This article discusses how much it costs to outsource accounting and more.
Accounting is the backbone of any business. It is one of the most crucial aspects of being an entrepreneur, but it can also be one of the most difficult and time-consuming tasks to handle. Outsourcing accounting can help you get rid of this burden and free up your time so you can focus on your business’s core services.
Think of this piece as Accounting Outsourcing 101 and aims to answer questions such as:
- How much does it cost to outsource accounting?
- What are its benefits?
- How to find an accounting services provider that fits your needs?
We aim to discuss everything you need to know about outsourcing accounting: how much it costs, what its benefits are, how to find an accountant or bookkeeper who fits with your company’s needs, and more.
Outsourcing is the practice of contracting out a business process to a third party. With accounting outsourcing, this means hiring an outside company to do your bookkeeping and tax preparation for you.
The advantages of outsourcing are numerous: you save time by delegating tasks that can be done more efficiently by an outsider; there’s no need for you to acquire specialized equipment or cost for training; and it’s easier on your budget because you only pay for what services you need.
On the other hand, there are some disadvantages. For some businesses who don’t have experience with outsourcing, they may not know how best to approach it. Once a contract is signed, it cannot be modified, however, there are contracts that usually include clauses allowing either party to terminate early. Lastly, some people just prefer doing things themselves after outsourcing than relying on someone else.
Not all forms of outsourcing are the same. In fact, there are three types of outsourcing you must know about if you’re diving into the practice for the first time:
- Onshoring is when a company outsources domestically (e.g. A Californian design studio hiring a freelance architect in Texas to work on a project);
- Nearshoring is outsourcing to a nearby country (e.g. A US firm outsourcing its back-office tasks to a BPO company in Mexico); and lastly
- Offshoring is the process of outsourcing services to a far-away country (e.g. A Canadian start-up availing the services of a remote team in India)
How much does it cost to outsource accounting?
The cost of outsourcing depends on the size of your business and the complexity of your accounting processes:
- The larger the number of transactions, the more expensive it will be.
- The more complex your accounting process is, the more expensive it will be.
These two factors will determine what type of accounting specialists to hire, what tasks to assign to them, how much time they need, and what type of tools to use.
As an example, a quick look at the QuickBooks (a popular accounting software package) website shows that the cheapest plan is priced at $30 a month and may run up to $200 for the highest-tier plan — though the company occasionally offers package options at 50% off.
Finally, the location where your outsourced team is based is also taken into consideration when computing costs.
Outsourcing acocunting services offshore would be the most inexpensive type of outsourcing as labor and other expenses can be sourced at lower rates, as compared to when you choose to outsource within the US. You can also compare different destinations to see which would be the most cost-effective choice.
What the average accountant and bookkeeper earns
In general, accounting services are billed by the hour and may vary from one firm to another. The firm’s size (e.g., a “Big 4” accounting company vs. an independent CPA firm would differ significantly in salary offerings) as well as its location affects the pay rates of their accountant-employees.
Seniority, specialization, and experience can dictate an individual’s fees. CPAs can command higher rates than non-certified accounting professionals.
Based on Salary.com data, here are the average rates for accountant jobs at different career levels and specialties in the US:
|Job Role/Job Level||Hourly Rate (National Average)|
|Accounting Operations Supervisor||$40|
|Accounting Operations Senior Manager||$74|
Now, let’s see the rates if you choose to outsource accounting processes to a BPO firm in the Philippines, as reflected on Indeed’s website:
|Job Role/Job Level||Hourly Rate (National Average) – Converted to Dollars*|
|Certified Public Accountant||$2.53|
*Exchange rate: $1.00 = ₱53.74
Choosing the right outsource accounting service partner
Outsourcing accounting can be a great way to save money and time, but it’s important to choose the right service. Here are some things you should look for:
- Experience: Are they well-versed in your product or industry?
- Credibility: Would someone you trust vouch for the company? Do they have excellent reviews from past customers? Have they been recognized by award-giving bodies in their industry?
- Great customer service: Are your communication channels open and easy to reach? Has the workflow and processes involved been explained thoroughly to you?
When it comes to outsourcing accounting, there are many benefits. For example, it’s much cheaper than keeping bookkeeping in-house. You can also expect higher quality work and better results from an experienced third-party accountant than if you had someone on staff or working for your company part-time. The reason for this is because the provider has an established system that works for them and their clients. They won’t have to worry about learning new things every time they take on a new client because the process stays consistent throughout all of their clients’ businesses.
Save time and money by hiring a professional to manage your finances for you. Learn more about outsourcing accounting to Connext Global Solutions.
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“Nearshoring Vs Offshoring Vs Onshoring: Key Elements to Understand When Dealing With Outsourcing Services | Future of Sourcing.” Future of Sourcing, 17 Dec. 2022, https://futureofsourcing.com/nearshoring-vs-offshoring-vs-onshoring-key-elements-to-understand-when-dealing-with-outsourcing.
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