Small businesses and startups may find it difficult to do accounting or hire an experienced accountant; as a result, many companies are seeking to engage with an outsourcing firm. When and why should you be outsourcing your accounting and finance functions? In this guide, we share some reasons outsourcing might be considered.
When to outsource accounting and finance?
Outsourcing accounting and the finance function are commonly used when:
- Small businesses cannot afford in-house accounting
- A foreign company is not familiar with the local procedures and regulations
- A company does not require a full-time accountant
- Looking to scale their accounting and bookkeeping services
- Temporary services are needed
- Additional advice is needed
- Need a professional accountant
Why consider outsourcing?
Some companies may think outsourcing is unnecessary and rather do it in-house. However, this might not always be the case. There are many benefits of outsourcing, which include the following.
Cost-saving
Companies that are small and medium enterprises (SMEs) may not have enough funds to hire professional accountants or need to prioritise their business plan, growth, training and research and development (R&D).
In this case, they can choose to outsource accounting and finance to cut down costs.
Insufficient staff
Companies may consider outsourcing if they do not have enough staff or has shortage problems, such as employee resignation, temporary leave or retrenchment.
If the shortage is temporary, companies might not want to hire a new employee(s), and it is often more beneficial to outsource their accounting.
Professional advice
Outsourcing your accounting will give you access to professional accountants who have knowledge of local and/or regional regulations, laws and procedures.
Outsourcing firms also provide a variety of services, including bookkeeping, compliance reporting and financial planning.
Time-saving
Once your business grows, you might find yourself focusing more on the company’s accounting and finance function instead of managing the business. By using the services of an outsourcing firm, you will have more time to manage and operate the business.
Merger and acquisition
If a company goes through a merger or acquisition, additional assistance with consolidated accounts and statements, new accounting software, audits and backlog accounts may be required.
Accounting software
Outsourcing firms have advanced automation software that saves time, reduces risk, get real-time reports and minimise human errors.
Examples of accounting software that outsourcing firms may use include SAP, Visma, Sage, Xero, and QuickBooks.
Meet compliance requirements
Professional accountants are familiar and up-to-date with the latest regulations and guidelines.
Compliance reporting such as year-end financial statements, tax registration and filing, financial reports (monthly, quarterly and yearly) and audit assistance are also completed in time, and you will not need to worry about any deadlines and can focus on the company’s operation.
Holding companies
A holding company does not usually conduct any transactions; it only has to file for annual tax returns and clear its finance.
However, if the holding company is holding property that is receiving rental income, you may consider outsourcing the accounting and finance functions.
Conclusion
Accounting and finance is an important function of a company, and if your company meets any of the reasons when outsourcing is used, it is a good choice to consider an outsourcing firm. If you are looking to outsource your accounting and finance functions, we recommend engaging with Acclime’s professional accounting services.
Tax incentives for Singapore businesses
