Bookkeeping is an essential requirement for businesses. Business owners have two options: do their bookkeeping or outsource to an accounting firm. What are the advantages and disadvantages of doing bookkeeping in-house or outsourcing to an accounting firm? Why and under what circumstances is it better to do bookkeeping in-house? Here are some tips to help you make the right decision and streamline your bookkeeping.
All companies are required by law to keep their own books of accounts, but directors are free to choose whether to keep their own books of accounts or outsource them. The law does not require directors to outsource this task to an accounting firm.
Bookkeeping is primarily done to report the amount of VAT collected and the profits for the year and to provide a basis for tax calculations. However, it is also useful for management to optimize business administration.
To fulfill their obligations, companies must record supporting documents on the basis of their bookkeeping: purchase and sales invoices and supporting documents for expenses such as rental receipts and payment vouchers.
Therefore, preparing internal ledgers requires an understanding of accounting rules and a certain level of accuracy when entering data. Although accounting software is strongly recommended to save time, it can also be useful to outsource these tasks to an accounting firm.
Depending on your business, turnover, and needs, doing your bookkeeping in-house or outsourcing it may make more sense.
If you are self-employed and have a small budget, it is recommended that you do your own bookkeeping. This is especially true if the activity is limited to sending and receiving similar invoices each month. While this is possible, in this case it is not advisable to do the bookkeeping in-house. The reason for this is simple: mistakes can quickly lead to higher costs. This is particularly true because chartered accountants have special rates for self-employed accountants.
The risk of mistakes is even greater for more complex and sophisticated businesses. In such cases, it is strongly recommended that you engage a chartered accountant.
For larger businesses, it is worth considering doing their own bookkeeping if they are able to employ one or more accountants. Each option has its advantages and disadvantages.
In-house Your Bookkeeping has a number of advantages. It gives management immediate access to valuable economic data, which can be used for business management. Management can constantly review the accounts and react quickly to difficulties and opportunities.
In-house Bookkeeping allows customers to obtain indicators and customized services tailored to their needs.
They can manage confidential information and enjoy full confidentiality. However, you can fully trust your chartered accountant to observe professional confidentiality in this regard.
Hiring staff is time-consuming and costly. In addition, accountants need regular training to keep up with new regulations and tax changes, which is costly.
The risk of errors and non-compliance must also be considered. Accountants constantly monitor the situation to maintain best practices and minimize risk.
When bookkeeping is done in-house, the opportunity to access information from external sources is also lost. With access to other companies and activities, accountancy firms can make comparisons and provide broader expertise, such as in taxation, human resources, and developing specific projects.
There are many benefits to using the services of an accounting firm beyond cost.
You can focus on your core business without worrying about the resources required for bookkeeping. You can also be assured that your bookkeeping complies with regulatory requirements.
Accounting firms can also advise on making the right business decisions to optimize profitability. You can also take advantage of a network of accounting firms. Accounting firms do more than just handle the day-to-day bookkeeping and prepare balance sheets and income statements at the end of the fiscal year! You can negotiate their scope of work for your business.
When choosing an accounting firm, look for one that is familiar with your industry and fits your company's needs and work style. For example, if you want to work collaboratively with a high degree of control over your data, you should work with an accounting software company.
There is a compromise between in-house and outsourcing, where bookkeeping is done in-house and certain one-off tasks are outsourced: for example, audits or advice on critical business stages (pre-fundraising, internationalization, etc.).
This hybrid solution is attractive to firms with the resources to handle in-house day-to-day bookkeeping. In such cases, it is particularly useful to use the services of an accounting firm that offers an outside perspective to ensure that the books are in order.
While companies must keep accounting records and file returns with the relevant authorities, they can choose whether to outsource bookkeeping internally or externally. Both internal and external bookkeeping have their advantages and disadvantages, which must be carefully assessed to fulfill accounting and tax obligations. Whatever your choice, Claritel can help! Schedule a free consultation today.
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