Outsource or In-House Accounting: Which is Better for Your Business in India?
Many businesses fail not because they have run out of clients from whom they draw revenues. Most of these businesses are doomed because they have failed to keep track of their activities and position in the market. Doomed businesses have one common denominator – failure in accounting.
Accounting is with all certainty crucial in any business form, regardless of enormity, location, commodity or service.
An effective accounting system provides businesses insight as to how much they’re spending as compared to the gross revenue, net revenue and profits made. It also ensures the company complies with tax laws. More than compliance with tax laws, an equally crucial role of accounting service in business embarks on providing investors with foresight deemed as crucial in every decision the company makes.
Recognizing its importance, it is safe to assume that most businesses have adopted a system – outsource or in-house accounting — in its business plan and structure.
The question now is – which is better, outsource or in-house accounting?
Need for Consistent Accounting in Business
Startup businesses, operating under limited personnel and operating capital, usually do the accounting themselves. However, as business racks up clients, their limited personnel get busier and pre-occupied on luring revenue-generating activities, leaving the accounting aspect little attention, if not totally unattended.
Under this condition, growing businesses consider two options, to outsource accounting to a service provider or put up its in-house accounting department.
The choice on whether to outsource or in-house accounting will entail rigorous study on its pros and cons and costs.
The process of choosing between outsource or in-house accounting, however, should be a judicious judgment call. This applies especially for small businesses who will have to determine which of the two will give the business the lift it requires to grow farther.
At the onset of the millennial, the business community has adopted outsourced accounting services because it is cheaper to maintain rather than forming an in-house accounting office.
Many businessmen are also avoiding the idea of putting up an office just for its accounting needs. An in-house accounting requires a fully equipped office manned by clerks, bookkeepers and accountants. The idea of providing an office in itself is already costly. Hiring the ideal personnel for the in-house accounting unit is not only tedious but also requires high-maintenance.
Interestingly, outsourced and in-house accounting largely differ in their working styles.
Requirements of an Effective Accounting
Legitimate businesses would always want to have an effective accounting system regardless of whether it is outsourced or in-house accounting systems. An effective accounting system makes an impression that a business is growing.
However, putting in place an effective accounting system should include the essential elements giving the businesses the leverage of having a regular cash flow update.
This particular leverage entails a significant chunk of company resources. To be able to get a regular cash flow update, a company has to adopt a cloud-based system. True enough, this modern-day accounting system works because it gives businessmen full comprehensible access on its financial transactions from where they formulate the next business move.
Cloud-based systems provide a clear view of how their business is doing. Such a system also identifies weak points, real-time figures, clientele, payables and collectables, among many other details of equal importance.
An effective accounting system should also embark on financial planning way ahead. Business budgets and revenue forecasts prepared before the onset of the next fiscal year are most ideal. It should also be aware of and ready for unforeseen circumstances. As such, there is a need to impose a spending operating cost while keeping an eye on the business finances on a regular monthly basis.
The Pros of an In-House Accounting
Forming and maintaining an in-house accounting service unit may be costlier than outsourcing the services to a service provider, but it has benefits too.
Keeping corporate accounting requirement in the corporate business office addresses the following concerns from both the corporate managers and clients, to wit:
- Instant answers to queries coming from the management officers wishing to be clarified on certain matters involving the company’s finances, transactions, and other accounting-related concerns.
- Immediate availability of the concerned accounting personnel who may provide help whenever the need arises.
- Accessibility of accounts and other pertinent financial records whenever the need arises. An in-house accounting office keeps a record of those in both hard and soft copies.
- Corporate managers have full control over its daily operations. This makes it easier to adapt to circumstances arising from day-to-day financial developments.
Benefits of Outsourcing Accounting Services
Maintaining in-house accounting boasts of instant, immediately accessible concerns. On this note, more legitimate businesses shift on the cost-efficient outsourcing services of an accounting firm. Other compelling reasons why companies outsource accounting work include:
- Specialist advice from an outsourced accounting firm is of high significance to legitimate businesses. It gives them almost everything required for effective accounting allowing them to concentrate on the business
- The idea of outsourcing accounting services also spares companies from hiring employees. No need to worry about compliance to government requirements imposing minimum salaries, benefits incentives, paid leaves, workers’ right to form a labour union, 13th-month pay, separation pay, among many other decrees under the labour law. Workflow is continuous – not even a holiday or sick personnel would stop the workflow. No need to train personnel too. An outsourced accounting service covers these concerns.
- The idea of outsourcing accounting services also saves companies from having to set up an office and hiring topnotch accountants. Comparative expenditure shows outsourcing accounting services as a cheaper option, yielding better results.
- With the right accounting firm, quality of work is deemed topnotch. These accounting firms are usually beefed up by exceptionally skilled Certified Public Accountants.
- Part of the work scope of an outsourced accounting firm is to ensure a fraud-free accounting of its corporate finances. Spotting fraud is the top priority of accounting firms.
- Outsourced accounting service firms work on a timetable. As such, there is a guarantee of punctual results.
The Most Logical Choice, Outsource It
The bullet point alone speaks for itself. Outsourcing accounting services yields more benefits than maintaining an in-house accounting office.
Tapping or outsourcing accounting services is a one-stop, cost-efficient solution to a corporate entity in need of efficient accountants.
For best and cost-efficient results, consider an India accounting service provider with a proven track record of excellence, efficiency and economy, or simply 3E. We deliver results for less – or your money back.
For more information on India accounting service, please contact us.