OUTSOURCE ACCOUNTING SERVICE- PROS AND CONS
OUTSOURCE ACCOUNTING SERVICE
One of the dilemmas faced by many businessmen is that
whether to keep an in house accountant for day to day book keeping or to outsource
accounting service to an external
agency.
There is no readymade answer to the same and it all depends
upon nature of business, complexities of accounting, annual turnover of the
company and other factors.
Normally, during the initial stage of businesses, it makes sense to outsource accounting service instead of
keeping an in house accountant merely from cost saving purpose and as the
business grows, it is advisable to keep an in house accountant.
In this write up, we would be discussing the pros and cons
of account
outsourcing instead of keeping an
in-house accountant
Pros of Account
Outsourcing
a)
Cost
Saving
As mentioned above, in the initial stage of business, lot of
cost saving can be done by taking account outsourcing service of an external
firm. This is due to the fact that keeping an in house accountant will increase
the cost of accounting and other compliance whereas
outsource accounting service will lead to only fraction of cost as
compare to keeping an in house accountant.
Normally, it makes sense to outsource accounting work up to
turnover of Rs.5 crore and beyond that there should be an in house accountant.
b)
Service
of expert professionals
Normally, external agency firms to whom accounting work is
outsourced employs team of trained accountants. Also, the work of such an
accountant is supervised by expert professionals on regular basis. Thus, by
account outsourcing, any company can get quality work through team of
professionals where as in case of an in house accountant, his work is not get
reviewed or supervised on daily basis which may lead to error in accounting and
profit computation.
c)
One
Window solution
Since outside firms have team of professionals, they can
normally provide multiple services under one roof like accounting, Income tax
return filing, GST filing, ROC filing, RBI compliance, audits etc which is not
possible in case of in house accountants.
d)
Online
Accounting Service
Outside firms can provide facility of online accounting wherein clients can provide documents and information
via email or google drive to the professional firm and they can complete the
accounting work without the necessity to make visit to the clients place. Also,
all the reports and ledger and Trial Balance are provided to the client via
email etc. Therefore, there is no need for making physical visit at client’s
place which will save time and cost.
Cons of Account
Outsourcing
1)
Lack
of control over data
In case of big businesses, they are very much concerned
about the confidentiality of data and in case of outsource
accounting; there is no proper control over the data.
2)
Multi-tasking
from an in-house accountant
In case of an in house accountant, there is flexibility to
the businessmen that the accountant can do multitasking like Invoice
preparation, visit to bank and other services which is not possible in case of accounting service
taken from an outside agency. Outside agency will require copies of invoices to
begin their work from remote location.
Thus, it is a tough job to make decision as to whether to
keep an in house accountant or outsource
accounting service to third party agency. However, practically, it is
advisable to outsource accounting in case of companies with less turnover say
upto Rs 5 core Turnover merely from the perspective of saving cost and beyond
that turnover, full -fledged accountant shall be employed in house.
For any feedback you may email us at anil@ezybizindia.in or
visit our website www.ezybizindia.in
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