For startups outsourcing isn’t really new.
As a public accountant I have embraced the concept of outsourcing. Most businesses of any size in North America outsource at least some of their tax and financial reporting functions to local or international CPA firms.
And many startups outsource their bookkeeping to local, independent bookkeepers or bookkeeping firms.
FINDING QUALIFIED BOOKKEEPERS
The key problem for startups is that finding quality bookkeeping services isn’t that easy. As a CPA I know that most of my colleagues have difficulty finding qualified bookkeepers that they can recommend. Most CPAs jealously guard their recommendations and keep them for valued clients.
From a public accountant’s perspective, good quality bookkeeping is necessary in order to provide profitable professional accounting services. For the most part our clients want us to help them file their taxes and they may need financial statements for their bank or investors. Whether our clients outsource the bookkeeping or do it themselves, they don’t appreciate paying public accountants to fix the bookkeeping.
However, all too often the lion’s share of a company’s year end fees can relate to bookkeeping problems – particularly when it comes to small businesses.
THE PROBLEM WITH BOOKKEEPING CERTIFICATIONS
If you research ‘bookkeeping certification’ on the internet you’ll find organizations that are trying to ‘professionalize’ bookkeeping by forming ‘institutes’ and similar certifying bodies. In addition you’ll find various colleges that offer courses which culminate in graduates receiving certificates. While members of these institutes and graduates of these courses may do a decent job of bookkeeping, our experience teaches us to be skeptical.
Education is one thing, while training and experience is something else. The discipline of working under professional supervision is vitally important. As far as I am aware, Chartered Professional Accountants are the only accounting professionals that combine education, mandatory supervision and ongoing professional development.
Perhaps most problematic is the tendency for some of these ‘professional’ bookkeepers to take on too much – particularly as it relates to filing corporate tax returns.
In the past I have outsourced bookkeeping and accounting functions to firms and individuals with recognized qualifications in India and the Philippines. I suspect that this may be an appropriate strategy for some CPA firms, however I don’t believe that accounting firms that reside overseas can readily handle local tax issues on a part-time basis.
A few months ago I hired a recently graduated CPA from the Philippines on a full-time basis. I would point out that CPAs in the Philippines receive their designation shortly after graduation. So she was really a bit of a blank slate when I hired her.
Together we are investing in developing her understanding of Canadian tax issues, and professional working paper preparation. While it is awkward dealing with time zone differences – she starts work when I am beginning to wind down – after a few short months she is progressing well and becoming a real asset to our firm.