Benefits of Outsourcing Accounting and Payroll Processes
Many companies choose to outsource their payroll and accounting processes as an alternative to hiring an in-house team. George Milev, Founder and CEO of PM Solutions EOOD tells us about the key benefits of outsourced accounting practices and the type of businesses that prefer this option:
In what cases does outsourced accounting work better for businesses?
The most common case in which businesses decide on outsourcing certain accounting operations is when they are in demand of a higher level of expertise or even personnel that their current teams cannot offer. Outsourcing operations to a specialised company, automatically allows their access to a larger pool of accounting experts and they can rely on the complete list of accounting operations and services that the company comes to offer. Working with highly qualified accounting professionals is also key for achieving greater effectiveness in the overall business process.
Another benefit from working with an outsourcing partner is the fact that company owners and senior managers can focus primarily on their core business and clients,. Thus their business can improve the overall quality of its production or services, without spending precious time on auxiliary processes. The management team can concentrate all their resources on development, performance, decisions and strategy.
In general, there is a growing number of businesses in Bulgaria that choose to work with an outsourcing partner company for their management and financial accounting, bookkeeping and payroll operations.
What are the key benefits of outsourced accounting and payroll business processes?
There are several key benefits characterising outsourced accounting practices:
First of all, outsourcing complementary business processes such as bookkeeping, accounting and payroll to a partner company, saves time and expenses. Spending less time on internal accounting will allow you to save a majority of employee time on recruitment and a number of costs related to salaries, labour taxes, benefits, office rent, technical equipment and training. This is all covered by the outsourcing partner in their overhead and shared in a cost centre.
When it comes to data and deliverables, each specialised accounting company delivers all the business information necessary faster and in a more organised and efficient way, so that you have everything you need to run a timely and improved management decision process. This works also for all current or ad hoc tax or other accounting consultancy issues that may occur and require immediate handling. When the accounting team is in-house, timely reactions may often be a problem, as there are personnel vacations, leave of absence, sick leave and other issues crossing their way to a timely reaction. Outsourcing practices always have a team available for you and the information or advice you may need is submitted in due time.
Handling deadlines and minimizing risks are both very important benefits of working with an accounting company. Errors in reporting can be very costly as there are a number of legal penalties and interest charges applicable in these cases. The outsourcing company takes responsibility and by working with trained and qualified professionals this limits the risk for businesses in contrast to the one that may exist in your in-house accounting and payroll department. The same refers to all legal reporting deadlines. In this case, businesses free themselves of the time, pressure and stressful situations with meeting deadlines for submitting year-end reporting, VAT and other tax returns, etc.
Staff turnover risk is also eliminated by appointing an accounting and payroll company. There is always a risk that a certain key employee from the accounting staff can decide to leave the company in the most inappropriate moment. This is one big issue that eats up a lot of time for business managers when it comes to time they need to dedicate to recruiting new key accounting personnel. An accounting company would not be interested in terminating their service contract, while this is not quite the case with individual employees.
Does the size of the business play a role when outsourcing accounting processes? Are these types of services suitable for smaller or larger entities?
All opportunities and advantages arising from outsourced accounting processes are absolutely applicable for businesses of all sizes. They can suit any practically any company. The difference would come only form the type and purpose of the functions outsourced.
Smaller companies usually operate on a small staff headcount. They are more willing to outsource everything from accounting, bookkeeping through payroll, as the idea here is to keep the team within the core business functionalities. Meanwhile, larger businesses tend to keep accounting in-house due to their huge volumes. Their HR departments are usually quite busy with recruiting, interviewing, on-boarding, motivating and training personnel and are more likely to outsource only their payroll lifecycle.
Is it still necessary for a business and an accounting services company to be physically based in the same location?
Definitely not anymore! In the modern world of technology that we live in this is absolutely unnecessary. Thanks to all the information and communication technologies, businesses face unlimited opportunities. All declarations, tax returns and reports have been submitted online for quite some time already. Businesses and accounting companies exchange documents and paperwork via e-mails and couriers. There is no necessity of frequent meetings, practically all issues can be handled by means of phone and online video calls. Working in “the cloud” is already something quite common. It is more than ever possible to have the business and accounting services company based in two separate physical locations- city, country or even continent.
There is even a very good example that illustrates the above – India is a well-known and absolute leader in various outsourced services. It is namely India that a lot of American companies choose for outsourcing their payroll practices. You can image the huge volume of work done and data processed in a distance of thousands of kilometers away from the businesses’ home location.
In conclusion, I must say that the location aspect makes absolutely no difference anymore when selecting a specialized accounting services agency. It is much more about expertise, team qualification, experience, service and delivery that helps business owners and management teams to take the decision to outsource certain practices.
Learn more about our accounting and payroll practice and the way we work at PM Solutions EOOD at the following links – Accounting Services, Payroll, Consulting services.
Our team at PM Solutions EOOD offers the complete pack of annual tax return services relating to personal tax returns, corporate tax returns for resident and non-resident citizens.
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