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CPA firms or Outsourced Accounting Service: Who should do your bookkeeping and accounting?

Posted by Stephen King
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It takes a lot of work to build and maintain a well-managed internal accounting team capable of implementing best practices for your business.

 

 

 

Overseeing that accounting department requires time – time that could be more productively used to grow your business. So how do you get out of the business of building an accounting department and back to growing your company?

There are two paths many small and mid-size businesses can use to get bookkeeping and accounting management off of their plate:

  • use your CPA firm
  • use an Outsourced Accounting Service

CPA FIRMS

Often CEOs view a CPA firm as a one stop shop when it comes to their financial management and will ask them to provide bookkeeping and accounting.  And while most CPAs do offer a wide array of services to complement each business’s needs, their main focus is compliance requirements of the IRS, banks and investors – taxes, audits and advisory services. Rarely are they focused on bookkeeping or management accounting.

The way many small/medium size CPA firms provide bookkeeping services to their clients is to have a single bookkeeper on the account who does all of the accounting and a CPA who reviews the finished product. Many times they are doing “write-up” or “after the fact” bookkeeping. While this is OK for staying in compliance or preparing for taxes, it’s not the best way to get up-to-date information to run your company.

OUTSOURCED ACCOUNTING SERVICES

While Outsourced Accounting Services may vary in their approach, many provide a team of resources that are dedicated to your business and its financial operations. You may get a bookkeeper who does transaction processing; a staff accountant that provides month-end close; and an accounting manager who oversees the team, ensures procedures are correct and the reporting package is delivering value.

Outsourced Accounting Services operate on a flexible model where they allow a business to choose from a menu of services that would best serve their needs. For example, a business might have an in-house employee who does billing and collections and the Outsourced Accounting Service team may do the month-end close process, which includes banking and credit card reconciliations, producing financial statements, if required and other related matters.

CPAs vs Outsourced Services or Compliance vs Reliance

One differentiator between a CPA firm and an Outsourced Accounting Service is that CPAs typically focus on Compliance, whereas Outsourced Accounting Services focus on Reliance – providing financial intelligence you can rely on to make informed financial decisions.

Compliance ensures the things that need to be done get done in order to comply. Reliance is having your fingertips on the financial pulse of the organization so you can rely on to your numbers for actionable financial intelligence.

For example, one of the most important decisions a CEO or owner can make is on pricing. If your accounting is compliance focused, you won’t get visibility into your profitability enough to inform your decisions. If your accounting is reliance focused, you can slice and dice the information anyway you want to see profitability by customer, by job or by marketing spend, for example, to make more data-driven decisions

CPA vs. Outsourced Accounting Staffing Model

CPAs traditionally work with a bookkeeper in order to fulfill the accounting needs of a business. Because the middle level of staff or senior accountant is missing at a CPA firm, significant internal controls may be missing which ensure data integrity. More often than not, a CPA firm doesn’t offer a ‘real time’ controller who can supervise the bookkeeper, solve problems with the accounting, as well as be responsible for managing a true month-end close. CPAs can often deliver management reports that controllers typically deliver, but their time is greatly limited during certain periods, i.e. tax season (February to April and August to October) and even more during recent tax changes this year.

Outsourced Accounting Services allows businesses to choose from a menu of services and cater it to their unique needs. They invest in continual training of staff in the latest technology and innovations and meet the real time needs of a business including billing, collection, bill payment and cash flow forecasting. Most importantly, they provide the management accounting reports that can help a business improve performance and profitability.

Accounting System Design and Optimization

CEOs should partner with someone who understands how to unleash the power of their financial software. Many outsourced companies are experts in accounting system design. At times, CPAs traditionally don’t have the time and money to invest in training on processes to teach their staff how to fully utilize all the capabilities a software like QuickBooks has to offer their client.  

For instance, you can add custom fields into QuickBooks and code each transaction to be able to report on anything you want to see. By using custom fields, you can see custom reports on profit and loss by team, customer, job and anything else that is important for your business.

Which Should your Business Choose?

Deciding between a CPA and an Outsourced Accounting service depends on the state of your business. The best result for your business would be to have a CPA working alongside with an Outsourced Accounting Service; however, that might not be possible for all businesses. If your business needs compliance and has a sound internal accounting team, a CPA is probably going to fulfill your business’s needs. However, if you only have a bookkeeper, outsourcing to an accounting service who partners with your CPA is the best way to gain both reliance and compliance.

GrowthForce delivers our clients actionable financials that they can count on. We are experts in bookkeeping, accounting and controller services and provide businesses timely and accurate financials from a team you can trust. While we do much more than just the essentials, the core of our service is solid, reliable bookkeeping and accounting services that keep your business on track.

By outsourcing your bookkeeping, accounting and controller services you ensure that your financial operations will be well managed and you will get actionable financial intelligence to make data-driven decisions that will help grow your business. 

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