Why Outsourcing your Accounting Might be a Good Idea

You may consider outsourcing your accounting in order to bring in additional expertise you don’t have access to internally, or to save money. Business owners and nonprofit organizations are especially good candidates for outsourced accounting.

Outsourcing your small business accounting

As a business owner, you know you’re edging closer to success when you no longer have the bandwidth to manage your own books. While many business owners know the basics of bookkeeping, in the growth stage the emphasis should be on management accounting. Financial and management reports are a necessity–both for the compliance side of things and when it comes to making business decisions.

Your small business may be ready to explore a new accounting solution if:

  • You’ve reached $1 million in revenue
  • You require more sophisticated financial reports
  • You employ 8-10 people
  • You want your technology to integrate
  • You’re entering an accelerated growth period for your business
  • You’re accepting outside investor capital

Many more small business owners are coming to appreciate and invest in outsourced accounting solutions, especially millennial business owners. Outsourcing is viewed as a competitive, attractive, and safe option that has positive effects on employees.

Outsourcing your nonprofit accounting

Nonprofit folks tend to be passionate about a charitable cause, not management accounting. Nonprofits operate a lot like for-profit businesses with the exception that profits are invested back into the programs. Qualified volunteers can get the job done, but when growth accelerates, the likelihood that they will continue in a volunteer position to manage increasingly complex accounting needs is significantly lessened. 

Your nonprofit organization might be ready to explore a new accounting solution if:

  • Revenues reach $500,000 (mandating audits in many states)
  • You’re acquiring grants and thus require foundation reporting
  • Programs are competing for limited funds and demonstrable ROI is needed
  • The Board of Directors requests more advanced financial reports

Fund accounting is usually beyond the means of a traditional bookkeeper and can stress financial operations.