How Outsourcing Your Bookkeeping Can Make You More Money
Bookkeeping may be the last thing on your mind when you initially start your business. Perhaps you’re beginning because you want to make a difference or need more cash. However, you must understand that good bookkeeping and accounting are essential to running your business.
If bookkeeping is becoming too much to handle, it’s time to find a partner specializing in bookkeeping services so you can focus on growing the business.
Accounting services can be beneficial because they can handle the following aspects of your company:
Opportunity Costs
As a business owner, you must consider the entire cost and if one of the firm’s employees is spending time completing the books. Every hour an employee or owner spends handling the finances, there is an hourly wage plus the potential cost of revenue-generating work.
For example, if an owner earns $50 per hour and spends 10 hours per month preparing the books, the business will incur a $500 expenditure in bookkeeping.
Although the initial cost is $50 per hour on the books, this does not consider what else the owner can do for the company. If they’re closing new deals and winning contracts, extending the client base, and enabling management to be more efficient, the potential revenue cost may be in the hundreds or thousands of dollars.
If an owner is worth $1,000 per hour to the company and spends the same amount of time in the books as they do throughout the year, the company loses $120,000 in income ($1000 x 120 hours). It may be better to outsource bookkeeping in this case.
Depreciation
Unexpected expenses in any organization can send a profitable company into the red.
One or two months like this in a succession might be a tipping point for investors and banks. Banks assess risk by focusing on the bottom line. If a firm is looking for a commercial loan or a line of credit, the bank may see it as risky if the bottom line is inconsistent.
Any major changes in the bottom line may impact an investor’s risk assessment and the price they are willing to pay for a company if they are exploring an acquisition.
As a result, during months with significant purchases, a corporation may depreciate the asset over time.
Assume a restaurant wanted to repair a large freezer and a grill within the same month. For many restaurants, this might be the difference between a profitable month and a terrible one. The IRS authorizes asset depreciation, although the amount of time allowed varies based on the type of item.
This is where an outsourced accounting service may help. It’s not that a business owner can’t record depreciation; it’s only a matter of knowing whether or not an item may be depreciated and for how long.
Obtaining a CPA for Less
Waiting till the end of the year to catch up on your books might be pricey. Most in-house CPAs demand a greater cost than a bookkeeping company.
As a result, for work that was spread out over a few months, a corporation may receive a bill from its CPA for a large amount of catchup work and charge a high premium for it.
Finding Expensive Processes
If an outside business maintains the bookkeeping, there is a good chance that they may detect cost increases or deteriorating profitability over time.
A bookkeeper can help you find changes that might otherwise go unnoticed. This enables an owner to detect the increased cost and then ascertain where it came from.
Conclusion
Outsourcing your books may appear redundant at first glance, but it may save you money and time. You’ll be more focused on running your firm and more mindful of the financial requirements for success.
Working with a financial solutions partner to manage your bookkeeping expands those benefits and, as a result, the organization’s earning potential. If you’re looking for an accountant in Framingham, MA, we can help. Our CPAs can deliver high-quality services for fair, affordable costs. Contact us today.