Reasons to Outsource Accounting & Bookkeeping Functions – Many small & medium businesses both for startups or those that are running, entrepreneurs find it difficult to hire an accountant. Especially with the right skills to compile company financial reports, manage bank account operations, analyze financial data, and prepare outgoing invoices etc.
Currently many companies outsource accounting. Outsourced accounting, bookkeeping and controller services have become a more common solution for businesses today. Why?
Here’s what you need to know when using Outsource Accounting & Bookkeeping services.
What are Accounting and Bookkeeping and the Difference between on Both?
Many executive directors have noted the positive aspects of outsourcing bookkeeping and accounting services. Importantly, outsourcing such services must be without adverse effects on business, employees and customers.
Accounting is the process of interpreting, analyzing, summarizing and reporting the financial transactions of a business. Financial statements prepared in accounting are precise summaries of financial transactions during the accounting period. This statement summarizes a company’s financial position, operations and cash flows.
Bookkeeping is the process of recording daily financial activities that occur in a business or company. Bookkeeping focuses on day-to-day financial activities and business transactions. Bookkeepers maintain and record books.
The following types of financial transactions are usually carried out daily in the company:
- Payment of taxes,
- Sales revenue,
- Interest income,
- Salary and
- Other operating costs,
- Investments, etc., are recorded in the bookkeeping.
Simply put, bookkeeping is at the forefront of launching a company’s finances. Bookkeeping also plays a role in making simple financial statements.
Difference between Accounting and Bookkeeping
- Accounting uses information provided by bookkeepers to prepare financial statements and reports.
- Accounting begins where bookkeeping ends and has a wider scope than bookkeeping.
- The result of accounting is the preparation of financial statements to make informed decisions and judgments.
- The purpose of accounting is to report on the financial strength and results of the operating activities of a business.
- The purpose of accounting is to monitor and analyze financial information for the right decisions.
- The person in charge of accounting is called an accountant.
- Accounting requires the skills of an accountant and knowledge of various accounting practices and policies.
- Financial statements and reports are prepared under the accounting process.
- Accounting procedures and methods for analyzing and analyzing financial statements may vary from entity to entity.
- Bookkeeping is the foundation / basis of accounting.
- Bookkeeping is one segment of the entire accounting system.
- The result of the bookkeeping process is to provide input for accounting.
- The purpose of bookkeeping is to maintain a systematic record of financial activities and transactions in chronological order.
- The purpose of bookkeeping is to summarize the effects of all the financial transactions of a business for a given period.
- The person in charge of bookkeeping is called a bookkeeper.
- Bookkeeping is clerical. Bookkeepers do not require any special knowledge or skills.
- Financial statements are not part of the bookkeeping process.
- The bookkeeping process is in accordance with accounting conventions and concepts.
Benefits of using Accounting and Bookkeeping Outsourcing Services
- Cost-Saving Accounting Services
- Saving & eliminate Time and Costs of Hiring Processes
- Expert Accountants and Bookkeepers
- Scaling Accounting Easily
- Automation technologies
- An accountant is your advisor
- Improving Productivity & Advice on how to grow
- Tax and Audit Ready Financials
- Better Business Decisions Faster
Common Mistakes Made when Outsourcing Accounting & Bookkeeping
- Start by outsourcing the most difficult jobs
- Does not create a standard workflow
- Does not involve your local team
- Not taking the time to understand the culture and communication style
- Not giving time for constructive feedback
- Not setting Metrics / KPIs
Bookkeeping serves as a platform for Accounting procedures because bookkeeping is the initial stage or prefix of accounting. Therefore, Bookkeeping is an inseparable part of Accounting. Bookkeeping acts as the basis for Accounting and if bookkeeping is done properly, then the accounting should also be perfect and vice versa.
Although both activities are needed, companies can choose which bookkeeping and accounting are more needed by the company.
Indoservice offers accounting & bookkeeping outsourcing services centered on businesses in Indonesia. At Indoservice, we have a dedicated team of professionals who will work with the needs of a good accounting & bookkeeping system for your business. You can count on us to provide the quality of service that best suits your needs.
By using our services, you can rest assured that your Accounting & bookkeeping records are always up to date and following the latest local accounting regulations. Manage your account easily with the help of a trusted accounting service from Indoservice.