In the Philippines, proper accounting is a necessary but costly part of running a business. Paying salaries, bonuses, and for office space for full-time in-house accountants can add up quickly.
Outsourcing offers a cost-effective solution, allowing businesses to save significantly while enhancing their efficiency and accuracy. So how can outsourcing accounting lower your business expenses? Let’s break down the financial benefits with explanations and some examples.
Every Business is Different
For this guide, we’ll use a fictional example: MakArti Marketing, a Makati-based agency with 25 employees. Note that every business is unique, and the benefits of outsourcing accounting vary depending on the business’s size and other factors. With our example, we’ll focus on small to medium enterprises (SMEs).
1. Slash Labor Costs with Expert Services
Hiring an in-house accounting team for MakArti Marketing can be expensive, usually requiring at least a senior accountant and a junior accountant to assist. Aside from their salaries, you’ll also need to pay for their bonuses, benefits, government contributions, and office space.
This is a significant expense for a growing agency. By outsourcing accounting tasks, MakArti pays only for the specific services they need—bookkeeping, payroll, financial reporting, and tax preparation—at a competitive price (often lower than employing full-time). You won’t need to cover employee bonuses, benefits, government contributions, or office space, which can save a significant amount for the company.
Plus, MakArti Marketing benefits from outsourced expertise and tools, avoiding costs for accounting software and additional training.
2. Solves the High-Turnover and Training Problem
MakArti Marketing once employed a junior bookkeeper who left after six months, costing the agency in recruitment fees and training for a replacement. High turnover in accounting roles is a common issue, and each new hire requires significant investment to onboard.
Outsourcing resolves this issue by delivering consistent, high-quality service from experienced professionals for MakArti. It eliminates the need for costly recruitment and training, ensuring uninterrupted accounting operations.
3. Avoid Costly Errors and Maximize Tax Deductions
Accounting errors can hit a small business hard. MakArti Marketing learned this the hard way when an overburdened in-house accountant caused a large penalty for an incorrect tax filing with the BIR.
Outsourcing eliminates such risks. MakArti’s new access to tax professionals and advanced software ensures precise bookkeeping, timely filings, and full compliance. Moreover, outsourced accounting identifies tax deductions—such as allowable business expenses—that MakArti might have overlooked. More accurate and efficient accounting can lead to substantial cost savings.
4. Scale Services to Match Your Budget
MakArti Marketing experiences fluctuating workloads, with intense activity during major client campaigns and quieter periods in between. Their in-house accounting team remains underutilized for much of the year but becomes overwhelmed during peak seasons.
By outsourcing, the company can scale accounting services to match its needs at any given time. Additionally, as shown in our earlier example, outsourcing can save money by eliminating costs for employee bonuses, benefits, and office space.
5. Free Up Time for Profit-Driven Work
Before outsourcing their accounting, MakArti’s owner, Carlo, spent 8 hours a week overseeing accounting tasks, diverting focus from client acquisition. After outsourcing, Carlo was able to spend that time finding new clients and boosting their annual net profit.
Final Thoughts
Outsourcing your accounting can save businesses tens of thousands of pesos (or more) annually. Whether you’re a marketing agency, a factory owner, or a seasonal business, the benefits are clear: lower overhead, fewer penalties, and more focus on growth.
Here’s a summary of how outsourcing accounting can benefit your business. Are you facing any challenges that outsourcing accounting could solve?
- Slash Labor Costs with Expert Services
- Solves the High-Turnover and Training Problem
- Avoid Costly Errors and Maximize Tax Deductions
- Scale Services to Match Your Needs and Budget
- Free Up Time for Profit-Driven Work
Remember every business is unique. Some businesses may benefit from outsourcing most of their financial reporting to an accounting firm, while others with established in-house teams may only require support for complex tasks or during peak periods.
Consulting with an accounting outsourcing company is the most effective way to discover how this practice can best support your specific needs. Let us help you discover how to improve your financial management.
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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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