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Not everybody is able to start a business on their own. As an entrepreneur, you have already taken the bold step and based on your business idea, are already running a business. Most entrepreneurs and owners across small businesses typically start with running most functions in-house, but soon realize that it is better to have specialized people or vendors to manage non-core functions, so that they can focus on sales growth and customer relationships.
Accounting is one such function, which needs to be well managed, right from day one. Whether it is just managing your accounting entries, managing payments or managing tax deductions and compliances on an ongoing basis, it requires constant attention.
I have observed that a lot of entrepreneurs start with hiring an internal accounts person, who can manage this on an ongoing basis.
Typical responsibilities of accounting team include:
Now to ensure that Accounts function works efficiently for your organisation, you need to ensure: -
Ensure Infrastructure in form of space and sitting arrangement for accounting team. Considering the confidential nature of the transactions, these seating locations need to be separated from all other employees so that there is no leakage of sensitive data. You also need to plan for hardware like computer, printers etc. and invest in the right accounting software.
2) Trained Manpower
You need experienced and trained manpower to manage your accounts. An accountant needs to know various compliance requirements and update himself with ever evolving government regulations. He also needs to have a know-how of best accounting practices. Typically, organizations hire a junior level accountant, who is able to execute on most actions, but does not have the experience to advise on any tricky issues that come up.
3) Disaster Recovery Plan
Accounting data is important and govt. authorities advise you to keep detailed back-ups at least of the past 3-5 years, just in case there is any query related to taxation, service tax, etc. As an organization, you need to plan for DRP (Disaster Recovery plan), working jointly with your IT organization to ensure that you have the back-ups as mandated by the govt. authorities. It is mandatory to produce this data, in case of specific audits on the topic.
4) Business Continuity plan
Having an internal accounting team members requires a business continuity plan in place. If the accounting team member is absent, or unavailable for some reason, then the whole work may come to standstill. Worse still, if the person decides to leave the organization, then you will need to deal with hiring, retraining and aligning of the employee to organisations system and processes. In spite of this if the person leaves your organisation then he goes away with lot of historical information for which you are dependent on him every now and then in subsequent months
Managing accounting in-house gives a sense of satisfaction to an entrepreneur, a feeling of having things in control and a feeling of keeping costs in check. In reality, it will surprising to note that the companies which outsource their accounting spend less than the companies who manage accounts themselves.
An Outsourced Accounting service provider will bring in lot of domain expertise and will be up to date with best practices and changes in tax laws as they deal with different types of businesses and cater to demanding customers. Also, an accounting service provider will take care of reporting requirements, plan for manpower changes and manage regulatory requirements for you.
Considering all these conveniences provided by an outsourced Accounting service providers, a lot of successful small and large companies prefer to outsource their accounting function.
“Finsmart Solutions has been providing Outsourcing solutions in Accounting for the last several years and has grown to be ‘Trusted Growth partners’ for many customers.“
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