Financial compliance is an important yet costly part of running a business in the Philippines. For small and medium-sized enterprises (SMEs), bookkeeping and similar tasks can become overwhelming as the business expands, demanding more time and expertise than regular staff can handle.
This is where Business Registration Philippines comes in, offering not only convenience but also significant cost savings. But how can bookkeeping service providers save you money? Let’s explore the financial and operational benefits of outsourcing bookkeeping for Filipino companies.
The Cost of In-House Bookkeeping
To understand the savings, consider the cost of in-house bookkeeping. Hiring a full-time bookkeeper or junior accountant in the Philippines can get expensive. More experienced bookkeepers and accountants command even higher salaries.
Aside from their wages, businesses also have to cover their:
- Benefits and Taxes: Bonuses, benefits, allowances, and mandatory contributions like SSS, PhilHealth, and Pag-IBIG.
- Overhead Costs: Office space, equipment, and software (e.g., QuickBooks or Xero licenses) increase expenses.
- Training and Errors: In-house staff may require ongoing training to stay compliant with Philippine Financial Reporting Standards (PFRS) and Bureau of Internal Revenue (BIR) regulations. Errors due to inexperience can lead to penalties or costly audits.
- Office Space: Businesses must allocate office space for the new bookkeeper rather than to a salesman who generates revenue.
Most SMEs simply don’t need a bookkeeper working full-time, so these costs can rapidly strain budgets. Larger companies, meanwhile, must carefully consider these expenses when planning to expand their in-house teams.
Bookkeeping Outsourcing: A Cost-Effective Alternative
In the Philippines, outsourcing is often more affordable than hiring a full-time bookkeeper. By not having to pay bonuses, benefits, government contributions, and office space, you can make significant savings annually. Additionally, businesses also avoid having to annually pay for expensive software licenses, as they typically gain access to cloud-based bookkeeping tools when outsourcing.
When outsourcing bookkeeping tasks, a business typically only needs to handle data collection to support the bookkeeping outsourcing provider, a task that a regular employee can complete quickly and with ease.
Beyond Compensation Savings
The benefits of outsourcing extend beyond direct cost reductions:
- Time Efficiency: Overseeing bookkeeping tasks can take precious time and focus away from business owners and managers. Outsourcing frees up time for strategic activities like marketing or product development, potentially increasing revenue.
- Expertise and Compliance: Professional providers are well-versed in PFRS, BIR regulations, and tax deadlines, reducing the risk of errors or penalties. This expertise is especially valuable during audits or tax season.
- Scalability: Outsourcing allows businesses to adjust services based on needs, scaling up during peak seasons or downsizing during slower periods, without the commitment of a full-time hire.
It’s more difficult to estimate the monetary value of these benefits since every business is unique. But they are all incredibly important to your company’s financial management.
SME Example Scenario
Consider a Filipino SME construction supply store with moderate bookkeeping needs (e.g., 300-500 transactions/month). Aside from paying the employee’s salary, the SME must also pay for the in-house bookkeeper’s bonuses, benefits, and other overhead.
In contrast, outsourcing for a competitive price saves them from having to pay bonuses, benefits, and other overhead. On top of the monetary savings, the SME will have more accurate bookkeeping, and access to professional software, and can focus more on business growth.
Large Corporation Example Scenario
A Filipino business, a retail chain specializing in apparel, launched a massive discount sale to promote their new clothing line during the Christmas season (last 2 months for our example), a peak shopping period in the Philippines. Rather than hire and train an additional 2 bookkeepers for the season, they opted to outsource their bookkeeping.
Outsourcing saved them money by eliminating expenses for training, allowances, and office space. Additionally, the bookkeeping outsourcing provider was more professional and reliable than contractual employees.
Summary
Most SMEs simply don’t require a full-time bookkeeper, which can be a significant financial burden. Fortunately, they can still access professional bookkeeping at affordable rates through bookkeeping outsourcing.
Large businesses also gain significant advantages from bookkeeping outsourcing providers. Despite having established accounting teams and in-house bookkeepers to manage complex internal processes, they can still face overwhelming workloads, particularly during busy accounting periods or high-sales seasons. To address this, large businesses frequently turn to accounting outsourcing companies for tasks like bookkeeping, ensuring efficiency and accuracy during these demanding times.
Review your in-house payroll expenses to see the benefits of outsourcing. Book a consultation, and we’ll walk you through the numbers to improve your payroll efficiency.
Do You Need Assistance?
BusinessRegistrationPhilippines.com offers legal and accounting services to simplify compliance. Outsourcing many of your bookkeeping, auditing, payroll, and other accounting tasks to us is often more cost-effective than expanding your in-house team. Reach out today to schedule an initial consultation with one of our experts.
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