4 Signs Your Startup Need to Outsources Accounting and Bookkeeping Services
- Posted by: omesh
- Category: Strategic plans
Startups usually tend to manage their accounts themselves but due to inefficient bookkeeping practices, they end up with complex financial records, missing out on hidden growth opportunities and waste time on paper-based accounting tasks.
Your startup business needs to get serious about financial management to get their books in good shape by stepping up for outsourcing accounting and bookkeeping services. To increase efficiency & productivity, drive revenue, and boost profits for staying ahead in the rapidly changing hyper-competitive market.
Let’s try to understand when it’s time to step up for outsourcing accounting and bookkeeping:
- Not Maintaining Adequate Financial Records :
This will result in paying extra taxes, tax adjustments after the audit, audit failures, penalties for improper licensure, inability to protect your business from theft, criminal penalties for improper licensure, and loss of investors.
So, it’s necessary for your startup business to outsource accounting and bookkeeping services for improving your accounting system which will help you to maintain financial records, understand your financial position, reduce the time spent on financial audit, filing ITR, etc.
- Not Performing a Bank Reconciliation After Month-End :
Bank reconciliation is required at least once a month prior to closing the books of accounts. If bank reconciliation is not checked and corrected on time, your startup business may face the risk of falling victim to fraud, unauthorized withdrawals, or bank errors and lead to cash flow leaks.
For startups, it is critical to outsource accounting and bookkeeping services to save time, avoid errors, to reduce the overall tax burden, gain investors for internal control and improving the performance of your business.
- Problems of Cash Management :
During the growth phase, a startup company usually experience cash flow issues such as high overhead expenses, excess inventory, slow-paying invoices, excessive bad debt, insufficient gross margins, disorganized account books, negative cash flow, loss of investor, etc.
For proper cash flow management, your startup business needs an accounting expert to increase the efficiency of your business operations, optimize cash and to reduce the overall cost of your business.
- Not Maintaining Chart of Accounts Properly :
Improper use of charts of accounts may leads to many issues such as too many general ledger accounts, too much detail in selling general and administrative expenses, cost of goods sold not aligned with revenue, poor titles on general ledger account descriptions, not enough detail in revenue and cost of goods sold categories, inadequate detail in chart of accounts, etc.
So, it’s a high time for your startup to outsource your accounting and bookkeeping services for turning down your potential business opportunities, strong cash flow, repeatable sales, and to surpass previous goals.
A startup business needs to step up for outsourcing accounting and bookkeeping services to increase efficiency & productivity, drive revenue, and boost profits for staying ahead in the rapidly changing hyper-competitive market.