Six benefits of outsourcing accounting for small businesses in 2024

Now that we’re firmly in 2024, small businesses are gearing up for fresh opportunities and challenges. In the dynamic landscape of small business operations, finding ways to optimize resources and streamline processes is crucial for sustained growth. One often overlooked yet vital aspect is outsourcing your accounting function.

This is a topic near and dear to my heart. As the CFO of Expensify, I am a big proponent of outsourced accounting. We used outsourced accountants for the first TWELVE years of Expensify’s life (from $0 in revenue to over $100mm). It was only when we started to prepare for our IPO that we brought our accounting in-house, as it becomes exceedingly difficult to IPO without an internal team.

Even to this day, we still outsource certain aspects of our accounting when we need expertise we may not have on staff. In this post, we’ll explore how small businesses can benefit significantly from outsourcing their accounting functions, focusing on why this year is an opportune time to start this journey.

1. Cost effectiveness - outsource for experts

Reduced overhead costs

Outsourcing accounting services allows small businesses to avoid the costs associated with hiring and training in-house accountants. This includes salaries, benefits, and office space.

Access to expertise

Similar to the above point, but beyond just reducing headcount, you also need to ensure you have an accountant who has the expertise your industry demands. Small businesses may not have the resources to employ a full-time, experienced accountant well-versed in your specific industry.

Typically, more specialized expertise comes with a larger salary demand. Outsourcing provides access to a team of skilled professionals who bring diverse expertise and can handle various financial tasks efficiently. 

2. Focus on your core business activities

Time-saving advantage

You won’t make your business better by doing your own accounting. Managing financial records, tax filings, and compliance can be time-consuming. By outsourcing these tasks, small business owners can redirect their time and energy towards core business activities, fostering growth and innovation.

You started your business because you are good at something and that something is probably not managing your books. Play to your strengths. 

Strategic decision-making

With accounting functions in capable hands, business owners can make informed decisions based on accurate financial data. You make the important decisions for your business, but you don’t need to gather the data yourself. With an experienced accountant reporting to you, you can optimize your time on high-impact decision-making instead of chasing down data to make those decisions. 

3. Enhanced accuracy and compliance

Reduced errors

Professional accountants are well-versed in the complexities of financial transactions, minimizing the risk of errors in calculations, reporting, and compliance. Finding out later that you wrongly filed some form and now you unexpectedly owe thousands of dollars can be a real gut punch to an SMB, especially in today’s tough economy. Get an expert to do this for you BEFORE you make this mistake. 

Adherence to regulations:

Staying compliant with ever-evolving tax laws and financial regulations is challenging. Outsourced accountants stay abreast of changes, ensuring small businesses remain compliant and avoid penalties. Your in-house person may be smart, but are they keeping up with all the changes Congress is making to the tax code?

4. Scalability and even more important - flexibility

Adaptability to business growth

As small businesses grow, their accounting needs evolve. Outsourcing provides scalability, allowing businesses to easily adjust their level of service as required without the hassle of recruitment. Additionally, maybe you don’t need a whole new person on your staff and you only need 10 extra hours a month.

It is exceedingly easier to do this when working with an outsourced accounting firm vs. finding the perfect person with the right experience who is willing to work 10 hours a month. Being able to scale up and down as needed is crucial and eliminates the hassle of needing to recruit more staff yourself or downsize when you no longer need them.

Customized solutions

Outsourcing firms tailor their services to the unique needs of each client. This flexibility ensures that small businesses receive the specific financial support they require. A firm that has experience with your tech stack (Expensify, your POS, your invoicing system, payroll, etc.) means they can hit the ground running and you don’t need to handle training a new employee on how everything in your back office works. 

5. Risk mitigation

Business continuity

Outsourcing minimizes the risk associated with employee turnover. Small businesses won't face disruptions in their financial operations due to staff changes or absences. If you have one key employee who knows everything about how your back office works and then they move away, you are up a creek without a paddle.

Outsourced accounting firms have turnover too, but they will just slot in a new expert with no stress on your side. The bottom line: employee turnover becomes their issue, not yours. 

Data security

Reputable outsourcing firms prioritize data security. With advanced technologies and documented protocols, they ensure the confidentiality and integrity of sensitive financial information.

6. Advanced technology adoption

Access to cutting-edge tools

Outsourcing partners often invest in the latest accounting software and technologies (like Expensify). Small businesses benefit from access to these tools without incurring the upfront costs associated with their purchase and implementation.

Efficiency and automation

Automation of routine accounting tasks not only enhances accuracy but also boosts efficiency. Outsourced accountants leverage technology to streamline processes, reducing the time and effort required for manual tasks.

If you DO have an outsourced accounting firm and they aren’t using the latest and greatest software, then you’re likely overpaying and should consider moving firms to one that has embraced technology. While not necessarily always true, look for a firm that charges for their service wholesale and isn’t charging by the hour. These firms are incentivized to take longer, and automation runs counter to that. 

Why 2024 is the ideal time to start

In addition to the perennial benefits of outsourcing, beginning this transformative journey in 2024 brings added advantages.

Fresh start, fresh perspectives

The beginning of a new year is symbolic of new beginnings. Engaging with an accounting firm early in the year allows for a fresh start, bringing in new perspectives and strategies for financial management.

Proactive planning for the year ahead

Starting early in the year allows businesses to proactively plan and align their financial strategies with their broader business goals for the entire year, setting the stage for success.

Maximized tax planning opportunities

Initiating a partnership with an outsourcing firm at the beginning of the year provides ample time for comprehensive tax planning, potentially optimizing deductions and ensuring compliance with the latest tax regulations.

Embrace the possibilities

As small businesses embrace the possibilities of 2024, outsourcing accounting functions emerges as a strategic move to empower them for sustained success. The cost-effectiveness, expertise, and flexibility provided by outsourcing partners, combined with the advantages of starting fresh in the new year, position small businesses to navigate the complexities of financial management with confidence.

By making this pivotal decision, businesses can lay the groundwork for a year of growth, efficiency, and profitability. Expensify is a testament to the benefits of outsourced accounting. Ready to give it a try? Fill out the form below and we’ll take it from there.