How Outsourcing Accounting Drives Growth in CPA Firms?

When businesses face rapid growth or require additional support, they may choose to outsource. Outsourcing involves engaging outside resources like a firm or a self-employed professional to help with various business functions, such as routine tasks, core operations, or other vital services.

What is outsourcing accounting?

It may surprise you that it can be many things depending on your business.

When you hire a third party to complete the accounting and financial functions of the organization, this is referred to as outsourcing accounting. 

All of the company’s financial operations, including bookkeeping, payroll, financial reports, management accounting, tax, accounts payable, accounts receivable, pursuing debtors, and other services linked to accounts, are handled by outsourced accountants.

Benefits of Outsourcing Accounting For CPA Firms

Outsourcing for CPA firms allows for the optimization of resources, enabling firms to focus on high-value activities and client relationships while reducing operational costs and accessing a global talent pool for specialized tasks.

Outsourcing accounting for CPA firms is a strategic decision that can help CPA firms improve their efficiency, quality, and profitability.

By outsourcing the routine and time-consuming accounting tasks to a reliable partner, CPA firms can reduce their overhead costs, access a large pool of qualified and experienced accountants, scale up or down their accounting services based on their needs, and enhance their client satisfaction.

By embracing outsourcing, your ability to manage numerous tasks will be significantly enhanced, positioning your accountancy firm as one of the highest achievers in productivity

Outsourcing accounting can also enable CPA firms to focus on their core competencies and provide value-added services to their clients.

Let’s read all the above points on the benefits of outsourcing accounting for CPA firms in detail.

We’ll start with the most apparent reason, which is money.

Significant cost savings for CPA Firms through offshore outsourcing accounting

Recruiting, training and, most of all paying an accountant is no picnic and is a crucial component for every successful entrepreneur is efficient cost reduction.

Hiring a third party for your accounting task is usually less expensive than hiring someone internally. Hiring in-house accountants can be costly when considering office space, insurance, sick days, etc. Furthermore, hiring an accounting company provides access to a team of employees with diverse expertise (as opposed to an employee who can only do one activity at a time). 

Outsourcing tasks to an offshore partner can result in substantial savings for a CPA firm. For instance, consider the difference in labor costs. A CPA firm in the United States might pay a local accountant around $70,000 per year, whereas hiring an accountant in India or the Philippines could cost approximately $20,000 annually. This results in direct savings of $50,000 per employee per year.

If a firm employs ten accountants, the total savings can reach $500,000 annually just from wage differences.

Additionally, operational costs such as office space and utilities can be significantly reduced. A CPA firm might spend about $10,000 per year per employee on office-related expenses in the US. With ten employees, this amounts to $100,000.

By outsourcing, these costs can be minimized or eliminated since the offshore partner typically provides their infrastructure. Moreover, overhead costs related to employee benefits and taxes can also be lower.

For example, if a firm saves $5,000 annually on benefits and taxes per employee by outsourcing, this would result in an additional $50,000 in savings for ten employees. In total, a CPA firm could save around $650,000 annually by outsourcing tasks and hiring an offshore partner.

Outsourcing accounting work enables CPA firms to tap into a global talent pool and expand their services beyond geographic boundaries. It facilitates 24/7 operations and supports clients with international operations.

It’s time to have more things under your control

One of the most significant advantages outsourcing accounting offers is getting rid of the worst attribute an accountant comes with.

Unpredictability, While managing your resources in advance, you must always remember the slight chance something may happen with your employers.

According to research cited in the Denver Post, “one in six firms experienced turnover rates above 20%,” with the largest accounting firms polled having an average annual turnover rate of 17%.

If there is one indispensable position in your business, that is of the accountant, something that makes the chance of it being unavailable all of a sudden the more frightening.

This fear and the painful process of finding the right person are going out the window.

Assessing the company’s needs based on client volume is now possible.

Whether the requests are in the dozens or thousands, this is none of your concern since there will be nobody working hard or hardly working, regardless of the scenario. As your company expands, so will its requirements. This can pose issues when you constantly need to hire new personnel to meet the increasing demand. As a result, your labour needs to catch up to your company’s actual needs, resulting in productivity gaps and lost earnings. 

On the other hand, businesses that hire staff too soon wind up with inflated labour costs and bored employees who feel they need to be more valued. Hire an outsourced accounting staff based on your needs and save up unnecessary costs.

Having this tedious process out of the way now, your company can focus on more specific roles and services to take its place, allowing for much better service in general.

Your time is one of your most valuable assets. Caring for things that could’ve been outsourced is a tremendous waste, especially when discussing this subject. Having plenty of time to brainstorm the client experience is crucial. Any aspect that can be taken care of without your direct involvement should be so.

Also Read: 10 Essential Accounting Tips For Startups and Small Business

The industry is going fast. Stay caught up!

Regardless of the strategy, outsourcing can offer advantages beyond cost savings, delivering a team approach with a variety of talents and scalable resources that are difficult to match with hired workers.

According to a survey conducted by the American Institute of CPAs (AICPA), nearly 60% of CPA firms outsource at least some portion of their accounting functions.

Meeting deadlines

It’s crucial to have a clean history when it comes to satisfying compliance obligations. However, deadlines are often missed when business owners and accountants are overworked with everyday chores and operations. 

Any company must adhere to compliance deadlines, but it is essential for businesses with plans to look for outside capital. Your outsourced, qualified finance team will check that all returns are current and will promptly notify you of any approaching deadlines.

The advantages of cutting-edge technology and a knowledgeable accounting and finance team frequently persuade clients of the value of changing their business style. By assisting businesses with the efficient management of their accounting and finance departments, they can devote more time to their core strengths and less time to handling paperwork and figures. Because current tech solutions improve accounting accuracy, reduce service costs, free up resources, and enable financial advisers to spend more time solving their client’s needs, the strategy is effective for both clients and CPA companies.

See More: Types of Outsourced Finance and Accounting Services

Maintaining Compliance Through Outsourced Accounting

Federal, state, and municipal rules and regulations governing your business’s operations and tax filing needs are constantly evolving. It’s a lot to keep track of. You pass the liability and risk of noncompliance to your outsourced provider when you use outsourced accounting. Furthermore, they are specialists in their industry and take great care to stay up to date on the ever-changing rules and regulations to make your business, its records, and its reporting entirely compliant.

About Invedus: Invedus offers finance and offshore accounting services to businesses. we provide solutions for bookkeeping, financial reporting, tax preparation, payroll, and more. Our team of offshore accountants helps optimize financial management and compliance, allowing businesses to focus on their core operations. reach out to us for more information.