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Top Benefits of Outsourced Accounting Services

You know that it is time to hire an accountant to help with your business finances. But, now you are facing the challenging decision of choosing the right accounting team to take care of the services that are needed. How should you go about choosing the right accounting services for your start-up or small business? Outsourced accounting services can transform your financial reports, helping to boost the potential of success of your company.

DIY is a Bad Idea

Do-it-yourself might be a good solution if you are repainting a bedroom or working on product development ideas. But, don’t make the mistake of trying to manage the finances for your company if you don’t have experience with accounting and bookkeeping.

One of the common problems that we see is when business owners attempt DIY financial management for their startups. While things might seem fine in the beginning, even the smallest issues can snowball into big problems in the future. As a result, you might end up paying more money to an accounting team that needs to clean up the mess.

These problems are easy to avoid by hiring the right accounting team in the first place. Quality accounting services will be helpful to create a solid foundation for your company and set you up for a successful future.

Local vs. Online Services

Often, the first idea is to look for accounting services in your city or town. While there may be benefits to local accounting services, don’t overlook some of the benefits that are available from hiring remote services. Most businesses are managed in the cloud, which means that there is no reason why you need to have face-to-face conversations with your accounting team. Instead, you can choose a team located anywhere in the country.

Online accounting services can be a good choice because you can tap into the best skill set applicable to your business needs. Plus, it is common to get a better “bang for your buck” regarding the quality of services that are offered at a minimal price.

The best thing that you can do is evaluate your options and then find the outsourced accounting services that match the requirements of your business.

Why Outsourced is Better Than In-House Accounting

One common debate is whether you should hire an employee or an outsourced accounting team to assist with the financial reports. Consider the costs of bringing an accountant on staff, and you will see that it is more affordable to outsource these services instead of maintaining the work in your office.

If you hire an accountant, then you are adding another salary to your payroll. Plus, you will accrue additional costs for office space, equipment, office supplies, benefits, and more. These costs definitely add up to more when you are paying for an internal employee.

Also, consider the fact that you can tap into a specialized skill set. Employees are often looking for training on the job, which means that you will need to cover the costs as they learn the skills that are applicable to your company. On the other hand, you can skip the training expenses by choosing an outsourced accounting team that specializes in the type of accounting that you need. For example, if you have a small business or a start-up, then your best bet is to choose an outsourced company that has experience working with other small businesses. It doesn’t make sense to hire a big, corporate accountant if you are in the beginning stages of getting the business off the ground.

Benefits to Expect When Hiring Outsourced Accounting Services

Here are some of the benefits you can expect when you choose outsourced accounting services:

  • Don’t Stress Over the Numbers: Does crunching numbers give you a headache? If you don’t enjoy managing the bookkeeping, taxes, and accounting, then it is time to hand these tasks off to an experienced team. You have the luxury of choosing how you are going to spend your time. Don’t waste your day doing something that you dislike. Outsourcing this part of your business means that you will have more time and energy to put into business growth activities and other management tasks that you enjoy.
  • Lean on the Experience from the Pros: Putting your books in the hands of the experts can have a drastic impact on the success of your company. Your accountant can offer years of experience, training, and education. They work with many companies on a day-to-day basis, which means that your business can benefit from the lessons that have been learned over the years. While an in-house employee can handle basic tasks, the employee can’t match the industry-specific skills that come from a dedicated accounting firm.
  • Improved Productivity: Instead of dedicating your time or your employee’s responsibilities to accounting and bookkeeping, outsource these requirements to free up resources for other tasks. A large amount of paperwork is required to keep up with accounting needs, leaving many companies buried in invoices and tax forms. Let the experts handle the files, which will help to boost the productivity of the staff in your office.
  • Save Money: One reason you need financial management is to save money and boost profit margins. As mentioned above, outsourced accounting services are cheaper than hiring an in-house employee. But, there are other financial benefits that can be expected as well. Remember that outsourcing is an investment. When you compare the costs of outsourced services, you will find that these costs are more affordable compared to other options. Plus, a good accountant can help with cost savings by reducing the tax burden, managing expenses, and more.
  • Grow Your Business: If you are experiencing a growth trend in your company, then you need to be sure that you have the support to help with the anticipated expansion that will be happening in the future. Bringing in the services of an accountant means that you will have the structure in place so that your company doesn’t buckle under the potential growth. It is possible to maintain agility as the industry fluctuates with rises and falls over the years.
  • Latest Industry Technology: It is easy to get stuck in “analysis paralysis” when you are comparing various accounting software programs that are available for your business needs. Instead of wasting days or weeks trying to determine the right features that are needed, talk to an experienced accounting team for assistance. You can access the latest technology and create financial systems that are built to last. Using the services of an accounting team means that you are benefiting from the leading accounting software and best systems to ensure the success of your business.
  • Focus on your Business: When you hire an accounting team to take care of the financial services that are needed. Then, it means that you can turn your focus to the core activities that are needed to grow your business. Don’t let yourself be distracted by focusing on things that sidetrack your focus from the things that you need to be working on. While it is important to take care of back-end tasks, these things can be outsourced so that your focus is placed solely on the activities that will help with the future growth that you are striving to achieve.

Choosing an Outsourced Accounting Team

The most important factor in choosing an outsourced accounting team is to find the core competencies that will help your company grow. What services are needed for your business model? How much support is needed throughout the year?

You might be surprised to see just how much you will benefit by bringing in a bookkeeping and accounting team to help. These services can be used to manage payroll processing, ongoing tax forms and payments, invoicing, cash flow, and more.

There’s no question that outsourcing helps with the efficiency and effectiveness of your business. When you have a good financial system in place, then many of the common issues will be smoothed over. Plus, you can rely on accurate financial reports when it is time to make big decisions that will affect your company.

Boost Your Business Results

If it is time to make a change so that you can move your company forward, then you need to look for options that will help with the growth of your business. Accounting and financial services are great solutions that can make a difference in the future.

Before you rush into this decision, we invite you to call our team to learn more about the services that are available. We offer a range of options that can be customized based on the needs of your company. Our team is always on call to answer your questions and help you determine the solutions that are most applicable to your business model.

Easier Accounting is leading the industry by offering the best outsourced accounting services that are available. We offer many years of experience helping entrepreneurs and small businesses with common accounting tasks. Call today to see how we can support your business efforts: (888) 620-0770

Profit Before Taxes: What it Means for Your Small Business

Now that you’ve started a small business, are you keeping up with the numbers that shed light on the profitability of your company? Not only do you need to evaluate cash flow, but it is also important to look at the reports that show the overall health of the company. Understanding the bigger picture is essential so that you can adjust your business strategy. That’s why you need to prioritize your understanding of profit before taxes.

It is exciting to work on product development and tasks that have a direct impact on business growth. On the other hand, it is common for business owners to feel like financial reporting and tax strategy is boring. But, it is essential to understand the importance of these tasks and how they will affect the future success of your company.

If you want long-term success for your business efforts, then you shouldn’t overlook the reports and numbers. Luckily, you don’t need to manage these details without support. Tap into the experience of an experienced accounting team to learn more about your options and the services that are available.

What is Profit Before Taxes?

What does it mean when your accountant is talking about profit before taxes? This term, sometimes referred to as Earnings Before Taxes (EBT), refers to the amount of money that is brought in by your company before paying for taxes and interest payments.

Even though this number doesn’t include tax burden and debt payoff, it does incorporate the overall business expenses that are used as write-offs. For example, there are many costs that are accrued throughout the year for overhead expenses, product development, marketing, and more. These costs are deducted from the money that is brought in. Then, taxes and reports are calculated based on the gross profit that is calculated.

The profit number can be found in your Profit and Loss statement. Or, you can talk to your accountant for a detailed explanation about how the number was calculated.

Why You Need This Information

Why is it necessary to know your earnings before taxes? Having a clear picture of the financial success of your company is essential so that you can make the right decisions that impact the growth of your company. Not only is your profit before taxes number needed for tax calculations, but these details might also be necessary when you are bringing on investors or applying for business credit.

Investment analysts will request specific information about the financial trends for the company. These details can help the analysts determine the operating performance of the business and possible financial trends going forward. If you can show the potential of your business, then it makes it easier to get the angel investing funds that might be needed to help your company grow.

This type of analysis is essential at specific points of your business progression. Often, the numbers are used to gain an objective analysis for the current trends and possible growth in the future. Additionally, your accountant will use these details when evaluating the tax burden that needs to be paid in a given year.

Applying for Business Credit

There are often times when business owners need credit to keep the company running. If you are applying for credit, then the lender will complete a credit risk analysis. The lender wants to ensure that your business will have the viability to pay back the loaned amount in the future.

Additionally, the financial health of your company might impact the interest rate that is offered for the loan. If the lender can see that your business is a good risk for the investment, then it is easier to get a low interest rate. But, if your company is already bursting at the seams with debt and financial obligations, then the lender will see the risk and probably increase the interest rate accordingly.

Financial institutions want to see that you can repay your obligations without harming your business or operating profits. When the cash flow is too tight, as shown in the financial reports, then it is a sign that the loans might default in the future.

Problems with Your Business Profits?

You might feel the pinch of cashflow as you are working through the month. But, it is hard to understand the full picture without looking at the financial reports. If you are dealing with low profit margins, then your business could be facing some serious consequences:

  • Growth is Limited: It is hard to encourage growth in your company if you don’t have the cashflow to keep things afloat. This poor cash position means that you are lacking in the money that is needed to reinvest into the company. If the profits are low and you don’t have the cash available, then how will you reinvest for inventory replacement and product development? These problems could be the nail in the coffin that prevents you from competing with other companies in the industry.
  • Economic Changes Will Have a Bigger Impact: The economy is always in flux, which means that every business owner should expect financial changes in the future. When the inevitable shock happens to the economic growth of the industry, poor profit margins will have a drastic impact on your company. Not only do you need to maximize your profits during the good months, but you also need to save for a rainy day with an emergency fund.
  • No Options for Business Financing: Financial reports that show poor profits for your company make it hard for you to get the loans or finances that might be needed. These reports can impact lending from banks and credit unions. At the same time, investors will be hesitant to provide the funds if they can see the potential for failure due to poor profit margins.

Just because you can see that your business is reporting low profit before taxes, doesn’t mean that your company is going to fail. Instead, it is a sign that you need to make a few changes. Also, don’t proceed without enlisting the assistance of an experienced accounting team to help with your financial management. It is essential that you tap into the expertise that is offered. Then, use this advice to put your company back on track for the future.

Tips for Boosting Profit Before Taxes

What should you do when you learn that your business has low profit before taxes? Here are a few things that should be evaluated to change the trajectory of your company:

  • Product Pricing: What does it cost to produce the products that are sold? How much profits are available for each unit? Not only do you need to evaluate the product pricing, but you should also look for ways to reduce the upfront costs for product development. You might not be charging enough, or it might be time to eliminate waste or reduce expenses. Look for options to source cheaper goods. Or, you might be able to cut payroll expenses by outsourcing some of the services that are needed instead of hiring more full-time employees.
  • Overhead Costs: Look at every cost that is coming through for overhead expenses. You have a set list of payments that need to be sent each month for anticipated costs. Sometimes, these expenses are higher than necessary and cutting into your profit margins. Consider options to cut unnecessary costs or reduce the amount that you are paying. For example, you might be able to move to an office location with lower rent payments. Or, call the phone and internet provider to see if any cheaper packages are available.
  • Leveraging Tax Deductions: Also, keep in mind that this profit before taxes calculation includes all of the costs that are being used for business management and ongoing costs. It is nice to leverage tax deductions in the form of expenses that are being used. At the same time, you also need to understand that spending the money will have an impact on the profits that are recorded on paper.

The most effective thing that you can do is get personalized advice from an accounting professional.  As a business owner, you don’t need to be an accounting professional. But, you do need to be familiar with the way the numbers work and how they impact your business. You can consult with your accounting team to learn more about the current trends. This information is very important when you are making big decisions that affect your finances.

Tapping into outsourced accounting services is one of the best things that you can do to ensure that you are staying on track for the future. The services of a good accounting team might be the difference to help you avoid common financial pitfalls that are faced by business owners.

If you are looking for support with your small business finances, then we are here to help. Contact us at Easier Accounting to learn more about the accounting services that are available. We specialize in small business accounting, giving you access to team that is leading the industry. Call today to learn more: (888) 620-0770