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Understanding Accounting Before Outsourcing Accounting

Mathematically challenged people have a very vague idea about what accountants really do. They know it has something to do with numbers and finance but the knowledge ends there. However, if you are thinking of outsourcing accounting, you need to have some idea what it is all about. Sure, you could be a creative soul much like your company, who never quite knows how much money, is in their own wallets. However, when you are running a company you cannot be so casual. There is also the issue of SMSF outsourcing, but that will come only after the basics are covered.

  • Budgets and Analysis: Every company needs to establish a budget that will guide the overall spending of the firm. This includes details like the utility bills down to tiny details like the office stationary that is required on a regular basis. Although these are variable costs, a general trend develops after a few months or years so it is possible to draw up a budget based on that. However, it is sticking to the budget that becomes difficult! That is why it is necessary to do a regular analysis to ensure that funds are being deployed in the right sector. If you are outsourcing accounting, their regular report will let you know which areas require budget cuts and which areas need more funds.
  • Financial records: This is a step we are familiar with. The accountant is holder of all the financial records of the company including income, expenditure and the resultant profits and losses. This is one of the prime reasons people are reluctant to handover their trust and money to an outside firm. That is why you should always do a thorough background check before outsourcing accounting so that you know your money is in safe hands. The bigger the company, the higher are the figures and more chances of mistakes, so choose wisely. The accountant also advises the company to make investments in the right places so as to get valuable returns later like SMSF. Although some firms prefer to go for specialized SMSF outsourcing because of the special skills required to tackle SMSF.
  • Taxes: The general public knows that there is some amount of tax paid to the government each year but the dynamics of the entire tax process is quite vague to us. There are actually many nuances in the tax process that are best understood by the accountants. People from different pay scales fall into different tax brackets, there are various types of taxes that are applicable and various ways to save some tax. Good accountants will always point you to the right tax saving policies so even if you are outsourcing accounting, make sure they are well versed with the current tax laws so that they know the best way to save some tax. Do you know what can be the sign of a good accountant? One who can explain the entire breakup of the tax that you are paying! It can sometimes be quite confusing, not to mention, the entire complexities of return and audits.

Once you understand the complexities of an accountant’s job you might realize it is not just handing out paychecks. So, the next time you consider a company for outsourcing accounting or SMSF outsourcing, choose the company well.