Accounting plays an important role in the growth of a business. And if you don’t have an in-house accounting professional with the required skills, you can hire an offshore accounting service.
Outsourcing accounting to an offshore company can give you accounting books without any mistakes and an expert opinion on your firm’s finances.
But how do you choose reliable offshore accounting services?
In this article, we’ll discuss what an offshore accounting service is, their key benefits, the types of services they offer and the characteristics of a good offshore accounting firm.
This Article Includes:
- What is an Offshore Accounting Service?
- 6 Types of Services offered by an Offshore Accountant
- When Should You Offshore Accounting Services?
- 5 Characteristics of a Good Offshore Accounting Service
Let’s get started.
What is an Offshore Accounting Service?
Offshore accounting involves delegating accounting and finance services to an external organization from another country.
It can benefit you when your employees can’t handle complex accounting or when they don’t have the knowledge to complete certain tasks. By offshoring accounting tasks, you can also get your accounts done within a fixed time with minimum errors and lower costs.
3 Key Benefits of Offshore Accounting Services
Offshore accounting services can give your business an advantage over your competitors. Here’s how:
1. Cost Savings
By outsourcing services to an offshore provider, you can save money you otherwise spend on paying your accountant’s salary, tax, office supplies, etc. You won’t have to spend money to hire and train human resources as the offshore service will manage that.
Additionally, you can save money if you outsource to a firm in a developing country as the cost of labor and other resources are lesser there. This way, you can reduce the expenditure related to having an accountant by outsourcing your accounting tasks.
2. Better Workload Management
Your firm may review their accounts only at the end of the year, which can increase the workload on your accountant. They may find the sudden increase in the workload stressful, increasing the chances of human error.
You can avoid this by outsourcing your accounting tasks to an offshore provider.
By outsourcing your accounting tasks to an offshore accounting firm, you can delegate time-consuming tasks like bookkeeping, financial reporting, auditing, tax calculation, preparing trial balance, MIS (Management Information System) reporting, etc.
This way, you can relieve the pressure on your accountant and ensure that your accounting is error-free.
3. Save Time
Hiring an accountant can involve job advertisement, screening applications, conducting interviews, training, and more. Additionally, onboarding the new hire may require your time and effort, which may delay the completion of other tasks.
You can avoid this by offshoring accounting, where you don’t have to spend time hiring and training an accountant — the service provider will handle it.
For example, a new accountant may need your help to learn the accounting software your firm uses. On the other hand, an offshore accountant can complete the task quickly using the software they have.
Moreover, the accountant in your outsourced firm may know more about the accounting trends as they deal with different types of clients. This way, you’ll get quality work delivered on time.
6 Types of Services Offered by an Offshore Accounting Service
According to a survey, 37% of companies outsource their accounting services.
Here’s a quick look at six types of outsourced accounting services for which you can hire an offshore firm:
1. Bookkeeping Service
Bookkeeping is the recording, classifying, and organizing of the financial transactions of a firm. It‘s a task that can become hectic and tiresome.
Here are some benefits of outsourcing it to a bookkeeper:
- You won’t have to worry about recording financial transactions when your business grows.
- You can save money spent on training employees on bookkeeping techniques.
You can also delegate bookkeeping to an offshore bookkeeping service so that your employees can concentrate on core business tasks that require their attention.
2. Payroll Services
Payroll services include calculating each employee’s salaries and applicable tax, printing and delivering checks, etc.
You can handle payroll management by outsourcing it to an offshore accounting firm that can complete it on time with diligence.
The benefits of offshore outsourcing the payroll processes are:
- Reduce mistakes by using the latest software.
- Ensure compliance with the latest tax laws and regulations.
3. Account Receivable and Payable Services
Accounts receivable is the amount of money you should get from your customers. Similarly, accounts payable is the amount of money you owe a vendor or a seller.
Now, monitoring your firm’s cash flow is important as you need to know where and how you’re spending money.
By outsourcing accounts receivable and payable, you can ensure that an experienced accountant handles your cash flow. This can greatly improve the process and save time and resources.
You can also close your books on time as offshore accounting firms usually submit accurate accounting records on time.
4. Financial Statement Preparations
Preparing financial statements includes creating a balance sheet, income and retained earnings statement, and monitoring cash flow.
Financial statements need to be accurate and transparent as even a small mistake can significantly impact your business — you’ll have to handle them carefully.
Offshore accounting firms can take care of your financial statement preparations either periodically or yearly, based on your business needs. These statements can aid your firm during disputes or any other legal case.
5. Year-End Accounting
Year-ending accounting involves collecting financial statements and past due invoices, cross-checking payroll and bookkeeping, organizing business receipts, etc.
Your year-end accounting can be hectic and stressful, making your accountant less productive.
By offshoring accounting services, you can distribute the tasks among a larger group and reduce the workload on your accountants. This way, they may complete all tasks perfectly before the deadline.
6. Tax Preparation
Tax preparation involves calculating, preparing, and filing income tax returns- especially during the year end. You’ll have to create and balance accounting books, prepare tax and financial reports, file returns, and more.
You can outsource tax preparation to offshore financial accounting firms during peak periods and reduce the workload on their accountants.
Additionally, a good CPA firm (Certified Public Accountant) may help reduce the tax you pay as they’ll usually be updated with new tax laws and concessions.
When Should You Offshore Accounting Services?
Here are a few signs that show you need to hire an offshore accounting firm:
1. Overworked Staff
Outsourcing your accounting services can help your accountants better manage their work.
Your staff may spend a significant amount of their time:
- Calculating tax and payroll.
- Examining the accuracy of statements and bills.
- Cross-checking whether statements comply with government rules.
- Keeping account books up to date and many other tasks.
Your accountant’s workload could increase, especially during certain days or a time of the year – which may burden them and increase the chances of errors. By outsourcing accounting, you can get error-free data without overburdening your employees.
2. Outdated Technology
Using outdated technology and accounting methods in the modern world can slow down your business. Additionally, you may lag behind your competitors who have access to new software and other technology.
An offshore accounting firm will mostly have all the latest resources to provide optimized services — so that their clients are satisfied.
By outsourcing accounting to an offshore company, you can boost your business and stay on top of your industry.
3. Less Skilled Employees
You may not always find a talented accountant.
Or, your full-time accountant may not be trained enough to carry out complicated work like tax calculation or payroll processing.
In such situations, you can outsource accounting to an offshore firm where accountants are more skilled.
You may also have to outsource accounting when your company decides to expand. Your in house team may not be able to manage the workload or have the expertise to carry out additional tasks.
5 Characteristics of a Good Offshore Accounting Service
You can choose your offshore accounting firm through an outsourcing platform by looking for a few characteristics.
Let’s look at some of the attributes of a good offshore accounting service provider:
Your offshore accounting company should have reasonable pricing — as it’s one of the major reasons for outsourcing accounting.
If your outsourcing partner costs you more than an in-house accounting team, you should reconsider hiring their service.
You can partner with a cloud outsourcing firm that is more cost-effective when compared to businesses having on-premise servers. You can also avail accounting services at a cheaper rate by offshoring to a developing country.
2. Skilled Employees
Your partner’s offshore staff defines the quality of their work.
Offshore companies with skilled and trained employees will be able to manage accounting tasks efficiently — than unskilled employees. That’s why you must ensure that the outsourced accountant can carry out accounting swiftly and with perfection.
Accounting involves difficult calculations and strict deadlines. So you should be sure that your offshore accounting partner can submit work on time.
Additionally, you should be able to trust your offshore accounting firm to manage your data securely.
They should also be able to complete accounting and finance work without making any mistakes. If not, your in-house accountant may have to cross-check all the calculations — making outsourcing accounting unbeneficial.
4. Should be Client-Centric
Your accounting partner should be able to provide customized services for you.
For example, let’s say you’re based in the USA and have outsourced accounting work to a CPA in the Philippines. Your accounting partner should be aware of your country’s federal and state laws to ensure proper compliance.
By hiring a client-centric offshore accounting firm, you can get work done according to your company’s needs.
5. Good Technology and Infrastructure
Your offshore company should utilize the latest technology and infrastructure to complete accounting tasks. They should use advanced methods like cloud bookkeeping, payroll processing software, etc., as they’re more reliable.
And as computerized accounting can save time and help complete tasks without errors, you must ensure your service provider uses accounting tools like Quickbooks, Xero, Sage, etc.
Additionally, you should ensure that they have employee performance monitoring software like Time Doctor in place. This helps you get accurate data about the total hours your offshore team works.
For instance, Time Doctor can help you track the time your offshore accountant works on your tasks and projects. You’ll also be able to pay your offshore accounting firm based on the number of hours they work for you.
While offshore accounting services can be beneficial for your company, there are several things you need to consider before hiring a service provider.
Ultimately, it comes to what you need. When you outsource accounting to a CPA or any other firm, ensure that they fit your unique business requirements.
The right partner can make accounting easy and increase your business profitability. Use the tips mentioned in this article to decide whether offshore accounting is perfect for your needs.
(article source: https://biz30.timedoctor.com/offshore-accounting-services/)