Every business requires accounting services to properly plan the future of the business and also to know the present situation of the undertaking. Accountants play a very vital role, especially now, in the growth and development of a business. In the current testing environment, an accountant will help in gathering analysis of the financial data of the company and provide the company with a better direction.
A business can choose from two different types of accounting services according to what suits the requirements of the company. A business can either hire an in-house accounting team or department, or it can outsource the accounting function of the business to a third party. Each of the accounting processes has its pros and cons.
Let us first define both of the accounting methods.
Internal Accounting (In-House Accounting)
In Internal Accounting, the management of the business opts to keep an in-house accounting team, which will assist the administration at all times. This becomes a separate accounting department in the company and is available to the management at all times. Internal Accounting strives to keep an eye on the effectiveness and efficiency of the company. It will take care that the business is compliant with the rules and regulations as set up by the concerned authorities.
Pros:
- As it is a separate department in the company, it is available to the management at all times.
- The In-House accounting department will keep a constant vigil and will see to it that the business is complying all the rules and regulations
- It will analyze the data procured at each step and will help the company to use utilize its resources effectively.
Cons:
- Keeping an In-house accounting team can be a costly affair as it will require separate office space, funds for selection and training, etc.
- As the In-House accounting team is a part of the company, there is a chance of fraud or illegal activity amongst themselves as the bad reputation of the company will affect them also.
Outsourcing Accounting function
This type of accounting process is mostly utilized by the management of upcoming and small businesses. These provide similar services of accounting to a company as an internal accountant would, but it is more cost-effective. This method does not employ a full-time in-house team; instead, all the accounting functions are outsourced to a third party.
Pros:
- The biggest advantage of outsourcing accounting functions is that a considerable investment Is not required. As a third party handles the accounting process, there is no need for any spate space or provide any training to the people.
- Outsourced accountants have made a living out of the process and perform it for a number of industries, making them proficient in the job and up to date with the various development in the field.
- As the outsourced accountants are a separate third party, they do not have any specific interest in the business and hence provide accurate information to the people and the management.
Cons:
- One of the most significant disadvantages of outsourced accounting is that there is very little control over the accounting function. As it is conducted by a third party, the management can no longer control how the process is handled.
- The outsourced firm may not be available at all times, which can be a problem for the business in some instances.
The Verdict
There are negatives and positives to both the accounting methods, but in the end, the management has to choose according to the requirements of the business. If the business is budding and has just started its operations, it will look more to save funds so that those funds can be used in the future. Similarly, if the company is a larger entity with financial backing, it will prefer an in-house accounting department.
However, in the present situation where the whole world has come to a stop, it is now more important to have savings in hand. There will be a massive impact on the coronavirus, and the businesses need to be ready for any situation which comes their way. It is because of this reason outsourcing the accounting functions of a company will be more beneficial for the management.
The financial data of a company should only be handled by reputed accounting and auditing firm. JAXA Chartered Accountants is one such firm. JAXA will handle all the accounting and auditing requirements of a company which is established in the United Arab Emirates. It is an ISO 9001:2015 certified firm that will provide timely and accurate advice to the business at a very competent price. To know more about JAXA Chartered Accountants and the services provided, Contact Us. We will happily answer all your questions and queries related to accounting and auditing.