Article
Is outsourced accounting right for my technology company?
Sept. 24, 2024 · Authored by Ries McQuillan
It’s a common question, and one that is all too often delayed longer than it should be. It’s easy to get focused on building your product-market fit, growing sales revenue, and hiring teammates to help you scale, but getting your finances in order should also be a top priority. If you don't, it can create significant work later to correct potential mistakes.
What exactly is outsourced accounting?
Outsourced accounting involves hiring an external firm or individual to manage a company's financial tasks, such as bookkeeping, tax preparation, payroll, and financial reporting. Unlike in-house accountants, these professionals work remotely and can provide specialized expertise across a range of financial functions. This approach offers startups flexibility, allowing them to access high-level accounting services without the overhead of maintaining an internal finance team.
When should we consider outsourced accounting for our startup?
Startups should consider outsourced accounting when financial complexity begins to outgrow the founder’s ability to manage it efficiently. This typically happens when a company starts to scale, raises venture funding, or experiences rapid revenue growth. Outsourcing is also ideal for early-stage companies that lack the resources to hire a full-time accounting team but need professional oversight to ensure compliance and financial accuracy.
What are the key benefits of outsourcing accounting?
Outsourcing accounting can save startups both time and money by providing access to professional expertise at a fraction of the cost of hiring in-house staff. It allows founders and CFOs to focus on strategic growth rather than daily financial operations. Importantly, the benefits also include the following:
- Consistency and clarity of financial reporting and analytics
- Reducing risk of misstatements and errors
- Providing investors with confidence and comfort in financial health
- More automated, efficient, and accurate reporting processes
- Improved compliance with tax and regulatory requirements
- Flexibility to scale services as the company grows