Accounting is a part of the business that cannot be taken lightly. It helps determine the current financial status and future of the business. A business needs an expert accountant to manage its accounting function properly. It can be by getting an in-house accountant or outsourcing to a good accounting services provider. Outsourcing accounting is always beneficial for the business in the long run. However, before deciding how to manage the accounting function, it is essential to get the service provider with expertise in the same field as the business operates. There are various types of accounting for which an experienced accountant is required. Let us know more about the types of accounting that can be outsourced.
What is accounting?
Accounting means measuring, processing, and communicating the financial and non-financial transactions of a business. Bookkeeping is the basic part of accounting that deals with recording and tracking financial transactions, while accounting involves preparing financial statements and records based on bookkeeping.
A business can get an individual or a team of accountants in-house to manage the accounting and bookkeeping. The other option is to outsource it to an accounting services provider.
What are the types of accounting commonly outsourced?
There are numerous types of accounting based on the industry and scope of work. Some of the most commonly outsourced types of accounting include:
- Financial accounting:
Financial accounting is an important and complex part of a business. It deals with the basic accounting and bookkeeping tasks of a business. It involves recording the financial transactions, preparing statements and reports based on the records, and helping make future financial decisions. Financial accounting requires time and human resources to complete the entire process accurately and punctually. It is the most commonly outsourced accounting. Outsourcing financial accounting enables the business to focus on its core function. It needs expert service to manage complex financial functions like accounts receivables and payables, payroll processing, etc.
- Managerial accounting:
Managerial accounting records, monitors, and helps a business in financial planning. The documents prepared under managerial accounting help the internal stakeholders of the business in decision making. They closely analyse the past and present performance of a business to help it devise future plans. This type of accounting is outsourced to accounting services providers to get help from competent and expert accountants in budget planning.
- Cost accounting:
Cost accounting affects both financial accounting and managerial accounting. The cost accountants record and review the manufacturing costs of the business to ensure input and output costs align. It involves multiple departments and activities within a business. Cost accountants determine the cost of products and the cost of employees. Being a widespread function, cost accounting is often outsourced. The expert team of outsourced accounting service providers efficiently manages the vast cost accounting process. They determine the costs to business and suggest ways to reduce costs and increase the profit margins.
- Auditing accounting:
Auditing is responsible for determining the effectiveness of a business’s accounting processes. Auditors must ensure that all the accounting tasks are done per the accounting standards and comply with the relevant laws and regulations. Auditing accounting is usually outsourced as a third party is the best option to confirm the statements comply with regulations. An accountant can become an auditor by completing a certification course.
- Tax accounting:
Tax accounting means preparing, filing, and reporting a business’s tax. Outsourcing the taxation function of a business is a very common practice now. The outsourced accounting services providers help the businesses file taxes, plan tax returns, and report the taxes. They also ensure compliance with the tax regulations set up by the Australian Taxation Office (ATO). Outsourcing services providers help businesses navigate complex financial records and prevent them from any penalties or fines.
- Governmental accounting:
Governmental accounting involves financial planning and resource allocation within the different levels of government, i.e., local, state, and federal government. Governmental accounting must comply with the accounting standards set up by AASB (Australian Accounting Standards Board). Governments usually outsource their accounting function to reliable accounting services providers. The outsourced accountants monitor the government’s budget and appropriately allocate funds. Sometimes only parts of the accounting function are outsourced by the government.
Commonly outsourced accounting services
Besides outsourcing the different types of accounting, many businesses also outsource various accounting functions of a business. Many accounting tasks are complex and time-taking and are best to be outsourced to an accounting service provider. Some of the most commonly outsourced accounting services include-
- Accounts payables and receivables:
The accounts payables and receivables services ensure timely payments to clients and customer collections. It includes expense reporting, payment approval, vendor inquiries, debt management, and customer billing management. Outsourcing this service means more time for a business to focus on core tasks and get the services from experts who have experience in handling similar services.
- Payroll processing:
Outsourcing payroll processing involves analysing the receipts and payroll data, making payments and reports to employees, and reporting payroll taxes. They keep an eye on the entire payroll process of the business and ensure everything complies with the regulations.
- Financial reporting:
Preparing financial reports for a business is an essential function. It helps determine the current financial status of the business and make the future plan for operations. Getting a review from an external party is very helpful in drawing a reliable report for the business. Therefore, it is best to outsource the financial reporting process to an accounting services provider. They prepare timely and reliable financial reports and also offer independent professional advice for smooth business functioning.
- Tax preparation:
A business’s accounting and bookkeeping process ensure proper financial reporting, ultimately aiding in taxation. Tax preparation requires a deep analysis of the financial records and reports to ensure all the information is in compliance with the laws and regulations of ATO. Many companies outsource the taxation process to service providers to save time and human resources. The outsourced service providers are experts in their field and provide reliable services. They help file the taxes, prepare returns, and report them to relevant authorities.
- Controller services:
Outsourcing controller services include audit reporting, cash flow analysis, compliance management, and KPI reporting. Thorough cash flow analysis is a tedious task made easier when outsourced to accounting services providers. It enables the business to review its financial health and make decisions accordingly.
- Financial planning and analysis:
Financial planning and analysis involve evaluating the financial statements and reports to strategise and plan for business growth. Outsourced service providers act as an extra set of eyes for financial planning and analysis. They also offer advisory services to help in business decision-making.
A business has to manage various types of accounting and accounting services. Though these can be managed by hiring an individual or a team of in-house accountants, outsourcing the accounting and bookkeeping process is a better option. It is time-saving and more cost-effective. But, before finalising an outsourcing service provider, it is also important to determine what type of accounting and accounting services a business wants to outsource. Understand the business needs and priorities before making any decisions.