What is the True Cost of Outsourcing Accounting?

As of June 2022, the average staff accountant in the U.S. earns slightly below $59,000 per year, while the average controller’s salary is about $120,000. To view your clients’ taxes as a multi-year consideration, consider broadening your tax season discussions to include advice that spans several years out. With a more comprehensive and forward-looking perspective, your firm can guide clients through potential scenarios and plan for tax saving strategies. “(Fewer) students are going into accounting, and [the students] are coming up with 10 job offers. So it’s becoming so much more competitive to get them,” Gillis said about his firm’s recruiting challenges.

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• Implementing systems and best practices for keeping track of expenditures and revenues is key to managing cash flow.
• In the latter case, credit hours that are unused in a given month may be rolled over to future months without additional charges.
• George could not answer the question right away (think about that – the Controller did not know whether the company had violated its loan covenants), but after some research, he told us that indeed, they had.

Another company had a CEO who was completely focused on revenue growth and paid no attention to profitability or cash flow. The company had ignored its accounts payable for over a year and did not know how much was owed to various vendors. Company A was a $100 million (in revenues) business with an in-house accountant, controller, and even a full-time CFO. The CEO and CFO decided to buy another company, but unfortunately, they did not know how to conduct adequate due diligence.

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We went back to basics and generated legitimate financials, which showed the company was only generating one-third of the revenues the CEO had reported and had never been profitable. The board was concerned that the company did know how to manage its spending and did not even know how much was being spent and on what. The board hired us to address these concerns and impose some much-needed financial discipline. If we had been brought in earlier, before the ill-fated acquisition, we would have examined the target company’s financial information and would have advised against the deal. We also would have cleaned up our client’s books and pushed them to be proactive in communicating with their bank.

Outsourcing your accounting services can be a cost-effective and efficient solution for your CPA firm. The hourly rates for outsourcing accounting functions can range from $50 to $200 and can be higher for specialized services, such as tax preparation, bookkeeping, cash flow management, job costing and more. At KDCI, we understand that outsourcing accounting services can be nerve-wracking, which is why we’ve taken extra measures to ensure your peace of mind. Our staff is highly motivated and reliable, and our domain expertise guarantees best practices in all aspects of our service. From recruiting the right people, to providing top-notch security and the latest software and technical infrastructure, we’ve got you covered. The standard cost of outsourcing your accounting can be anywhere from $100-$250 an hour for a high-quality service.

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However, outsourcing may not always be cheaper than hiring and training employees, especially if the business needs full time support. With a ready-made team at your disposal, you save time and avoid the need for training. Moreover, the hiring company can rid itself of the onus of mentoring, training, onboarding, and managing accountants (typically depletion definition not their core skillset). Here, we’ll explore the benefits of outsourcing your accounting services to help you decide whether it’s a good option for your organization, or not. While these are some of the most popular pricing models available, you must get the one that best aligns with your outsourcing budget and business needs.

What Are Three Important Costs of Outsourcing?

You’ll want to periodically back up your files and ensure that you’re adhering to security protocols so your information isn’t compromised. For example, if you need to save a copy of a document separately from other files you may put it in its own password-protected folder inside your document management software. There are three financial statements all small businesses should consider creating. According to research conducted by Price Waterhouse Coopers (PwC), 46% of organizations surveyed reported experiencing fraud, corruption, or other economic crimes in the past 24 months in 2022.

Setting Up Accounting for Small Businesses

The tiered pricing model has different pricing models depending on the volume of tasks or complexity. This model offers enormous flexibility to choose from depending upon the business need. Established firms should have a seamless onboarding process for transitioning to their services because if they have a decent client roster they will have done this a few times. As you evaluate different outsourced CFO options, there are several things to bear in mind to ensure you make the right choice. By keeping these considerations in mind, you’ll be able to avoid any of the drawbacks that can impact businesses that partner with an outsourced CFO that isn’t a great fit for their business. Many businesses work with an outsourced CFO on a short-term project basis, although longer-term, ongoing advisory relationships are also common.

Tax professionals charged an average of $218 for new clients in 2023, a 25% jump from $174 in 2021, the National Association of Tax Professionals found in its 2023 Tax Fee report. Tax pros also bumped repeat clients’ fees to $205, a 22.7% increase from $167 two years ago. This is based on the most common fee structure, where clients are charged a minimum fee plus costs based on the complexity of their return. On the subject of a specialized service, you can employ an outsourced provider to pay for tax return services. Note that it is not reasonable to shell out large payments for the kind of work that is not of too great scale.

As a result, outsourcing to the Philippines can provide a significant reduction in the cost of accounting services, making it a cost-effective option for businesses and individuals. However, according to industry statistics, the starting point for outsourcing accounting costs is $2,000 a month. This means that the minimum cost one can expect to pay for outsourcing accounting services is $2,000 a month. The actual cost may be higher or lower than this, but it serves as a baseline to work from. The typical cost of outsourcing your accounting and bookkeeping can range from $500 to $5,000 per month for small businesses. There are a wide variety of factors to consider to determine the price to outsource the accounting for any business.