Outsourcing: Have your accounting done by professionals
Bookkeeping, annual financial statements, controlling: There are jobs associated with running a company that require special expertise, which not all managers possess. Instead of hiring employees to manage these tasks, outsourcing accounting to a professional service provider can be a convenient and cost-efficient solution that also improves accounting quality.
All merchants, defined by the German Commercial Code, must prepare financial statements at the end of each business year. Whether an enterprise is a “merchant” (Kaufmann) within the meaning of the Commercial Code, depends on the size of the company. However, certain legal forms such as GmbHs are automatically considered “merchants”, and therefore require professional accounting services. Outsourced accounting allows them to meet their obligations set out in the German Commercial Code without having to maintain an in-house accounting department.
Outsourced accounting: Service providers are specialized in foreign companies
Outsourced accounting can be particularly useful for foreign companies that are not familiar with local laws and regulations in Germany.
Outsourced accounting providers are usually responsible for bookkeeping, inventory management and preparation of financial statements. Upon request, they also take over communication with tax authorities. Therefore it is advisable to look for accounting service providers that also offer expert tax advisory services – like RBO. Certain service providers also offer advice and support in Controlling.
Accounting: outsourcing helps reduce costs
The benefits of outsourced accounting are obvious. Outsourced accounting may reduce costs considerably.
Take personnel expenses, for example. Hiring and employing qualified accounting experts and preparing financial statements is expensive. Employees have to participate in regular trainings to stay up-to-date on regulatory changes and best practices, at the company’s expense. All those costs and expenses can be avoided with outsourced accounting. Also, the company does not need to purchase expensive equipment, software and infrasturcture. In-house accounting departments need special computer programs, which are expensive to buy and maintain. Those expenses can also be avoided with outsourced accounting.
There are also strategic reasons for using outsourced accounting services. Instead of setting aside valuable resources for an in-house accounting department, businesses are better off focusing on their core competencies.
Resources allocated to core activities can directly help the company differentiate itself from its competitors. Back office processes, such as accounting, are usually irrelevant to customers and business partners.
Outsourced accounting comes with lower risks
Outsourced accounting often results in significant quality improvement of related processes and documents. That is no surprise, as external service providers re focused on and specialized in these particular areas, while bookkeepers and accountants at small businesses are overwhelmed with other tasks and responsibilities. They do not have the time and resources to acquire the same level of expertise as professional advisory firms and outsourced accounting providers.
And finally, outsourced accounting helps lowering the operational risks of the company. After all, bookkeeping records and accounting documents must meet strict legal requirements and are the basis for taxation. Mistakes can be expensive, and come in the form of higher than necessary tax payments or fines. A professional accounting service provider is not only less likely to make mistakes, but can also be held liable for claims and damages.