An accounting department is something that a lot of companies have since 60 percent of small business owners are not very fluent in the complexities of corporate accounting. And considering the fact that 82 percent of businesses fail due to poor cash flow management, having professional accountants handle your bookkeeping is really a no-brainer.
Even though these accountants and bookkeepers work to deal with the money and try to save money through things avoiding additional taxes or penalties, they can ironically be costing you a fair amount of money to upkeep in some cases.
So the question remains, how do you cut your accounting costs? Luckily, this is something that is very achievable if you take the following steps.
Cut Back on Expenses
It might not seem like cutting back in other areas will actually make accounting costs cheaper but it does! This is because the less you spend on things like insurance or transportation will allow you to dedicate more money towards accounting, which means that you can hire the type of professional help that you might need in order to discover other ways of saving some money. This creates a bit of a snowball effect where the more that your accountants are able to save you, the more funds you can dedicate towards them, so on and so forth.
Keep Information As Organized As Possible
Many accountants or accounting services will end up costing more money the longer that they have to work on your company’s finances. That's why you should try and streamline your financial records so that you are helping to minimize the amount of organizing and searching through records that the accountants have to do. The less they have to try and scour through a pile of disorganized files, the faster they will be able to complete their job and stop charging you money.
Plus, accountants are only able to work with the information that you give them. Therefore, if you fail to give them all of the information or leave out some important information, then it will likely result in them making a mistake.
At the very least, this mistake will cause them to have to do some backtracking in the financial records at year's end so that they can find out where they went wrong, which will once again drive up the number of hours they work and drive up the cost. But if the mistake is not caught, then it could have even more severe consequences, including the IRS noticing the mistake and penalizing the company by making them pay even more money.
There is also the possibility that this big mistake could lead to the entire company being audited. If this happens, then it will make the accountants very necessary and will be a lot more hours that they will need to work to help you deal with this process. So you’ll end up paying a lot more money in accounting costs, even if the audit doesn’t reveal any further mistakes.
But if there are additional mistakes, then this could result in the company having to make up for the mistake. So not only will you be paying the accountants much more in order to work the extra hours throughout the audit process but you also have the possibility of being instructed to pay even more money to the IRS.
All of this can happen because you made a mistake due to unorganized financial documents. That is why it is so important that you take the time to make sure that all of your various paperwork and financial information is properly organized and 100 percent accurate. If you do this right, then it helps you cut down on the amount of time that it will take in order to continually manage your books.
Get Professional Expertise
When you attempt to handle your own company’s finances without having an in-depth understanding of corporate accounting, it is likely that you will end up causing mistakes. These mistakes might be something big like forgetting to claim something that would end up saving a ton of money or could be as simple as using accounting software that is unnecessarily expensive when there are cheaper options that are just as good.
Luckily, these mistakes can be caught and corrected when you get a professional to come in and take over the company finances. So if you do not have a sufficient amount of corporate bookkeeping experience, then it’s best to rely on accounting professionals in order to save costs in the long-run.
Outsource Instead of Working In-House
It might seem like having an in-house accounting department would be the easier choice. However, if you’re interested in saving some money on your accounting costs, then it is going to be smarter to outsource the job instead.
This is because the average cost of an accountant full-time employee is over $70,000 per year. This doesn’t even include the cost of benefits, which can often be a few more thousand dollars every year. Plus, they will also need their own computer, accounting software, other office equipment, and potentially even their own office space. All of this costs money and can quickly make the cost of an in-house accounting team skyrocket. But it doesn’t have to be this way.
By switching to outsourced accounting services, you can eliminate the vast majority of these costs. Not only will you not need to pay for the accounting software, but you’ll also be able to avoid any overhead costs of the office supplies or space. Therefore, you’ll only need to pay the outsourced professionals for the actual accounting that they do, which will come out to being far less than the total cost of having an in-house accountant.
Going with an outsourced accounting department will also provide you with an option to only pay for the services that you need. So if you’re comfortable doing your own bookkeeping and just want help handling your payroll and tax preparation, then you’ll only have to pay for these services rather than the all-or-nothing deal of having in-house accountants.
By following these tips, you should be able to see significant savings on your accounting costs. In order to get the best outsourced accounting services possible and help save money in more ways than one, make sure to contact us at AdminAssist.