5 Types of Accounting Services That Can Be Outsourced

Accounting is a key part of running a successful business. However, it can also be a time-consuming and costly task. In many cases, the most effective way to get this work done is through outsourced services. Many business owners search online for outsourced accounting services near me and check their reviews. Outsourced accounting providers can help small businesses save time and money and prevent errors while ensuring your tax bill is minimal.

Bookkeeping

Bookkeeping is the process of maintaining financial records, one of the most important functions of a business. It allows a company to stay on top of its finances and make sound short-and long-term decisions.

It can also help identify areas that require improvement and determine a business’s best course of action. A bookkeeper will typically be responsible for producing a variety of financial statements, including the cash flow statement, balance sheet and income statement. These reports are produced by consolidating information from a company’s bookkeeping activities, and they help the business understand how it’s performing over time. They can also help the business make informed financial decisions and give stakeholders a more accurate view of its financial position.

Payroll

Payroll is a service that is required by nearly every business. It involves calculating wages, issuing paychecks, and recording employee earnings records. Outsourcing payroll services allow companies to save time on administration, safeguard compliance with tax and employment laws, and alleviate the headaches of managing the payroll process in-house. It also frees up finance, payroll, and HR team members to focus on more strategic projects. The downside to outsourcing payroll is that mistakes can be costly and difficult to resolve. Additionally, companies must stay up-to-date with changes in tax rules and personnel regulations. Technology limitations can also be a limiting factor. For example, there might be no direct deposit options, or it could take a long time to update employees on their paychecks and W-2s online. As with other processes, it is crucial to choose a provider with extensive payroll experience who can meet all your needs. It is also essential that the provider can be an extension of your payroll team, forming a strong partnership that evolves as your business does.

Financial Statement Preparation

Financial statements are a vital component of a company’s operations. They provide key data on a company’s assets, liabilities and income to help stakeholders make important business decisions. The first financial statement to be prepared is an income statement, which calculates net profit or loss by analyzing sales revenue, expenses and general ledger records. The second statement, the statement of retained earnings, shows how much profits have been distributed to shareholders in the form of dividends. Whether preparing annual financial statements around tax time or updating them as often as monthly, keeping your business’s financial information accurate and up-to-date is essential for growth and success. Preparing financial statements is typically a non-attest, nonassurance service, but it can trigger a requirement for independence if an accountant prepares monthly financial statements and issues a compilation report. Depending on the nature of the client relationship, an accountant may add a disclaimer or use a “no assurance is provided” legend on the financial statements.

Management Accounting

The field of management accounting aims to provide information that managers can use to improve business operations. This accounting type primarily focuses on improving the quality of data about operational business metrics, such as cost and sales revenue. Managerial accountants gather and analyze this data, presenting it to their senior management team. This information is essential for guiding the company toward making sound decisions based on financial circumstances, forecasts and trends. A manager’s use of this information can range from analyzing a specific product’s performance to understanding the impact of an acquisition or expansion plan on the bottom line. It can even be used for forecasting future trends. The main difference between management accounting and financial accounting is that management accounting occurs at regular intervals rather than being a one-time event like preparing financial statements. It is also easier to prepare managerial accounting reports with off-the-shelf accounting software. However, it requires more specialized analysis than financial accounting.

Tax Accounting

Tax accounting tracks incoming and outgoing funds associated with individuals, businesses, and corporations. This includes funds owed to the government and any investments or donations that an individual may have.

Tax accountants have specialized education and certifications in tax law and are trained to understand the IRS regulations that govern tax preparation. They also have the skills to navigate court rulings and legislation that can impact clients’ tax returns and payments. They manage a company’s bookkeeping, tax, and other financial accounts to ensure they comply with local, state, and federal laws. They also help companies reduce their tax liabilities by assessing their current and future tax obligations.

One of the most popular methods for tax accounting is the accrual method, which records income and expenses when they occur. This helps companies streamline their deferred tax assets and liabilities to control pro forma financial statements better. In addition to preparing tax returns, corporate accountants provide strategic advice on tax planning based on business objectives. They can also assist with dispute resolution negotiations and argue cases before government tax authorities.