OUTSOURCE ACCOUNTING SERVICE- PROS AND CONS

ezybizadviser

OUTSOURCE ACCOUNTING SERVICE

One of the dilemmas faced by many businessmen is that whether to keep an in house accountant for day to day book keeping or to outsource accounting service to an external agency.

There is no readymade answer to the same and it all depends upon nature of business, complexities of accounting, annual turnover of the company and other factors.

Normally, during the initial stage of businesses, it makes sense to outsource accounting service instead of keeping an in house accountant merely from cost saving purpose and as the business grows, it is advisable to keep an in house accountant.

In this write up, we would be discussing the pros and cons of account outsourcing instead of keeping an in-house accountant

Pros of Account Outsourcing

a) Cost Saving

As mentioned above, in the initial stage of business, lot of cost saving can be done by taking account outsourcing service of an external firm. This is due to the fact that keeping an in house accountant will increase the cost of accounting and other compliance whereas outsource accounting service will lead to only fraction of cost as compare to keeping an in house accountant.

Normally, it makes sense to outsource accounting work up to turnover of Rs. 5 crore and beyond that there should be an in house accountant.

b) Service of expert professionals

Normally, external agency firms to whom accounting work is outsourced employs team of trained accountants. Also, the work of such an accountant is supervised by expert professionals on regular basis. Thus, by account outsourcing, any company can get quality work through team of professionals where as in case of an in house accountant, his work is not get reviewed or supervised on daily basis which may lead to error in accounting and profit computation.

c) One Window solution

Since outside firms have team of professionals, they can normally provide multiple services under one roof like accounting, Income tax return filing, GST filing, ROC filing, RBI compliance, audits etc which is not possible in case of in house accountants.

d) Online Accounting Service

Outside firms can provide facility of online accounting wherein clients can provide documents and information via email or google drive to the professional firm and they can complete the accounting work without the necessity to make visit to the clients place. Also, all the reports and ledger and Trial Balance are provided to the client via email etc. Therefore, there is no need for making physical visit at client’s place which will save time and cost.

Cons of Account Outsourcing

1) Lack of control over data

In case of big businesses, they are very much concerned about the confidentiality of data and in case of outsource accounting; there is no proper control over the data.

2) Multi-tasking from an in-house accountant

In case of an in house accountant, there is flexibility to the businessmen that the accountant can do multitasking like Invoice preparation, visit to bank and other services which is not possible in case of accounting service taken from an outside agency. Outside agency will require copies of invoices to begin their work from remote location.

Thus, it is a tough job to make decision as to whether to keep an in house accountant or outsource accounting service to third party agency. However, practically, it is advisable to outsource accounting in case of companies with less turnover say upto Rs 5 core Turnover merely from the perspective of saving cost and beyond that turnover, full -fledged accountant shall be employed in house.

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ezybizadviser

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How to Successfully Outsource Accounting Processes

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Outsourced Accounting Services India, is a booming sector.

But there have been some significant changes observed in the last few years.

Now, deciding to outsource your work especially in the area of finances has always been a difficult decision as there are a plethora of decisions that you would need to take into consideration.

Thus the cost of outsourcing accounting services is pretty less.

When you save money in accounting you can consider investing in other crucial aspects of a business.

It is usually observed that mid-market companies have limited process of documentation.

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