Outsourcing accounting and bookkeeping needs is no longer a foreign or rare concept; it is rather a standard practice across the United States. What then keeps small and medium-sized companies of America skeptical about outsourcing? Let’s address that with practical and realistic solutions.

Here are a few interesting numbers indicating that Outsourcing is now the norm before we get into the details

1. 60% of small business owners feel they aren’t knowledgeable about accounting.
   – QuickBooks survey
   
   
2. Outsourcing can reduce accounting costs by up to 40%.
   – Deloitte Global Outsourcing Survey
   
   
3. 68% of U.S. businesses outsource their accounting and IT services

Table of Content

What is Outsourced Accounting or Outsourced Bookkeeping?

It is the decision and activity that a company undertakes. When a company delegates a partial or end-to-end accounting function to an external company for terms and payment that are mutually agreed upon, it has outsourced its accounting needs. Outsourcing is often confused with delegation to organizations overseas; however, outsourcing specifically refers to delegating a function to an external company. The misconception stems from countries like India and the Philippines being hot favorites for companies that choose to outsource or sometimes offshore their accounting operations.

By the end of this article, you’ll understand what cost advantages drive companies towards outsourcing, what inhibits some small and medium companies in the US from outsourcing, and how these sensitive doubts can be solved to outsource successfully.

What Costs Can You Save by Outsourcing Your Accounting & Bookkeeping Needs?

An in-house accounting team in the US incurs higher costs due to payment guidelines that mandate insurance, social security, minimum wages, and other obligations. US service providers are also burdened with strict compliance requirements, legal fees, and licenses that further increase costs if a company chooses to outsource locally.  

When you outsource your accounting & bookkeeping needs, you have lower fixed costs, fewer financial risks, and more scalability by saving big on:

1. Employee Salaries, Benefits & Training – You are rid of the need to hire full-time staff and train them or professionals.
2. Overhead Costs & Tech Investment– You can skip expenses pertaining to office space rent and maintenance, software licenses, software tools, and expensive computers.
3. Error-Related Costs – Human error accounts for over 27% of accounting mistakes in small businesses. You can reduce these costly mistakes to save on penalties and missed tax deadlines.
4. Time – This is more valuable than your money; your focus is best invested in growth while experts handle complex compliance and reporting.

You probably already knew the need and prevalence of outsourcing comes from a steep cost advantage, but here’s a real-time cost comparison of costs to show you just how steep the cost advantage is when you choose to have an in-house team that can meet all your accounting needs and when you choose to outsource all of your accounting and bookkeeping needs to India.

  Table 1

Why, then, do the small and medium companies of the US (SBMs) hold back from outsourcing their accounting & bookkeeping functions to India?

Here’s our take on the inhibitions and practical solutions to address them

Despite clear advantages, some key concerns hold back/inhibit small to mid-sized U.S. businesses from outsourcing their end-to-end accounting and bookkeeping functions. Here’s the breakdown with reasons & realistic solutions:

1. Loss of Control and Internal Performance Review

Business owners fear that outsourcing means losing control over critical financial processes. Accounting is tied to cash flow, vendor relations, payroll, and compliance, all of which are sensitive areas. The idea of outsourcing these to an external party may feel risky, especially without face-to-face access or on-site presence.

Next, among the concerns is that accounting serves as an essential internal management tool, such as reviewing the costs and sales of a division/department. Having the numbers drawn up immediately is much easier with an in-house team.

“If something goes wrong, will I be able to fix it quickly?”

Solution: Outsourced accounting in a realistic context allows for overlooking your information. The function now comes with contracts that enable you to have complete data ownership, restrict third-party sharing, include non-disclosure clauses, provide encrypted access-controlled platforms, and implement role-based access control. 

You can also review a company’s strategy and experience with crisis management.

“Can I still draw up the numbers for internal assessment?”

Solution: You retain access to your data/accounting information by controlling login credentials and using cloud-based platforms to allow you real-time access to information and reports when you need them. Outsourced accounting companies have now advanced to the role of advisors as well, which means you can generate reports at the touch of your fingertips, hence addressing your need to conduct seamless internal reviews.

2. Data Security and Confidentiality Concerns

Outsourcing accounting often requires sharing sensitive financial and employee data. This raises valid concerns about

• Cybersecurity breaches
• Compliance with data protection laws (like HIPAA, GDPR, or CCPA)
• Misuse of financial information

Without trust in the outsourced partner’s systems and processes, many firms hesitate.

“Is my sensitive accounting information discreet?”

Solution: You eliminate much of the risk by choosing a reputable vendor with US-based client references.

·        Check for industry certifications like SOC 2 Type II & ISO 27001,

·        Include clauses in your contract that give you complete data ownership and ensure ‘non-disclosure.’

·        You can also control logins and allow role-based access.

Software solutions like QuickBooks, Xero, and NetSuite provide logs of:

·        Who accessed what and when &

·        What changes were made

You can also have a small in-house team that conducts audit trials, ensures access policies, and ensures strict adherence to the dos and don’ts of file sharing.  

In short, you don’t actually lose control of your information. There are ways to verify and maintain confidence

3. Quality and Reliability Doubts

Smaller and mid-sized firms worry that they may not get a dedicated team, and the quality of financial reporting or tax compliance might suffer.

“I don’t want the short end of the deal; I want my money’s worth.”

Solution: Start your accounting outsourcing process by outsourcing a part of your accounting needs. What services are you in need of? Bookkeeping, payroll, AR/AP, or tax prep.

Start with smaller, 60-day or 90-day projects to verify and assess responsiveness, quality, and delivery consistency.

Evaluate team structure & expertise from your communication and ask critical questions when onboarding a service provider, and when you choose to upgrade your plans.

Ask:

• Will I get a dedicated team or shared staff?
• Do you offer multi-tier talent (with bookkeepers, controller, CPA, CFO)?
• What’s your average turnaround time for reports or queries?

It’s also important to note that outsourcing accounting and bookkeeping services has evolved over the years and has become a reliable option. However, if that is an area of concern, verify and build trust over time, and consider delegating to your vendor if they can satisfy your needs.  

4. Cost Misconceptions

While outsourcing is generally cost-effective, some firms assume there will be hidden fees or onboarding costs.

“DIY software like QuickBooks is good enough and cheaper.”

Solution: This perception leads small businesses to stick with in-house or ad-hoc solutions, which can ultimately prove more costly. Human error accounts for over 27% of accounting mistakes in small businesses. The IRS issued over $13 billion in penalties related to payroll taxes in just one year.

One small filing mistake can cost a business thousands, whereas a reliable outsourced team can drastically reduce this risk with better tools and expertise. We aren’t advising you to leap in, but use some of these measures to clarify pricing misconceptions.

Request

• Clear breakdown of monthly/hourly rates
• Ask about hidden fees by phrasing questions about extra revisions & tax filings.
• Read through the contract carefully to check for loopholes or margin for a steep increase in price.
• When you want them to handle your needs as you grow, ask questions about flexibility to scale up or down (since you are testing their pricing logic)

5.  There might be communication gaps due to time zones or language barriers

Since outsourcing typically refers to outsourcing bookkeeping to India, time gaps and language barriers pose a real threat.

“I need my accounting team accessible on the go!”

Solution: When outsourcing to countries like India, which are about 10 hours ahead, you can assign an accounting task at the end of the day and wake up to it being completed by the time you begin work the next day. Your accounting and bookkeeping work gets done when you sleep. That is more of an advantage than a disadvantage.

However, when you have concerns regarding real-time collaboration,

You must use an encrypted, access-controlled platform, such as Google Workspace, Dropbox Business, or ShareFile.

Check for companies that operate on cloud-based systems, enabling 24X4 access to your financial reports.

You could also check if they can assign a representative who works in the U.S. shift. Companies typically have teams that work during those hours for coordination.

Cultural Gap

“They probably have a thick accent, and I can’t get through to them.”

Solution: Understand how the similarities and differences in the two cultures account for it right from the start. If we are taking India, for instance:  

·        India has a vast pool of English-speaking professionals.

·        They have a work-centric approach, just like the US.

·        They have more of an authority-based work culture, which hinders them from asking too many questions, especially when they look at you as higher in the hierarchy. You can address this by encouraging openness right from the beginning.

·        India might be confused by the comma placement with numbers, as the US and Indian systems differ. Keep an eye out for that error. 

Conclusion

Despite the strategic, financial, and operational advantages of outsourcing accounting, small and mid-sized American businesses frequently hesitate due to perceived complexity and cognitive barriers. However, with the right partner, assessing goals, strategic and clear onboarding, and robust security standards, these concerns can be addressed, turning outsourcing from a fear into a competitive edge over peers. Profitjets is an experienced and trusted company that provides outsourced accounting and bookkeeping, taxation planning and strategy, expert CFO advice, and more! We believe in providing the best value for our customers, and our satisfied customers stand testament to it. Contact us for your accounting and compliance needs.

FAQs on Outsourced Accounting