Why Small Businesses Should Outsource Accounting

With the Federal Reserve aggressively raising interest rates and significant layoffs at prominent tech companies, ominous clouds are looming over the US economy.

If you're like 63% of small business owners in the US (Q1 2023 MetLife and US Chamber Small Business Index), and optimistic about the health of your business, you keep grinding and working through challenges, notably inflation, supply chain, and a tight labor market, and keep moving forward.

Maybe you're even looking at an addition to your building or buying some equipment to help meet increased demand. You'll need to consider the impact to your business if you decide to move forward, or decide to pass.

• How will cash flows look after adding either of these, or both, on a net basis?
• Should you lease or buy the equipment?
• If you lease, will it be accounted for as a financing lease?
• If you decide to move forward, how can you use Section 179 to put money in your pocket in the year of purchase?
• If you think the Fed will continue raising rates, how will that affect your decision to move forward?

An interesting, and somewhat staggering, statistic from Quickbooks states that 7 out of 10 small businesses are NOT connected to an accounting professional for ongoing accounting support. With approximately 33 million small businesses in the US, (US Chamber of Commerce) that would translate to 23.1 million small businesses have no ongoing accounting support.

This is unfortunate, as the cost of outsourced professional help can be quite affordable.

If you are 1 of these 7 businesses with no ongoing accounting support, do you have confidence in the integrity of your financial statements to make critical decisions that could significantly impact the success and livelihood of your company?

One of the most important decisions you'll make as a business owner is how to manage your accounting and/or bookkeeping function(s). Do you do it yourself or do you hire an in-house accountant and/or bookkeeper? Can you even find one that is qualified that won't cost you an arm and a leg in this tight labor market?

The bottom line is, you need an accurate picture of your company’s finances at all times, and Altruistic Accounting & Business Services (Altruistic ABS) will deliver. For a fraction of the cost of hiring an employee, training them, providing medical, dental, retirement benefits (401k), and paid time off, we will work with you in an ongoing partnership to handle your accounting and bookkeeping needs.  

For comparative purposes, let's take a quick look at hiring an accountant and/or bookkeeper inhouse versus outsourcing this function.

As noted in Accounting/Bookkeeping Services and Pricing section of this website, my top end monthly fee is $1,000. Let's assume additional work is requested and the monthly cost is now $2,000, which is $24,000 annually. This is less than half the cost of a bookkeeper, and you're getting a CPA with more knowledge, experience, and perspective from having worked with over 100 companies during my career.
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Outsourcing is a common practice for many businesses who view it as a strategic business option. In addition to addressing current needs, a strategic partner can also assist you in developing proactive processes to set your company up for long-term success. In addition to cost savings, here are 5 benefits outsourcing can provide:

• In times of economic uncertainty, you have the flexibility to scale down services, and corresponding costs.  
• Fresh eyes on your business that will provide a new perspective from an objective third party. Not being immersed in the day-to-day business activity, the CPA is able to provide an unbiased review of the business. This is especially true if the CPA has run and/or owned businesses in their past, which I have done.
• Work with trained, certified professionals (CPAs) with years of accounting and business experience.
• Independent review of internal controls to determine if safeguards are in place to mitigate theft. A 2022 report from the Association of Certified Fraud Examiners estimates that organizations lose 5% of revenue to fraud each year.
• Access to your financial records 24/7, regardless of location, as long as you have internet access.    

Outsourcing frees up your time to focus on your business's success. The opportunity cost from owners spending time in accounting and other areas that can be outsourced, is hard to measure, but must be considered.

Your time is valuable and can be redeployed to more strategic areas that will help grow your business. I'm sure being bogged down in the day to day minutiae that goes with running a business is not the highlight of your day.

We’ll supply the financial reporting you need to stay informed. We will also work to identify and eliminate unnecessary expenses, further reducing costs. Outsourcing will more than pay for itself, and you’ll be confident that your books are organized, up to date, and accessible by you and your team, 24/7.

By working with Altruistic ABS , you'll get reliable accounting and bookkeeping services without putting additional stress on your valuable time and resources. For information on Altruistic's pricing plans, they can be accessed via the highlighted link or the navigation bar at the top of the page.
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Contact us today to discuss your needs and let us handle this function for you.

‍(1) Joe Hadzima. Senior Lecturer MIT Sloan School of Management. (How Much Does An Employee Cost) The article gives a rate of 1.25 to 1.40 to multiple to the annual salary to get the total employee cost to the company, which includes the employer's portion of payroll taxes and benefits. For illustration purposes the lower multiplier was used to compare to the cost of outsourcing, which is conservative in nature.