EA - Strategies to Reduce Bookkeeping and Accounting Costs

Strategies to Reduce Bookkeeping and Accounting Costs

It’s easy to see that good bookkeeping and accounting strategies are important for the financial health of your company. But sometimes small business owners have a hard time justifying bookkeeping and accounting costs because they are worried about managing overhead expenses. Today, we are breaking it down to help you see that good services are an essential investment for your company.

Expense Vs. Investment

Yes, you will need to pay money for services, software, and more. Instead of viewing the money as an expense that is eating away at your profit margins, a better solution is to reframe the spending as a long-term investment for your company.

What is the difference between an expense vs. an investment? An expense is a drain on your resources without adding measurable benefits for your company. In comparison, an investment is a cost that will start paying you back and improve your business efforts.

You need to balance the initial and ongoing costs with the potential benefits and costs in the future. For example, failing to implement a good bookkeeping and accounting system can result in messy finances in the future. Even though you are “saving money” by not paying an accounting service for support, you will likely face expensive consequences in the future such as:

  • Missed opportunities for tax deductions
  • IRS fines for incorrect tax filings
  • Mistakes on payroll and invoicing
  • Cash flow problems from poor tracking
  • Poor business decisions due to inaccurate financial reports

When you understand all of the potential issues that can be prevented with the right accounting services and software, then it will help you see why you shouldn’t delay these investments.

Most Important Investment

What is the most important investment that you can make in your company? People! If you cut corners on the quality of employees, contractors, and service providers that are hired, then it will hurt the performance of your company.

Often, business owners look at the amount that is spent on people as an expense. Instead, ask yourself how much that person is worth to your company. Investing in the right talent means that you can bring in the skill set that is needed to help your business flourish and grow in the future.

As you put together the right team, all of the skills and services will be available to help you accomplish the top goals for the organization. If you are paying for costs that don’t contribute to those efforts, then it might be an indication that you can do without those things.

Tips for Managing Expenses

Even though you can’t eliminate the budget line-item for bookkeeping and accounting costs, there are a few things that you can do to decrease your overall spending. Set a budget, then put your money into the right places that will support your needs. Hiring the right accounting team can have a positive impact on your cash flow and the overall financial health of your company.

Here are a few tips to help with the management of your costs:

  • Cut Expenses: Now that you understand the differences between expenses and investments, evaluate your spending to see if you can find areas where you are spending money on unnecessary items. Are there any expenses that you are maintaining that aren’t adding to or supporting your main business goals? You will need to decide about each item to determine the overall strategy that is best for your needs. Then, use that money for an investment that will have an impact. For example, you might adjust your insurance coverage to save a little money each month. Then use that extra cash to put towards bookkeeping services to ensure that you are staying ahead of the numbers throughout the year.
  • Organize Your Information: Once you’ve hired bookkeeping and accounting services, keep in mind that the costs go up if the team has to do extra, unnecessary work. Instead of overpaying your bookkeeper, look for ways that you can streamline your in-office systems to ensure that everything is neat and orderly for the financial professional. Organization not only saves you money, but you can also save time sorting through paperwork and other busy work. Bookkeepers and accountants only work based on the paperwork and information that is provided. So, you need to be sure that you are offering accurate, effective information. Maintaining this organized system will reduce the number of hours required to manage your books.
  • Professional Advice: Without experience in running a business, setting a budget, or filing taxes, it is likely that you are making mistakes with your financial management. You will find that it is worth the cost to bring in an expert for advice on the services that are required. Even though you will pay a fee for time with the professional, you can identify areas where your finances are managed Small tweaks to your ongoing bookkeeping and accounting systems can result in big savings in the future.
  • Contractor Instead of Employee: When you know that you need specific services or skills, then it might make sense to hire an employee to help. But there are many situations where business owners don’t need the full-time services provided by an employee. Another option is to skip the full salary, benefits, and overhead costs of employment by hiring a contractor for outsourced services. For example, you can save thousands of dollars each month by paying a small business accountant for basic services instead of hiring a full-time accountant to work in your office.

The key is to find ways to cut expenses without harming the well-being of your company. Each business is unique, which is why there isn’t a one-size-fits-all solution for all companies. A personalized approach is the most effective way to be sure that you are avoiding high costs and unnecessary expenses.

The Power of Outsourcing

There’s no question that outsourcing is one of the most effective and simple ways to reduce the amount of money that you are spending on skills and support. We’ve talked about this point in other blog posts, but it’s worth a mention again because of the leverage that is available to help you cut accounting costs.

When you look at the numbers, it’s easy to see why a big team of employees can cut into your overall profits. Hiring an employee can be expensive! You need to look at more than their hourly pay. In addition to these hourly or salary costs, you will also bear the burden of benefits, office supplies, office space, furniture, and more. There are times when it makes sense to bring in an employee because you need full-time services in your office. On the other hand, there are many instances where you can pay a fraction of that amount for top-notch services from an outsourced team.

Contractors offer the same skills that are available from an employee. In fact, there are times when hiring an outsourced team is more effective than employee services since those contractors have experience working with many different companies. You can tap into the expertise that comes from working with other businesses that are similar to your company. This information can be used to improve your systems and help you avoid some of the common mistakes experienced by others.

Lean Strategies to Reduce Accounting Costs

Implementing lean strategies for your company means that you are focused on the measurement, control, accounting, and management aspects to maximize the information that is available when making significant business decisions. If you are trying to decide on a business development investment or whether you should hire more employees, you need to be sure that you have accurate financial information to influence the way the decision is handled.

An experienced accounting and bookkeeping team will ensure that your financial reports and transactions are current. Then, this information can be used at any point to help you determine the right decisions that will have the best impact on your company. Hiring an outsourced accounting service ensures that you have timely reports which can be used to determine the value created for customers. Additionally, you can implement a lean system that reduces overall costs while increasing sales at the same time. It feels great to make these changes, knowing that you are improving cash flow and the potential success for your company.

Do You Need Outsourced Accounting Services?

How do you know when it is time to hire an outsourced accounting team? The truth is that you can probably benefit from these services right away. Many business owners choose to implement these services from the beginning of their startup efforts, ensuring that the financial system has a strong foundation as the business grows.

If you are considering the option to hire outsourced accounting services, then you are welcome to talk to us about your situation. Call our team at Easier Accounting to learn more about the way our services can be matched to fit your needs. We’re here to keep your financial information on track so that you can focus your time and energy on growing your business this year. Call for more details: (888) 620-0770.

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