Most business owners and managers see accounting as a necessary evil. It is something that has to be done in order to comply. Managers would prefer to spend their time strategizing and finding out how to make a process more efficient. You really can’t blame them; sometimes crunching numbers just isn’t that fun. For those who don’t get excited about debits and credits, you can always look for an online accounting services firm to do your accounting for you.

These online accounting firms are made up of skilled bookkeepers and accountants. These accountants can work with your business year around to keep your books up to date. Most of the time these firms have a physical location where they do their work. They are normal people just like you and me. They gather together in their office and they perform the accounting tasks that you don’t want to.

How It Works

Let’s get down to the nitty-gritty of how this arrangement works. Basically, you send the online accounting services firm all of your boring accounting information: bills, invoices, receipts, etc. They take all of these documents and they perform your accounting for you. They usually have some accounting software that they use to help them with this process.

The way you deliver your information depends on the provider you are working with. The method of delivery is more important than you might think; remember that you will be sending them this information all year. The first option for delivery of information is through the traditional mail system. Basically, you gather up all of your information for a certain time period, cram it into an envelope, and ship it off to the accounting service provider (you’ll probably want to make copies in case there is every a problem). The second option is to scan all of your documents and send them electronically. Surprisingly, not all online services have this option (you’ll need to check with the accounting firm beforehand). The third option is to work on some form of cloud-computing device. I’m not an expert on how all of this works, but basically the idea is that you just share all of your information online with your accountants. Think of it as sharing an email account where you both have access to the same information.

Why Do Companies Do This?

The main reason companies outsource their accounting is for specialization purposes. Remember that most economists believe that if everyone specializes in what they are best at, then each individual will be better off. In other words companies who outsource their accounting believe that the accounting experts can do a better job at accounting than they can (a logical assumption). Once the accounting is off their hands, these business owners, managers, and employees are free to focus on what they do best. This helps companies to focus on their own core competencies.

When?

Many business managers (mostly small business managers) falsely assume that they only need to do this once a year. Just store up all of your documents all year long and then come tax season ship them off to the online accounting services firm. This is a recipe for disaster. If something goes wrong then you will not be able to meet the tax deadlines (and that means spending more time with the IRS; never enjoyable). You are missing out on another opportunity if you wait until fiscal year end to do all of your accounting. Believe it or not accounting provides economic information. This is information that you could be using all year round to make smarter business decisions. You’ll want to work with these firms year round.

How Much Does Online Accounting Cost?

The prices of these services vary according to what you are looking for. If you just want someone to do your bookkeeping (creating monthly financial statements) then depending on the size of your corporation it might only cost you $100-$200 a month. This is a really great deal; try finding an experience bookkeeper for this much. However, if you want the online firm to perform all of your accounting for you (including payroll) then you are probably looking at around $1,000 a month (again depending on your size). Obviously the larger the size of your company, the more you will have to pay.

Online Accounting Services Firms

There is a fairly large selection of firms that offer this service. The organizations that do offer this service vary dramatically. For example you may find someone who is a full-time accountant that just performs this service on the side. You will definitely run into some organizations that are based in India (and other locations outside of the U.S. that offer this service). You can also find U.S. based firms that offer these accounting and bookkeeping services. As time passes I will try to provide reviews from what I can dig up on the Web. However; I encourage anybody with experience to please share their online accounting services experience below. If you do this you will sincerely be helping others who are also looking to outsource their accounting.

If you comment please provide the following information:
Name of the provider (and their website).
Size of your company.
Your experience with them (pros and cons).
Did they save you time?
Would you recommend them to a friend?
Anything else you feel will be helpful for others in this situation.