Outsourcing Accounting Functions: An Efficient & Effective Business Solution for Small to Medium Sized Companies

Feb 13, 2020

IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Eric Moore of Accounting Solution Partners (www.asp-nw.com):

Outsourcing Accounting Functions: An Efficient & Effective Business Solution for Small to Medium Sized Companies

Outsourcing accounting functions is a cost-effective solution for SMBs (small-to-medium-sized businesses) because it provides necessary financial services without the steep costs associated with hiring in-house employees.

Recruiting, onboarding, and benefits expenses inflate the operational costs associated with acquiring and retaining employees, making outsourcing roles an appealing proposition.

Additionally, outsourced accounting functions are highly customizable. The a la carte nature of outsourcing ensures cost-effectiveness by allowing businesses to add services as they are needed and utilize specialty accounting services over predetermined time periods. Outsourcing accounting can be done on a part-time or full-time basis, as well as during a limited engagement. Regardless of the duration, however, outsourced accounting services provide a way for businesses to bring in a specialist that does not require significant lead time to be functional in the role.

When business owners consider outsourcing accounting services, they generally think about general bookkeeping or tax preparation. However, these are not the only scenarios in which it makes sense to utilize a third-party for accounting functions. Businesses trying to mitigate risk, comply with an audit, or investigate financial problems will also benefit from hiring an accounting firm to advise and assist.

Routine Bookkeeping

Daily operations like accounts payable (AP), accounts receivable (AR), bank reconciliations, and payroll are commonly outsourced financial tasks. While these routine processes do not necessarily require the expertise of an accountant on their own, they can make overall cash flow management more challenging. As such, an accountant is going to be the best equipped to ensure that routine bookkeeping activities are contributing to a cohesive cash flow management strategy. Strategic cash flow management is what will ensure the business’s sustainable growth.

Tax Planning and Filing

Tax planning, preparation, and filing are a headache for most business owners, which is why most choose to outsource these tasks every year. From paying for tax preparation software to finding a local CPA, business owners nationwide are always looking for cost-effective ways to get their state and federal taxes completed. But while some business owners take a myopic approach, focusing on simply getting their taxes filed on time as is to avoid penalties and fines later, others plan much further in advance. Working with a third-party accountant throughout the year provides the opportunity to do long-term tax planning. The result is more predictable tax expectations as well as a reduced overall tax burden year-over-year.

Retaining a third-party accountant is especially important during times of strategic business changes, such as expansion, ownership transfers, mergers and acquisitions, or downsizing. An accountant can advise on how best to manage these changes from a tax perspective, keeping legal regulations in mind while simultaneously maximizing business benefits. Amidst these types of changes outsourcing also ensures that proper payroll deductions will be taken for full-time and part-time employees and accurate 1099 forms will be issued to contract employees among other tax-related considerations.

Fraud Prevention

An accounting company has the objectivity needed to recommend and implement fraud prevention tactics successfully. Without a personal connection to employees or a direct stake in the company, a third-party accountant can recognize weaknesses more clearly and identify ways to fix these vulnerabilities. The result is a more efficient, more complete fraud prevention approach.

Since risk mitigation tends to be a touchy subject among employees, leaning on an outside company for advice typically provides the distance needed for employees to support these measures instead of being offended by them. An accounting company can impartially educate existing staff on the importance of fraud prevention best practices to increase the likelihood of long-term success.


During both internal and external audits, a third-party accountant can ensure the process goes smoothly. While conducting an internal audit or weathering an IRS audit, an accounting company can ensure that the proper documents are being provided and information is being shared appropriately among relevant parties. Similarly, an accounting company can represent the business when due diligence is being done by a potential investor or as the target of an acquisition.

Investigative Accounting

An accounting firm can also conduct forensic accounting to identify and prosecute fraud, when needed. In less nefarious circumstances, an external accountant can use investigative tactics to uncover ongoing accounting issues that are hurting cash flow or stifling business growth.

Regardless of the accounting need, certain industries and business types also require specialized accounting services due to the unique demands of their business models. For instance, health professionals and medical practices, restaurants and hospitality-related businesses, construction companies, and franchisees have distinct financial needs that necessitate a specialized accountant.

If you have questions relating to the content of this article, Eric Moore of Accounting Solutions Partners would welcome the opportunity to answer them.  Mr. Moore can be reached at (425) 492-1901 or moore@asp-nw.com.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.