Accounts Outsourcing: The Ideal Time For Businesses To Opt For It
Author : QXAS UK | Published On : 23 Sep 2021
Most businesses suffer from indecision about the ideal time to outsource their accounts. Some feel that outsourcing at the beginning of the fiscal year is advisable while others feel that year end accounts outsourcing is cost-effective.
However, most accountants and third-party service providers are inundated with work during the yearend. While outsourcing accounts at the end of the year might seem like a better option, the fact that accountants refuse to take up additional client accounts during this time might land a business in deep trouble.
Alternatively, outsourcing accounts at the beginning of the year is relatively costly, as the firm will have to be paid for the entire year. Since work associated with accounts is seasonal, small businesses and start-ups might find this an additional burden.
There are advantages and disadvantages associated with both thought processes. Hence, businesses should decide the ideal time based on their convenience.
Since accounts need regular updations and their workload also increases periodically during the year, all businesses have to outsource accounts sometime or the other. However, until businesses can take it up without their core processes getting affected they can continue to maintain accounts in-house. The time to outsource accounts, thus, depends on the convenience of the business.
Outsourcing at the beginning of the fiscal year
Finance and accounts are processes that ensure the health of the company. They need to be maintained and kept updated from the very beginning. Yet most businesses keep relegating the involved work and try to update accounts only when the tax season looms large. Such updations and calculations are prone to errors and mistakes. Eventually the tax returns filed and taxes submitted return errors and companies have no option but to revise the same. If this continues every time, it results in repetitive work for the company. Such work is time-consuming and costly and will periodically take the focus away from the core processes.
Additionally, it may also incur penalties from the relevant statutory and regulatory authorities. To prevent all this, companies should outsource accounts from the outset. Some of the benefits associated with the same include:
Sustained and consistent maintenance and updation of accounts
Freeing up of resources that can be utilised for improvement of core business processes
Greater accuracy and better quality of work output
Timely submission of tax returns thereby doing away with the need to pay penalties or incur additional interest charges
The monthly costs involved might make the system seem expensive especially for a start-up. But eventually, the time saved, the elimination of penalties and monetary savings resulting from proper tax planning will offset the same.
Outsourcing at the yearend or a later stage
A certain section of businesses feel that opting for year end accounts outsourcing is a better option. They tend to delay outsourcing until the time they are overwhelmed by the sheer amount of work involved. This might save the company a considerable amount of money as the company only pays for the outsourced services when they avail of the same.
However, this process has certain disadvantages that might eventually create more harm than good. These include:
Refusal by hard-pressed accountants to take up additional work during yearend
Accounts rectification is time-consuming as the accountants have to wade through old and out-of-date manual systems before they can automate the same
Possibility of discovery of errors made in the past might make it difficult to accurately calculate taxes
Past error correction and resubmission of previous tax returns prove to be time-consuming and incur additional costs
Eventually, the costs incurred in the correction of previous accounts and the additional time and effort required, increase the cost of this process.
Ultimately, as they grow and become more profitable, all businesses have to outsource their accounts and finance processes. Hence, instead of waiting until the last moment and availing of year end accounts outsourcing services, it is always better to outsource accounts before the workload becomes too great to handle.