-in-class software tools to drive efficiency and user experience.

Specialized Focus

Rather than looking for a jack-of-all-trades, entrepreneurs should look for a firm that specializes in their industry. At Milestone, we specialize in working with professional services companies as well as scaling SaaS and tech startups and nonprofits. While we do occasionally work with small businesses outside these industries, we excel in spaces where we have the most history and perspective. And that’s the same for other outsourced accounting services firms, too.

Broader Business Support

If you’re considering outsourcing other elements of your business, such as human resources, consider seeking a firm that offers both services. It will be easier for both services to sync up and you’ll have a cohesive team to turn to when the need arises.

Great Attitude

If you’re trusting your accounting needs to a third-party firm, you should know—and like—who you’re working with. Relationships are important. Don’t discount the need to find a firm that fits your company culture and values. You don’t want to be an anonymous customer in an email or chat message.

Things to Avoid

Just as there are things to look for when seeking out an outsourced accounting firm, there are things to avoid, too. Be on the lookout for the following red flags:

• Pricing structure seems too low: If the pricing seems too low, it probably is. Pricing that seems too low is often a sign of inexperience or hidden fees. Be wary of both.
• Being forced to sign up for unneeded services: The best outsourced accounting firms want to help you figure out what services you need, not sell you on services you don’t need.
• Lack of experience in your industry: While experience with your industry isn’t required, it’s a plus. Industry experience means they are more likely to understand the intricacies of your business.

Trust Milestone for your small business outsourced accounting services

Milestone is making a difference for entrepreneurs who make a difference every day. Whether your small business is new or established, Milestone offers a refreshingly forward approach to accounting services like bookkeeping, cash flow forecasting, outsourced CFO, and more.

We aren’t your typical professional services company. At Milestone, we believe in building partnerships with each of our clients to make their lives easier and provide them with access to all the information they need to make smarter decisions to help build a more successful business.

Surround yourself with smart people to grow your business with Milestone. Contact our outsourced accounting team today to learn more about Milestone’s expertise in the entrepreneurial journey.