Outsourcing Your Company’s Small Business Accounting Functions to Family
If you own a small business, interested in minimizing a portion of your payroll, considering outsourcing your current bookkeeper or accountant, and someone in your family is not working, outsourcing to family may be a viable alternative for you.
Outsourcing your bookkeeping functions may result in reduced salary expenses, or the conversion of fixed costs to variable costs, insurance benefits and some tax savings, etc.. Before you begin to outsource, you will need to purchase a quality fax machine or scanner. The type of fax machine or scanner is dependent upon the volume and frequency of paper documents (i.e. customer invoices,vendor bills, bank statements, etc.) to be scanned and sent to your outsourced accountant. Scanning or faxing is necessary because all of the source documents have to be sent either by email or fax to the outsourced accountant to record the accounting transactions.
Whether you are the owner of a small business or the person responsible for accounting or bookkeeping, it’s critical to establish a process by which someone monitors the activities of the outsourced company or person. If you decided to outsource, its also important to insure that a competent and independent person oversees and monitors your small business’s financial results.
It’s is often advertised that if you outsource to a foreign country, then your labor expense will be less than what you would pay in the United States. However,when small business owners are facing issues such as contraction, business survival or, to make an already bad or problematic situation worse, family unemployment, it may make sense to employ the family to help with the small business accounting. By employing a family member in your house or outsourcing your accounting function with family in a distant location, rather than some outsourcing to another country, you may actually help, in your own way, the balance of payments for the United States by keeping jobs in this country. Not a bad idea during these times. This strategy should work,if the owners or members of the owner’s family are able to learn QuickBooks, or some other comparable online accounting software program. Its also helpful that the family member have some basic financial knowledge to undertake this responsibility of entering the financial information into QuickBooks. Given the current economy in the United States, there are situations where family members are recently unemployed and are now available to help make a contribution in the family business.
QuickBooks Online Plus is one of many online accounting programs that is easy to learn and with some training, most people with common sense can handle. If you decide to chose this route, it’s important to have a CPA or accountant is available to ask questions as well as a mechanism in place, to allow for real time or after the fact corrections or adjustments to the accounting records.
Under either scenario, outsourcing with a family member or to a foreign country,a CPA or accountant or a skilled financial services consultant is the ideal person to monitor either the real time, or monthly or quarterly financial information, and to check that the reconciliation process is working and more importantly, that outsource person or team, are doing the right job.
It is important to monitor an outsourced accounting department, whether the outsourced department is in a distant location or outsourced to family. By using QuickBooks Online or other QuickBooks versions with remote access, it is possible to have a CPA or an accountant remotely perform this monitoring function.
If you are thinking about outsourcing, it is recommended that you consult with your CPA or accountant to make sure that outsourcing is well suited for your particular small business accounting situation and to help access the skill sets of the person to provide the outsourced service.
This idea of outsourcing to one or two family members will probably not work for a mid size or large business business. However, if you own a small business, interested in saving a portion of your payroll costs, have made the decision to outsource your current bookkeeper, a family member is out of work, outsourcing may make sense for you. Once again, this works providing the outsourced family member is appropriately supervised and monitored by your CPA or accountant. In the beginning there may be more time required by your CPA or accountant to teach and to monitor as compared to the amount of time that your accounting professional currently spends each month or quarter. Overtime,the amount of time spent by your accounting professional should decrease, however, some amount of time will always be required to monitor the performance of the outsourced person.
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