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Cash is not profit and vice versa

Posted on | by Jessica Weston | Leave a Comment on Cash is not profit and vice versa

The purpose of a business is to make money, and that means you have to know the difference between profit and cashflow.

Net profit is what you have left after you deduct all your business expenses from all your revenue. You change net profit only by changing the things that affect revenue and expenses.

For example, if:

  • You renegotiate with your suppliers, you may get stock cheaper, or carry less inventory
  • Your staff engage with customers better, you can learn more about what they do and don’t like – and get more business
  • You can roster staff differently, you may be able to run your business more efficiently.

Cashflow comes from various sources. However, it also covers operating expenses, taxes, equipment purchases, repayments, distribution, and so on. 

Note that a profitable business does not always have good cashflow. And a business with good cashflow is not always profitable. For example, you can have good cashflow, and loss-making expenses.

To work out how fast you can grow your business, you need to look at your projected cashflow. We can advise you on this.

Keeping cash crowned as King

Your business can’t survive without cash.

The following six takeaways are essential for business success:

  1. Protect your cash position, by knowing what it is. Build a cashflow statement and always keep it up-to-date. If you foresee a shortfall, start at once to fix it.
  2. Create a cash buffer as an insurance against unexpected difficulties.
  3. Protect your cash position against revenue shocks, by maintaining a balance equivalent to at least two months of operating expenses.
  4. Be realistic with revenue expectations. Take action now if it looks like sales are not going to get you to breakeven.
  5. Credit checking up front will reduce the risk of customer non-payment. Make sure you follow up with clear payment terms agreed in writing. Communicate regularly with customers and automate where possible.
  6. Every dollar you spend reduces cash reserves. The best way to protect your cash is to create a budget for the spend you know you need, and stick to it.

Looking to improve cashflow? Make a time to talk to us. We are here to help.

Could you be eligible for the Self-Employment Income Support Scheme?

Posted on | by Jessica Weston | Leave a Comment on Could you be eligible for the Self-Employment Income Support Scheme?

The pandemic has proved to be a tough time for the UK’s freelancers. But there is help at hand still in the form of the Self-Employment Income Support Scheme (SEISS).

The fifth tranche of the SEISS is now available to freelancers, contractors and people running self-employed businesses. If you meet the eligibility criteria, you may be able to claim a grant payment up to the maximum cap of £7,500.

This could be an extremely helpful cash injection for any self-employed workers who have been negatively impacted by the Covid crisis.

How do you know if you’re eligible for SEISS?

The criteria for making a SEISS claim are similar (but not exactly the same) as for the preceding four tranches of the scheme. So it’s important to read the small print and make sure you definitely ARE eligible before you submit a claim.

To be eligible to claim the fifth SEISS grant, you must:

  • Have submitted your 2019/20 self-assessment return by 02/03/2021
  • Have traded in both the 2019/20 and 2020/21 tax years
  • Intend to continue to trade in 2021/22
  • Have trading profits that don’t exceed £50,000 and are more than 50% of total income for either:
    • the 2019/20 tax year
    • an average of 4 years, 2016/17 to 2019/20.

In addition, to be eligible for the fifth tranche, you must reasonably believe there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021. Trading profit excludes SEISS and other Covid-19 support grants.

What evidence do you need to submit?

There are a few other conditions which it’s important to note, particularly around the impact that the Covid pandemic has had on your business and profits.

  • Unlike previous tranches, you need to submit details of turnover (sales). This will normally be the actual amount included on your 2019/20 tax return, and either an estimated or actual amount that has been/will be included on your 2020/21 return.
  • The grant you receive will be based on your profits from self-employment, calculated over the four years from 2016/17 to 2019/20.
  • If your turnover has fallen by 30% or more between 2019/20 and 2020/21, the grant is 80% of your average quarterly profits, capped at £7,500. Otherwise it is 30% of average quarterly profits, capped at £2,850.
  • The latest date for submitting a claim is 30 September 2021.

NOTE: If you need help working out your turnover, HMRC has included a handy step-by-step walk-through of the process in this guidance.

Talk to us about getting your SEISS information together

If you meet all of the SEISS requirements, it’s a no-brainer to make a claim. Over what’s been a very difficult period, this free cash injection will be a real boost for your cashflow position.

Talk to us if you need help calculating the turnover figures to include in your claim, or deciding whether or not there will be a significant reduction in trading profits for the May-September 2021 period. As with the previous SEISS grants, we’re not allowed to submit the claim on your behalf – you must complete the application and make the claim yourself, as per the SEISS rules.

Get in touch if you need help with your calculations.

Posted in Tax

The Fear of Money and Four Ways to Overcome Your Money Blocks

Posted on | by Jessica Weston | Leave a Comment on The Fear of Money and Four Ways to Overcome Your Money Blocks

Few people are wizards at making money. But it IS possible for anybody to get rid of their money blocks.

Businesses exist to make money. But even with that goal in mind, it doesn’t mean it’s an easy ride to the top.

Money blocks are all too real and common in personal and business finance. Learning to overcome them is an essential thing to do early on.

Here are four ways to help you overcome your own fear of money.

1. Acknowledge the Fear

As is the case with any fear, the first step to overcoming fear of money is to recognise it. Do that and it becomes easier to identify what’s actually scary.

Do you fear the thought of losing money? Or do you fear not making enough money?

Acknowledging your fear, whatever it may be, helps identify the real underlying issue. 

2. Ask for Help

Whether it’s personal or business finances, there’s always someone out there that knows more. 

People who hit money blocks and develop a fear of money are those that never ask for help. But there’s no shame in asking someone more qualified about what you can do in this regard.

Accountants, financial advisors, successful investors and entrepreneurs are all people that may be able to help. Salespeople and professional marketers can also provide insights into specific money problems.

3. Ask for Money

Are you not generating enough revenue? If so, why not consider asking for money? 

Do your due diligence on potential partnerships, investments, and loans.

In some cases, overcoming a money block simply requires an influx of capital from outside sources. It may not seem like the most appealing idea, but it is an option.

4. Develop New Money Habits

Sometimes, the best way to overcome a block is to step outside the comfort zone. 

People run into money blocks because they are fixed in their ways. That’s why making adjustments and developing new money habits can help overcome the fear of money.

It will take work and time. But you already know that one’s mindset can’t be changed in an instant. 

The idea is to try new things and make progress. After all, small successes add up and can alter the mindset.

Taking Action

The fear of money and money blocks don’t always cast a veil on what needs to change. It’s possible to identify solutions and still not overcome fear.

Why?

It’s because the fear of failure can also creep in. When that happens, people refuse to take action and make the required positive changes.

Tackling the fear head-on is always a good thing. Identify what action you should take and pull the trigger to break through the money block.

Learn to Overcome Common Money Myths

There are well-founded fears in the world. But when it comes to entrepreneurs and business owners, the line between facts and myths involving money is not all that clear sometimes. 

It’s vital to learn more about the economic environment as those without knowledge of this area can fall prey to money myths. 

They can end up creating entirely fictional and impossible scenarios for why they have money blocks. That’s also a reason why it’s difficult to see the solution when the issue doesn’t have a strong foundation to stand on.

Do you want to move past your money blocks? Book a call with us today www.sunnysideaccountancy.co.uk/contact

5 Ways to Grow Your Small Business Without Breaking the Bank

Posted on | by Jessica Weston | Leave a Comment on 5 Ways to Grow Your Small Business Without Breaking the Bank

Small business growth often requires hefty investment, but there are ways of growing and improving your enterprise without spending a huge chunk of cash. If you’re trying to build your business on a conservative budget, take a look at the following seven wallet-friendly ways to grow your small business. 

1. Analyse Your Marketing Efforts 

Fine-tuning your marketing efforts can help you use your marketing budget more wisely and achieve a better return on investment. Take a look at the marketing strategies you’re putting the most money into and work out which ones are driving sales. Tools like Google Analytics can help you figure out where your website traffic is coming from, allowing you to prune the practices that aren’t serving your business and focus on the ones that are achieving real results. Social media tools like HootSuite can also give you a clearer picture of the type of content that engages your audience the most. 

2. Fine-Tune Your Website

Many business owners build a website and then consider it a job done. However, your website should be regularly reviewed, optimised and updated to make sure that it’s delivering the best possible results for your business. 

Make sure that your contact information is correct and visible on each page. Strive to improve your loading times – for example, by compressing images – to boost your SEO score. Focus on local SEO strategies to find new customers in your local area and make sure that your site is content rich to attract a bigger audience. 

3. Take Advantage of Trends 

Show your customers that you’re an agile organisation by creating content, products and offers that reflect what is happening in your community and industry. For example, in recent years there has been a rise in micro influencer marketing and a focus on shopping locally due to the covid-19 pandemic. You could capitalise on this by collaborating with micro influencers in your local area, proving that you’re an on-trend business at the heart of the local community. 

4. Upgrade Your Sales Funnel with Content Marketing

If you generate a lot of leads but relatively few sales, then something is going wrong somewhere in your sales funnel. Either you’re not filling the top of the funnel with the right kind of leads, or you’re not nurturing them appropriately to convert them into paying customers. 

One key way to convert leads who are not yet ready to buy into paying customers is nurturing them through content marketing. A first-time visitor to your site will rarely make a purchase, so you need to give them a good reason to keep on coming back. When you share content to your audience every single day, you remain front of mind and build trust. Then, when a prospect becomes ready to buy, voila – you’re right in front of them. 

5. Understand Your Finances 

Knowledge, as they say, is power. Gaining a deeper understanding of your small business’ finances will empower you to make better decisions and grow your business more effectively. Using cloud accounting software such as Xero or Quickbooks can be enormously helpful here, as these programs create easy-to-understand reports and summaries. If you work with an accountant, be sure to consult with them regularly and don’t be afraid to ask questions – a great accountant is not just a number cruncher, but a partner and guide.

Summary 

Growing your business does not need to break the bank. Often, accelerating small business growth is a case of fine-tuning practices that are already in place and capitalising on the opportunities that are already in front of you. By working to improve your existing website and sales funnel, you can generate more high quality leads and nurture them to become paying customers via content marketing. It’s also important to remain agile and respond to local and market trends. Finally, it’s essential that you understand your finances so that you can make smart financial decisions that will really benefit your business growth. 

6 Ways to Boost Profitability for Your Small Business

Posted on | by Jessica Weston | Leave a Comment on 6 Ways to Boost Profitability for Your Small Business

Every small business owner would like to boost their profits, but it’s easier said than done. In fact, research by SmallBizTrends found that only 40% of small businesses are actually profitable. However, by changing your practices, you can increase your margins to ensure that your business not only stays afloat, but has the means to grow and thrive. Let’s take a look at six ways you can boost profitability. 

1. Content Marketing 

Content marketing is a relatively low-cost way of ensuring that your business stays visible. By consistently publishing blog posts, videos and social media updates, your ideal customers are much more likely to happen across your small business. Furthermore, you’ll stay at the forefront of their minds so that they are more likely to come to you when they’re ready to buy. 

Of course, simply being visible isn’t enough. Content marketing allows you to demonstrate your expertise and help your clients solve their problems so that they see you as the go-to provider for your particular product or service. 

2. Create a Stable Cash Flow 

Cash flow is separate from profit, but it is still incredibly important to the financial health of your business. Positive cash flow enables you to grow your business and gives you the freedom to reinvest your capital, thereby generating greater profits. 

One way to improve your cash flow is to offer retainer contracts to your clients at a discounted hourly rate. This may seem counter-productive, but by doing this you are securing work for the long-term and strengthening client relationships, which is likely to lead to additional work in the future. 

3. Consider Outsourcing 

In order to increase profits, you need to cut costs. Whilst hiring new team members may not seem like the obvious solution, it’s important to consider the financial value of your own time. Consider how much certain tasks within your business are worth; if your time is worth £100 per hour, can you afford to waste several hours per day on £10 tasks? Outsourcing frees up your time and allows you to focus on the high value tasks that require your specific expertise. 

4. Cross-Selling

Another effective way to boost your profits is to introduce new products or services that complement your current offerings. A classic example of cross-selling is when a fast food worker asks you if you’d like fries alongside your burger. Other examples include a fashion boutique highlighting accessories to “complete the look” or a smartphone store offering protective cases for your new device. 

5. Shop Around with Suppliers 

If you’ve been using the same suppliers for several years, you’re probably not getting the best deal possible. Suppliers don’t reward customer loyalty, so shop around and see if you can find a lower price elsewhere. Besides, threatening to leave your current supplier often encourages them to be much more forthcoming with discounts and special offers. 

6. Remove Dead Weight

Are all of your products and services really generating a profit? In order to boost your margins, you need to analyse your current offerings and work out which ones generate the most profit. You may be surprised to learn that some of your products or services don’t generate much profit at all. You can then cut them out and focus solely on the practices that really do make you money. 

Summary 

Boosting your profits doesn’t just happen; it requires time and consistent action. By focusing on marketing, outsourcing lower value tasks and getting rid of products and services that don’t make you money, you will see a big increase in your margins. Furthermore, it’s important to maintain a healthy cash flow so that you have capital available to reinvest in profit-generating activities and shop around with suppliers to keep your costs low. 

The Four Cash Flow Forecasting Blunders That Lead to an Inaccurate Financial Picture

Posted on | by Jessica Weston | Leave a Comment on The Four Cash Flow Forecasting Blunders That Lead to an Inaccurate Financial Picture

Cash flow forecasting is a powerful tool for businesses of all sizes. To make it all the more effective, avoiding these common mistakes is crucial.

Making projections can be incredibly beneficial for controlling the financial situation in a business. Because of this, financial reports are the most important aspect of company accounting. 

The forecast serves as a foundation for future strategies and plans. Unfortunately, there are some mistakes commonly made in the process. 

If a cash flow forecast isn’t done properly and fails to illustrate crucial financial trends, it can prove quite damaging to a business. 

In this article, we’ll examine some of the pitfalls of improper cash flow forecasting that are most likely to put a company in turmoil.

Mistake #1. Incremental Income Line

Since cash flow forecasting depends on the income from business operations, projections of the incoming cash must be handled with care. And a common mistake when it comes to this aspect is making the income line incremental. 

For example, setting growth goals from one percentage to a higher one isn’t enough. A correctly done income projection should rely on such contributors as prices and volume while considering different divisions. 

In this way, the forecast will better reflect business performance and simultaneously raise attention about potential issues. 

Mistake #2. Inaccurate Data

Cash flow forecasting can’t be effective if it provides outdated data. Yet, many businesses fail to update their projections regularly. 

If there’s a large discrepancy between the actual numbers and those entered in the forecast, issues could amass.

Updates to the cash flow forecast should ideally be done weekly. When the projection is updated that often, it might not be a perfect forecast but it will vary only slightly.

Mistake #3. Not Calculating Differences

Difference calculations can provide valuable insight and prove quite useful for devising a business plan. For that reason, a well-made cash flow forecast should include those calculations. 

It’s even more efficient if they are expressed as percentages, as these will make certain expenses impossible to overlook and present a clearer picture than just considering numbers.

Mistake #4. Sticking to One Scenario

It’s always advisable to consider various ways certain business aspects can develop in the forecast period. 

For example, if sales projections are overestimated, the whole projection will quickly prove unreliable. That’s why it’s vital to consider different scenarios when creating a cash flow forecast, with a particular focus on the worst-case scenario.

Many businesses avoid considering such cases, but those should always be predicted before moving forward. A realistic approach to the projection is ideal and it should be a product of considering both extremes – worst-case and best-case scenarios.

Create the Most Accurate Cash Flow Forecast

Meticulously working on the cash flow forecast will serve as an excellent platform for future business planning. Taking the relevant data into consideration and making the forecast straightforward and understandable is crucial for every company.

Although a forecast will rarely predict with absolute accuracy, it has the power to lead the company in the best possible direction.

6 Reasons to Swap Spreadsheets for Cloud Accounting Software

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Many small business owners have been using spreadsheets to do their accounting for years now. Whilst spreadsheets may seem like a convenient and cost-effective way of managing your finances, advances in cloud accounting software mean that your business could most likely benefit from an upgrade. Let’s take a look at why you should swap your spreadsheets for cloud accounting software, and how to make the transition smoothly.

1. Data Entry

Not only is manual data entry mind-numbing, it also makes it very easy to make mistakes. Just one typo could lead to major errors, including mistakes on your tax return which may result in missed deductions or penalties. 

Cloud accounting software, however, allows you to upload your receipts and invoices directly and keep accurate records, removing the need for double data entry and reducing the likelihood of mistakes.

2. Lost Data 

The larger a spreadsheet becomes, the more likely it is to either crash or corrupt, resulting in lost data. However, your records don’t cease to matter once your tax return is filed. It’s important to keep your records for audits and to track the company’s progress over time. Leaving your data in a spreadsheet leaves it vulnerable, whereas cloud based accounting software provides multiple layers of protection to keep your information safe.

3. Integration

Spreadsheets don’t tend to integrate well which can lead to a lot of stress and wasted man hours. Saving a spreadsheet in a new location can corrupt files and break links, causing countless problems. However, cloud accounting software automatically syncs your data across a range of devices and is designed to integrate well with other software, permitting seamless sharing and collaboration.

4. Audit Trail 

Spreadsheets don’t create a clear audit trail in the same way that accounting software does. For example, you may see that something was changed but be unable to identify the exact details. It’s important to keep a step-by-step record to keep your company safe and your records accurate. Accounting software allows you to easily keep a log of all changes made to your files, dating right back to the moment they were initially created.

5. Time 

Spreadsheets tend to be much more time-consuming than cloud accounting software, especially if you’re working with a high volume of data. Using spreadsheets requires you to spend a lot of time on data entry, preparing reports and verifying information. This could cost you days’ worth of man hours! With cloud accounting software, on the other hand, these processes take mere minutes to complete.

6. Collaboration 

The sharing functionality of traditional spreadsheets tends to be slow and can become confusing when multiple people try to work on a document at once. Cloud accounting software is designed to be collaborative and, as mentioned previously, automatically syncs across all devices, permitting seamless sharing and creating an accurate audit trail.

How to Choose the Right Cloud Accounting Software

The right cloud accounting software for your small business will depend on your particular requirements, and it’s worth asking your accountant for recommendations. We recommend considering the following:

  • Which systems do you want to integrate the software with?
  • How many people will use the software?
  • Which functions are most important to your business? 
  • What is the upfront cost or subscription fee?
  • How much training is required?
  • What support is provided?
  • Is the software scalable as your business evolves?

Summary

If you’re still using spreadsheets for your small business accounting then it’s most definitely time for an upgrade. In fact, using spreadsheets is almost as outdated as working with pen and paper! Cloud accounting software can save you a huge amount of time and money, as well as protecting your data and maintaining more accurate records. For a relatively small investment, it offers a very large return.

How an Accountant Can Help Your Small Business to Succeed

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They say that behind every good business is a great accountant, and it’s true! A great accountant does far more than save you money on your tax return – although that certainly is an attractive benefit. Hiring a great accountant isn’t just about remaining compliant; it’s a big step towards improving the financial health of your business and can really help with planning for the future. Here’s how an accountant can help your small business to succeed.

Save Time

One of the most attractive benefits of hiring an accountant is the relief of not having to do it all yourself. Accounting is notoriously difficult and time-consuming – there’s a good reason why qualified accountants undergo so many years of training. A great accountant will save you many man hours and allow you to get back to growing your small business.

A Smaller Tax Bill

A great accountant won’t see you pay a penny more in tax than is strictly necessary. Many small business owners, despite their best efforts, end up missing out on tax deductions or incentives. The rules and regulations surrounding taxation are complex and ever-changing, so it’s best to have a qualified professional on your side who can help you to save you as much as possible.

Accurate Records

It’s important to maintain accurate financial records to ensure that mistakes don’t compound and spiral out of control. A great accountant will ensure that your records are impeccable so that you don’t end up with a tangled web of errors on your hands or worse, mistakes on your tax return that could come back to bite you.

Financial Planning and Stability

Cash flow can be very tricky to handle and it’s often difficult for business owners to get a clear picture of how much money is entering and leaving each month. An accountant will help you to manage your cash flow and ensure that there’s always enough in the bank to continue operations, even when times are tough. This helps to keep your business stable and running smoothly. You’ll be able to offer both your staff and your clients a consistent and positive experience, maintain high levels of trust and loyalty with both.

Furthermore, a great accountant helps you to plan for the future and make sage investments at the right time. They will use their financial acumen to help you to identify areas of improvement and plot for growth, so you’re not taking a shot in the dark.

Marketing

It may not seem obvious at first that an accountant would be able to help with marketing, but they may in fact be able to advise you on where to spend your money and which practices aren’t generating a worthwhile return on investment. This allows you to focus on the marketing activities that truly drive the needle for your business and cut back on areas that aren’t serving you. Furthermore, cash flow analysis can help you decide when to launch a new campaign and get a clear picture of the results.

Financing

Your accountant can help you to understand your financing options and weigh up the pros and cons of each. On top of this, they can help you to prepare the best possible case for potential lenders so that you get the best rates possible. All of this can be enormously helpful in terms of business growth. Furthermore, if you have existing debt, your accountant can help you to handle it in the most beneficial way possible for your business.

Summary

A great accountant is so much more than a number cruncher – they function as a partner and guide to help you make the best possible financial decisions for your business. Whether you’re in the startup phase or looking to grow your business, hiring a quality accountant is a decision you won’t regret.

4 Reasons Not to DIY Your Tax Return For Your Small Business

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As a small business owner, you may be used to taking the DIY approach. After all, you’re most likely a marketer, financial director, HR manager and payroll administrator, to name but a few of your many responsibilities. However, although your business may be small, there’s one area that really does call for professional help – and that’s filing your tax return. Let’s take a look at four of the main reasons you shouldn’t do your taxes yourself this season. 

1. You’re Not a Numbers Person 

We’d all like to believe that we’re good at absolutely everything, but the truth is that not everyone is good with numbers. If you don’t have an affinity for mathematics then doing your taxes yourself is probably not the best idea. 

Even if you’re competent enough at everyday calculations, taxes are a whole different ball game. Calculating your taxes is a very complex process; there’s a reason that accountants have to spend so many years in training. 

A simple mistake on your tax return can cause you to pay the wrong amount of tax and even result in harsh penalties that can seriously threaten your small business. It really isn’t worth the risk. 

2. It’s a Waste of Your Time

Taxes are notoriously time-consuming and as a busy business owner, your time is a precious resource that you can ill-afford to waste. After all, the time that you spend doing your taxes is time you can’t spend growing your business. It’s important to sit down and think about how much your time is actually worth before you squander it all trying to figure out your taxes. Think of time in the same way as you think of money, and learn to invest it wisely. 

3. Tax Laws Change Constantly 

Tax laws change all the time and it can be incredibly difficult to stay on top of all the latest rules and regulations – especially when you already have a business to run. When tax season rolls around, the chances are you won’t know about all of the latest changes which could lead to you making mistakes on your tax return or missing out on new opportunities to save money. 

It’s an accountant’s job to keep up to date on any changes and then take advantage of these opportunities to save you money, so that you pocket as much of your income as possible. Remember that a quality accountant will always save you more than their wages. 

4. The Internet is Full of Misinformation 

In this day and age, the DIY approach to any task usually involves several Google searches. The problem is that although the internet is a wonderful resource, it’s full of incorrect or outdated information. As discussed, tax laws and deductions change all the time, so the article you’re reading may no longer be accurate. Furthermore, tax rules vary hugely from country to country, so you might end up making a mistake because you read advice that doesn’t apply to your business. 

Sifting through all of this information and checking for veracity is a hugely time-consuming task, so you’re far better off working with a tax professional who has relevant experience within your specific industry. That way, you can have your questions immediately answered by someone who knows what they’re talking about and won’t have to waste time falling down Google rabbit holes. 

Summary 

The needs of every business are different, but if the above issues resonate with you then you should consider hiring an accountant when tax season rolls around. A great accountant is an investment in the financial health of your business, and will undoubtedly save you a significant amount of time, money and stress in the long run. 

Book a call with us today if you’d like to arrange for us to do your return…. https://calendly.com/sunnysideaccountancy/phone-meeting

Should You Outsource Your Accounting?

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It might be tempting to try and do the accounting yourself. But getting a team of experts could save you precious time and resources.

Some businesses have internal solutions for financial management. And in smaller companies, even the owners themselves can weigh in and tackle the task. 

Such an approach could work for the business for a while. But it might not be the best option, especially once the company starts growing.

To answer the titular question, it’s more ideal to outsource your accounting, or at least consider doing so. Here are the essential reasons why outsourcing might be a good idea.

Reason #1. Time Efficiency

Your team already has a list of responsibilities. If you don’t have a dedicated accounting team, your team will probably spend their precious work hours taking care of the financials as well. 

The time your team spends on accounting tasks means you get less time to focus on your company’s vital operations, such as improving sales or bringing in new leads.

Additionally, if neither you nor your employees are trained or experienced, dedicating company resources to such tasks can be considered wasteful. You’re diminishing your business capacity and distracting your team with a job outside their skill set instead of focusing on your strong points.

Outsourcing will save you time and get your financials in order sooner. Simply put, leave the accounting to the professionals.

Reason #2. Decreased Costs

If you consider hiring an employee solely for accounting, or you’ve already done that, notice that outsourcing could save you a significant amount of money. 

There are indications that companies hiring accountant agencies save around 40% of the costs compared to those that have in-house accounting. 

The calculation is very straightforward – by outsourcing your accounting, the only cost you have is the service price. On the other hand, keeping a full or part-time employee comes with additional expenses, not to mention taking away various resources better spent elsewhere.

Reason #3. Lesser Risk of Fraud

Small and medium-sized companies suffer significant losses due to employee fraud. 

Larger businesses have better control over their metrics, with dedicated departments that monitor all transactions. A small business will usually lack this kind of control, which results in a higher risk of fraud.

When you decide to outsource your accounting, your company gains access to an affordable CFO service that will have no problems detecting fraud signs. You can get an objective analysis of the financials as the accountant is entirely independent of your company.

Reason #4. Professional Service

Professional accountants have an obvious advantage in financial dealings – they know accounting. Your business will be in safe hands with using a service that’s well-familiar with all relevant codes and laws.

From a technical standpoint, an accounting agency will have every resource necessary to perform the job – from expert employees to the best accounting software. These resources won’t be available to your company without additional expenses and hefty time investment.

Finally, a professional accountant could offer you some useful, impartial advice that you couldn’t get from anyone other than an expert.

Focus on Business, Not on Accounting

Once the burden of accounting is lifted from your shoulders, you can expect work efficiency to improve in several ways. 

Outsourcing your accounting is cost-effective, saves time, and lets you focus on the more important matters where you and your team can be the most productive.