16 Basic Accounting Terms and Definitions for US-based Businesses

How often have you ended a call with your accounting team feeling befuddled about an accounting term? If your answer is a lot of times, then, you’re not alone. A lot of business owners in the US (and at other places too) aren’t familiar with common accounting terms and definitions. 

However, in order to manage your business and finances properly, it is really important to latch on to basic accounting concepts and terminologies. If you want to learn, then, keep reading! 

In this blog, Finsmart has compiled a handy list of 16 basic accounting terms and definitions for US-based businesses. These terminologies and definitions will define business accounting basics for you and give you insights on how to keep your business operations running smoothly. 

Accounting terms and definitions

Are you ready to explore our list of basic accounting terms and definitions? Let’s go! 

#1 Cash flow 

You must have heard this term while having a conversation with your accounting team. Cash flow depicts the net amount of cash and cash equivalents coming into and going out of the business at any given time. In simple words, it is the calculation of all cash collected and spent on business operations, investments, and financing.  

#2 Cash flow forecasting 

As the term itself suggests, cash flow forecasting involves predicting the future flow of cash that will move through (in and out) your business bank accounts. This basic accounting term will help you create scenarios based on new projects or investments; let you determine when to invest in a business, and also pay off debts or pay yourself correctly. 

basic accounting terms

#3 Allocation 

Most entrepreneurs allocate tasks to different team members to lighten the workload and make business functions run effectively. This basic accounting term is something like that. Allocation is the process of assigning funds to various accounts or periods. It can also be used to divide costs between different departments or activities within a company. 

#4 Credit/Debit 

Credit as a basic accounting term means an increase in a liability or equity account or a decrease in an asset or expense account. Debit, on the other hand, is an increase in an asset or expense account or a decrease in a liability or equity account. 

 

Learn about outsourced bookkeeping services in India

#5 Income sheet 

Another important accounting definition for businesses to keep in mind! The income sheet shows the company’s financial performance (net profit) over a certain period. It tells the financial story of the business over a period of time. The income sheet is an amazing benchmark tool for businesses to measure performance and understand profit. 

accounting terms and definitions

#6 Accounts Payable (AP) 

Accounts Payable (AP) represents money your business has incurred but has not yet paid. In other words, this basic accounting term represents the amount due to vendors or suppliers for goods or services received that have not yet been paid for. AP is recorded as a liability on your balance sheet. 

#7 Accounts Receivable (AR) 

Accounts Receivable (AR) represents the money due to your business for goods or services it has provided. It includes all of the revenue (sales) that your company has provided but has not yet collected payment on. AP is recorded as an asset on the balance sheet that is likely to convert to cash in the short term. 

 

Accounts payable and receivables services in India to streamline accounting 

#8 Accrued Expense 

As the accounting term itself suggests, an accrued expense is a type of expense that has been incurred but hasn’t been paid or for which there is no expenditure documentation yet. A journal entry is created to record an accrued expense in place of documentation. An accrued expense is generally expected to be paid for within quite a short period of time like next week or next month. 

#9 Asset (A) 

Another basic accounting term you might have heard from your accountant. An asset is defined as anything of value or a resource of value that is owned by your business and can be easily converted to cash. These are listed in descending order of liquidity. Cash, A/R balances, inventory, buildings, office furniture, land, and vehicles are all considered assets.  

#10 Equity (E) 

Equity (E) can be found on a business balance sheet and is one of the most common pieces of data employed by analysts to assess a company’s financial health. It denotes the value left over after liabilities have been removed. To be more precise, equity represents the money that would be returned to your business’ stakeholders if all of the assets were liquidated and all debts were paid off.

basic accounting terminology

#11 Inventory 

Inventory is a basic accounting term used for raw materials, produced goods, and goods that are available for sale. There are 3 types of inventory – raw materials, work-in-progress, and finished goods. Inventory is classified as a current asset on a business’s balance sheet. As goods are sold to customers, the inventory account becomes lower. 

#12 Liability (L) 

All debts that a business has yet to pay are referred to as liabilities (L). These are settled over time through the transfer of economic benefits including goods, money, or services. Common liabilities in accounting include Accounts Payable (AP), payroll, and loans. 

#13 Interest 

Another basic accounting term every US-based business should have an idea about. Interest is the amount paid on a loan or line of credit that exceeds the repayment of the principal balance. It is often reflected as an annual percentage of the amount of a loan. Interest in accounting can either be simple or compound. 

#14 Journal Entry (JE) 

Journal entries (JE) are raw business transactions that are recorded in manual accounting or bookkeeping systems in chronological order by date and posted to the appropriate accounts in the general ledger. Each journal entry comprises a unique identifier, date, debit/credit, amount, and account code.  

 

 7 glorious tips to outsource accounting to India 

#15 Payroll 

Since you are a business owner, it is obvious you give wages, salaries, and bonuses to your employees. The total of all the compensation that a business must pay to its employees on a given date or for a set period is called payroll. It often appears as a liability on your balance sheet showing what your business owes in terms of unpaid wages, bonuses, and more. 

#16 Receipts 

We are certain most of our readers know about this accounting term. For those who don’t, receipts are documents produced by a business for its customers after they have paid for goods or services. Business owners should save received receipts because they can prove that their incurred expenses are accurate. 

basic accounting definitions

Basic accounting terms and concepts 

Our list of basic accounting terms and definitions ends here. But your accounting journey has only begun. You are likely to come across more unfamiliar accounting terms, finance phrases, and acronyms. Whenever that happens, speak with your accounting partner to get the exact meaning and insights. 

Got any queries to ask? Send them to info@finsmart.co.in and have them answered by our accounting experts.

Check out these services as well if you operate or want to scale in India:

Outsourced accounting and payroll services in India

India entry services for global MNCs

Discover accounting outsourcing services in India

Outsourcing Accounting Services to India? Here are 7 Things to Keep in Mind

The many advantages of outsourcing accounting services in India have made it popular amongst businesses of all sizes. For those who don’t know, outsourcing accounting and bookkeeping companies in India are helping organisations as well as CPA firms boost accounting efficiency, minimise bookkeeping cost, and maximise profitability every year. While thousands of global CPAs and accounting firms hire bookkeepers in India, a lot of them have a limited understanding of outsourced accounting and aren’t sure how to go about the same. That’s why we have decided to help out!

In this blog, Finsmart Solutions will share tips to keep in mind while outsourcing accounting services to India for your business or CPA firm. Read on to discover agency hiring ideas that will help you switch to outsourced accounting and bookkeeping. Let’s get started:

Tips for outsourcing accounting services in India

#1 Identify requirements

Requirements will define the goals of your accounting outsourcing and help bring the best of its utility and benefits. If your CPA bookkeeping and accounting needs aren’t clear, you might end up picking the wrong engagement model while outsourcing accounting services to India. Or you may end up hiring the wrong accounting resources!

Therefore, our first and foremost tip for businesses is to identify your accounting and financial requirements. Ask yourself why you need to outsource accounting services. Is it because:

  • You don’t want to pay a full-time accountant’s salary

  • You are spending a lot of time on accounting functions and are unable to focus on other critical business aspects.

  • Your bookeeping or accounting firm is growing rapidly and you need fast scalability for financial functions

  • You want to minimise errors, automate payroll management, and benefit from modern accounting technologies.

Pick a notebook and list down your reasons for outsourcing accounting services in India. This will give you a better perspective on your outsourcing needs.

outsourcing accounting india

#2 Be clear about expectations

They say when the WHY is clear, the HOW becomes easy. This means that when you are clear about your expectations and scope of work, your outsourced accounting and bookeeping partner will be in a better position to address your business goals and recommend correct accounting solutions.

Want a robust reporting system for your accounting firm? Ask your potential accounting vendor about the same. Want accounting for CPAs help on an hourly basis? Mention the same in the very beginning. Be open about your business accounting goals and tell potential service providers what exactly you are trying to achieve while outsourcing accounting services in India.

#3 Decide engagement model

Accounting outsourcing companies across the globe work with multiple engagement models. Below three are the most popular:

Dedicated accounting seat: In this engagement model, the accounting and bookkeeping team works dedicatedly for you.

Hourly accounting seat: In this engagement model favoured by small businesses, business owners get access to specific hours of accounting support.

US tax sheet: This engagement model brings support for tax return preparations and filing.

At Finsmart, we specialise in the ‘bookkeepers on subscription’ engagement model. While vetting outsourcing accounting partners in India, the USA, or anywhere in the world, we also recommend putting your trust in stringent paperwork!

outsourcing accounting india

#4 Choose expertise, always

Even if you have rightly chosen outsourced accounting and bookkeeping services in India, there will be a lot of pricing options to choose from. And let’s be honest here, engaging an experienced team of accountants and bookkeepers that will bring professionalism and prompt support to the table won’t come at super low pricing.

If you are hiring an accounting team in India for monthly support, paying anything between 1500 and 2000 USD is practical. An hourly accounting seat in India on the other hand will cost anything between 15 and 20 USD per hour.

Partner with an established outsourcing accounting company in India to get the best expertise.

#5 Experience and reputation

This is one of the most important tips to consider while outsourcing accounting services in India. Since you will be spending a lot of time and resources on accounting outsourcing for your business or CPA firm, signing an agreement with the company won’t be enough. You have to make sure that your offshore accounting vendor has vast experience and an unmatched reputation.

Going through the websites of shortlisted accounting outsourcing vendors is a good place to start. Read online reviews to get a reasonable idea of their market reputation and discover references as well. Ask for client references to double-check expertise and professionalism.

#6 Confirm data security

Jodi Rell once said, “At the end of the day, the goals are simple – safety and security.” She is 100% right even in the accounting sense. Ensure that your partner outsourcing accounting and bookkeeping company in India has customer data safety and security measures in place to protect critical business and financial data. This is super crucial for CPA firms.

Discuss security measures in place and technologies being used for accounting and bookkeeping. For example, “what procedures are followed to keep track of the location and propagation of my clients’ accounting data” is a good question to start the data safety conversation.

outsourcing accounting india

#7 Good communication

Lack of communication causes unmet expectations and lots of errors. Therefore, it’s important that all the critical business aspects are communicated clearly. India is a popular accounting and bookkeeping outsourcing destination because English is widely spoken by local financial professionals and most CPA firms across the globe prefer the same.

Having it all in writing will also greatly help in avoiding miscommunication. For every day or weekly communication, use modern communication and collaboration tools to keep everything streamlined. This is how truly global CPA and accounting firms function!

Outsource accounting services to India

Above are some useful tips and ideas to keep in mind while outsourcing accounting services in India. Hiring an offshore accounting company for your business or CPA firm generates great value, especially when your business goal is to optimise accounting operations and reduce overhead costs.

Yes, the outsourcing process is going to take some time, but we are certain that with patience and thorough research, you will arrive at the best choice for your business or accounting firm.

Got any queries to ask? Send them to info@finsmart.co.in and have them answered by our accounting experts.

Check out these services as well if you operate or want to scale in India:

Outsourced payroll services in India

India entry services for global MNCs

How Global CPA Firms Can Combat “The Great Resignation”: Maanoj Shah

Recently I went for a global CFO meet where I got the opportunity to interact with CFOs across the globe. Every person I spoke to said, staff retention is the biggest challenge they are facing right now. This got me thinking that “The Great Resignation” tidal wave is hitting everyone hard, irrespective of the industry sector. This mass exodus is being felt both inside and outside of the accounting sphere.

You could argue that employee turnover is normal and retirement is a natural part of life. But the data tells a different story. In November 2021 alone, 4.5 million Americans quit their jobs. According to the U.S. Bureau of Labor Statistics, in all 20.2 million employees have walked away during May – September 2021. And, over 73% of US employers are having difficulty retaining and attracting new staff. That is a serious issue!

With a large percentage of accountants retiring, it is creating a great void in the industry. Besides, the cumulative cost to businesses facing The Great Resignation is huge. But why is this happening? And can anything be done about it? Here’s my take!

Key Issues

Owing to the growing regulatory requirements and stringent compliances, there is increased pressure on the accounting staff more than ever. Accountants all over the globe are struggling with overwork and burnout in the busy tax and audit season. Moreover, during the pandemic, people got access to alternative jobs with the “Remote Work” culture where they could balance personal and professional life. So your employees had a choice between being an overworked accountant vs remote worker where they were not bound to geographies and could work for companies in any part of the world. These alternatives created a great challenge for CPA and accounting firms.

The Solutions

1. Create Hybrid Work Format: As an accounting firm, a lot of collaboration is required between a Bookkeeper, an Accountant and a Partner. However, it might not be possible for them to physically meet every time. So ideally if CPA firms can create a hybrid work format, say for example 3 days in office and 2 days WFH, it can help accountants to balance professional and personal life and they will get the needed time and space. And remember, a happy employee equals a productive and motivated employee.

2. Implement Collaborative Tools and Technology: Adequate technology and automation tools in the accounting field can help deal with great resignation. It’s time that you understand the need to automate your accounting function and embrace advanced technologies like Artificial Intelligence, Robotics, Cloud Computing, Big Data, Internet of Things, Blockchain, etc. Use the latest tools and technologies like Zoom, Google Meet, etc. for meetings. Make use of Accounting Practice Management Softwares like Karbon, Financial Cents for managing client deadlines and work. Use Project Management Tools like Monday.com, Asana to keep client work and priorities organised.

3. Switch to Outsourcing: You can outsource accounting and bookkeeping services to a third party and get experienced and expert professionals looking after your accounting and finance function. Cross border or offshore outsourcing to a country like India can add significant value to small and medium businesses in the form of reduced costs, time zone advantage, access to specialized expertise and more.

You can easily scale up their services in the busy season and free your in-house staff for more productive tasks. This will not only bring more satisfaction to your employees but will also keep them motivated. An outsourced partner can help you streamline your processes and workflows to achieve greater efficiency. Additionally, they can assist you to smoothly automate or transform your finance function in order to achieve maximum value. One can refer to our blog that was written earlier on technology transformation . https://finsmart.co.in/technology-transformation-for-your-accounting-process-finsmart/

4. Seasonal Incentives: Tax season can be really exhausting for accountants. They are naturally overworked, and hence during such times, burnout rates can be high. You may ease their stress and keep them happy during tax season by incentivising them over and above their compensation package. Everyone loves a bonus system that rewards their performance. Consider offering employees a one-time bonus, special incentives, gift cards, extra allowances like offering food-based rewards in the form of pizza coupons, happy hours, etc. Rewards can be individual, team-based, or be a joint effort to meet an office-wide goal. This added benefit will help them remain motivated during this tough season and build loyalty towards their company.

Act Fast, Act Now!

We don’t know how the great resignation will impact us but being prepared is the key to surviving it. So take action now! There can’t be any perfect solution to The Great Resignation but some of the above solutions can help CPA and Accounting Firms to combat the situation. Employee Retention is a constant process and one has to invest in terms of time and energy in creating a great working relationship and culture of trust and bonding within the teams.

About Author

The article is written by Maanoj Shah – Director Growth Strategy & Alliances at Electronica Finsmart Solutions Pvt. Ltd. www.finsmart.co.in Finsmart is a leader in accounting outsourcing with 15+ years of experience in catering 150+ clients in outsourcing of payroll, bookkeeping and management accounting services for large multinational corporations as well as SMEs globally. The Accounting Seat™ offering by Finsmart is specially designed for global CPA firms. It offers bookkeepers on subscription helping CPA firms to reduce their workload, help them to provide scalability with bookkeepers and enhance efficiency and profitability of the firm.

9 Benefits of outsourcing accounting and bookkeeping services

Outsourcing accounting & bookkeeping Introduction

In the current time, it is challenging to find a qualified and eligible person or agency to grant their accounting or bookkeeping services at an affordable price.

It is very challenging for small businesses, entrepreneurs, and startups to get an accountant because of the lack of money.

They need the right people with the right skills to prepare for their company’s financial statements, manage bank account operations, prepare the outgoing invoices, and analyze financial data.

Most of the small companies do not feel comfortable doing accounting independently. Around 30 percent of small businesses are going with outsourcing accounting and bookkeeping services.

Apart from that, it is commonly believed that bookkeeping must be done in-house. But before that, the companies must ask themselves if they have adequate skills and experience to do this job.

Nevertheless, companies can deal with all the tasks within the organization and can increase the accounting tasks. And after all this hassle they will end up overpaying the taxes.

Now you must have understood why it is necessary to have the right person for the right job. You must consider outsourcing accounting services to the company with the right expertise and knowledge about the domain. It will help you to do your particular job more qualitatively and cost-effectively.

Therefore, many companies consider outsourcing bookkeeping and accounting services to scale their business without affecting the harmony of business, employees, and customers.

Benefits of outsourcing accounting and bookkeeping

Here we are going to share the 9 excellent benefits of outsourcing accounting and bookkeeping tasks:

1. Cost-effective:

Most of the businesses’ perception of outsourcing is that they think it is costly as compared to inhouse Accountants. But in reality, it is opposite to their perception.

Many accounting companies in India offer their services at an economical cost and they charge based on the volume of transactions. So you can scale your servie up and down based on the business, Further in inhouse Accountant you may not get all the relevant expertise and if they goof up the cost of non-compliance becomes heavy, so considering all this Outsourcing is a cost effective and efficient solutions

Further by outsourcing services remotely, you ultimately save money on office supplies, snacks, travel expenses and many more things. You only have to pay for what you need.

2. Achieve a high level of accuracy:

You will achieve a high level of accuracy by outsourcing bookkeeping services. Experts know their job better than anyone else; therefore letting accounting professionals doing their job will give you far better accuracy as compared to inhouse accounting.

3. Elimination of hiring cost:

If you see the image of any recruitment process from its base, you could find that it is a very rigorous job and takes many resources to manage that procedure.

You also have to make recruitment strategies like making ads and taking interviews, which cost a lot of force. It needs dedication which many companies can’t afford.

But in doing this many of the companies do not think about what cost and hassle it takes to get an accountant through this process, therefore, they could afford it and correlate it with equal time and expenses. Therefore this must be accounted for savings from outsourcing business processes.

4. Saves your time:

We have seen that after the growth of any particular business, they find themselves spending more time managing the money and less on the business.

This is why you should consider outsourcing bookkeeping, which helps you focus on your business with total energy. The accounting companies perform the administrative works to manage the accounts and spending of money.

5. Helps in straightforwardly scaling the account:

The accounting service providers have an efficient amount of availability to scale the business services in a significant and well manner, with no lagging. For example, if your bookkeeping tasks exceed one employee’s function, you can easily be enforced with the extra workforce.

6. It reduces the chances of fraud:

The accounting and bookkeeping companies use automation technologies or softwares, which reduces the risk of mistakes, and it also saves time. It minimizes human error, and even regular reports reduce the chances of internal frauds.

7. Timely Reporting:

When the accounting is outsourced they ensure you get timely MIS and Reports needed to run your business. In inhouse accounting you will have to strive to get the timely reports from the Accountants.

8. Reaping benefits from up-to-date technology:

Accounting companies are up to date with the happenings and new technologies in their industry. Due to new technology advancements, companies could systematically progress by using them optimally.

9. New ideas:

The outsourced companies have the diversified nature in which customers from various places and locations are linked with those companies. Therefore the next level of creativity comes when many brains are involved in reaching a particular goal.

When you should outsource your accounting and bookkeeping?

You should consider outsourcing accounting and bookkeeping work when managing all the matters becomes tricky and seems very difficult.

You could choose to outsource when you cannot handle the workforce on time at an affordable cost. You could get that from another company where the workforce came in a remote location with less expense.

If you think that there is an internal error or fraud in your company, you should involve a third party in the picture.

When your mind is stuck and needs some extra advice from the professionals or experience one, then you should go for it. It makes that easy to handle your business with the headache-free mind.

Things to consider before outsourcing

The following things which you should consider before outsourcing is that:

You have to find all the management team who will lead your offshore team and check for their required exposure and experience; this will help you achieve your goal.

You have to check for their service level agreement in which the sign documents of the outsourcing partnership are written.

Check for the pricing and compare it with the other vendors and then go for that. Level of flexibility, have to be checked for flexibility and proper communication with them have to be done.

Conclusion

Thus, we can say that outsourcing accounting and bookkeeping services could play a vital role in enhancing your company’s services. It helps in appropriately managing the company by saving your time and cost.

From the article, we understood that the advantages of outsourcing accounting and bookkeeping are that it reduces the cost, enhances the quality of the product, gives human resources at a lower cost, and increases the profit. It reduces the company’s investment. It emphasizes the efficiency as well as the effectiveness of that company.

Three Common Misconceptions About Offshore Outsourcing – Finsmart

Three Common Misconceptions About Offshore Outsourcing

Offshore AR /AP outsourcing has become a proven strategy for organizations to create efficiencies in costs and time, and deliver better value to their customers. According to a 2021 Report Linker study, the finance and accounting outsourcing market is projected to grow by US$16.7 billion. But even with its impressive track record, accounting outsourcing is viewed through a lens of skepticism by many. Unfortunately, popular misconceptions about outsourcing have persisted in the collective imagination, preventing many businesses from fulfilling their true potential. Let us consider three common myths and then peel back the surface to look at the ground reality.

1. “The outsourcing service provider does not know my organization’s processes or the industry’s nuances”

Accounting outsourcing companies such as Finsmart are comprised of experts who have significant experience across industries, working on AR and AP for organizations of all sizes. The average in-house accountant cannot be expected to have the same exposure. Our resources are trained and experienced in understanding the protocols of clients and following them to the tee. Any time there is a task that requires specialized knowledge, a resource with expertise in that aspect will step in to accelerate the process.

Having Finsmart as your Intelligent FinOps partner means that you will need to conduct training and knowledge transfers on your processes only once. From a training standpoint, your organization can effectively switch to the autopilot mode. On the other hand, in-house AR/AP teams will require you to conduct numerous training/re-training exercises as your company navigates expensive recruiting and attrition cycles.

You can also read more about how outsourcing can save you the hassle of training and retraining employees in our blog here.

2. “Outsourcing isn’t necessary when implementing technology solutions can achieve the same results”

Bill Gates famously said that “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” This point is extremely valid in the ‘outsourcing vs. technology’ debate in the context of AP and AR. 58% of large firms use cloud-based accounting software, according to a 2020 report by Entigrity. However, while tasks can be automated and accelerated by technology, unless they are underpinned with sound business processes, the results are bound to disappoint. Technological capabilities may not be used optimally if a culture of maximizing productivity has not been carefully cultivated over the years.

Outsourcing companies, on the other hand, are incentivized to continually hone and refine processes to achieve maximum efficiency. By onboarding an outsourcing company, you are leveraging their proven processes. When a technology layer is then added on top of this foundation of sound practices, the maximum value can be drawn out of your AR and AP function. With Finsmart as your ‘Intelligent FinOps partner’, you are leveraging optimized processes and cutting-edge technology at the same time.
With Accounting Seat, you need to conduct training processes only once. There will be no need for retraining ever again. Knowledge transfers will happen internally on our end with no support required from you. Our teams are well-versed in a wide range of accounting software platforms which means time required from your organization on software training sessions will most likely be non-existent, or minimal if at all.

3. “Outsourcing means downsizing and layoffs for employees”

While outsourcing can be an effective tool in reducing headcount, it does not necessarily entail downsizing. The flexibility offered to you by outsourcing means that resources can step in to supplement your internal team to better handle seasonal demands and surges in workload. This translates into better work-life balance and satisfaction for your team members during grueling work cycles such as those typical of the tax season.

Employee attrition rates are already high in the accounting field with burnout and long hours frequently cited as reasons. According to AICPA’S Journal of Accountancy, 2020-2021 was one of the most brutal tax seasons for CPAs in recent history. But the problem is exacerbated by the fact that more CPAs are retiring than entering the field. Outsourcing can put an end to the churn and make your employees feel supported. The reduced attrition rates will help you to focus on strategic areas rather than grappling with your talent pipeline and managing deadlines.

Understanding outsourcing

Outsourcing is meant to be a tool in empowering your organization to meet its business goals by shifting your attention from operational details to strategic focus areas. In this blog, we have inspected some of the assumptions about outsourcing. However, even many of the benefits of accounting are not understood well enough. Most companies view cost-savings as the sole criterion to measure the impact of outsourcing when in fact, your intelligent FinOps partner can offer you a plethora of hidden benefits such as improvements in vendor relationships, a more satisfied supply chain, better controls and much more.

In an increasingly competitive business landscape, it is vital that you embrace the strengths and efficiencies that outsourcing can impart to your organization.

To know more about Finsmart’s services, click here.

Say goodbye to the hassle of training and retraining bookkeeping resources – Finsmart

Say goodbye to the hassle of training and retraining bookkeeping resources

With advances in technology and changes in the business landscape, businesses are re-evaluating which functions of their organization will benefit from in-house resources and which will not. After all, people are one of the biggest investments that companies spend in terms of cost and time. Managing people involves incurring various costs that can bog down the company. Managers believe that they have more process control when they have dedicated bookkeeping resources in-house even when that is not the case. They also often fail to see the lack of productive output, lack of exposure to cross-industry expertise and other consequences of this mindset. In this blog, we will explore the hidden and visible costs of in-house accounting resources and how you can overcome these challenges.

Revenue traps from recruiting to training to retraining

There is a significant investment of time that is involved in hiring an in-house accountant and it begins even before recruitment. It starts right from devising the recruitment strategy, which takes up precious man-hours for your HR, accounting department, supervisors and CFO. Short-listing and interviewing the candidates and conducting background checks also divert time away from important tasks.

Once recruited, there will be a significant learning curve. There will be industry-specific, project-specific and other specialized information that they will require familiarization on. Today’s businesses use a wide variety of accounting software platforms. The onboarding process, therefore, demands a period of software training too. On-the-job training will have to be undertaken by supervisors and senior employees, triggering a cascading effect of reduced productivity. It can take between weeks and months for an employee to get fully trained and comfortable to deliver to their fullest potential.

While the resource is in the onboarding stage, they are losing money for the company. It is only after a substantial period that the company reaches a break-even point. This problem is exacerbated if most of the resource’s work is not on revenue-generating work. After spending considerable time and money on hiring and training an employee, they may choose to leave your organization for various reasons. This leaves the company back at square one, and employee retraining can be even more expensive.

Taking advantage of outsourced teams

In-house employees may not work optimally throughout the day, which means you will be paying for man-hours that are not utilized productively in improving your bottom line. By investing in outsourced teams instead, you can drive down your accounting costs by 50% while improving scalability, efficiency and accuracy.

With Finsmart’s Accounting Seat , you are leveraging cross-industry expertise in accounting. Our teams have a vast amount of knowledge gleaned from working with various companies. They are exposed to the latest trends and technology and trained on an on-going basis. If new developments arise in the broader accounting and financial realm, our resources would have already undergone training on the same and would be immediately deployable on tasks that require the updated skills.

With Accounting Seat, you need to conduct training processes only once. There will be no need for retraining ever again. Knowledge transfers will happen internally on our end with no support required from you. Our teams are well-versed in a wide range of accounting software platforms which means time required from your organization on software training sessions will most likely be non-existent, or minimal if at all.

With our Accounting Seat Subscription model, you can downsize or upsize your accounting function as per your needs without worrying over personnel-carrying costs, and have access to resources with higher expertise and cross-industry knowledge.

Making the switch

Many companies do not identify the hidden costs and opportunity costs of hiring in-house accounting resources. They are bogged down with personnel-carrying costs and training procedures that cost the company dearly in the long run. They also fail to identify the streamlined processes, technology expertise and other strengths that outsourced teams can bring. Leveraging outsourced accounting teams needs to be viewed not just from a cost-saving perspective but also from the perspective of accessing superior expertise and dynamic capabilities.

If you want to know more about how we have helped companies improve their productivity and drive down costs with our Accounting Seat, click here.

Ministry of Corporate Affairs ( MCA ) has now allowed all matters of board to be approved through Virtual Meeting wef 15th June 2021 – Finsmart

With this amendment some board matters which were restricted to pass through physical board meeting only, can now be dealt with in a Virtual Board Meeting

However one should keep following points in mind while conducting Virtual Board Meeting:

  • Virtual Board Meeting can be held anytime with 7 days’ notice given to every director either through electronic means or by post or hand delivered
  • It is necessary that all participants to Virtual Board Meeting have access to same technology that enables them to participate in the meeting without any constraints
  • It is necessary that virtual board meeting is recorded the audio with video and the recording is saved for records
  • It is necessary that only concerned directors are attending the meeting and no other person is allowed to attend the same in any manner
  • It is necessary to ensure that proper identification procedures for persons attending the meeting and security measures for safeguarding integrity of the meeting are undertaken

Virtual Board meetings has upside such as reduced travel, more attendance, shorter agendas and quick presentation.

Recent amendment is a good move bringing ease of business conduct for all companies on the background of Covid pandemic.

Though social distancing measures are going to relax at some point in future, we feel that most of the companies will continue to adapt the series of online board meetings throughout the year for its obvious benefits

5 Key Advantages of Remote Accounting – Finsmart

While bookkeeping services are important, what’s more important for small to medium scale enterprises is to pay attention to the larger picture. Bookkeeping is a specialised task and in today’s world of remote working, remote bookkeeping professionals can be a boon for your business. If you are an owner of a small to medium enterprise, you will be happy to find out the advantages remote bookkeeping services come with.

To help you understand why remote bookkeepers are a boon, we have listed down 5 essential benefits that it can come with for your company. Have a look –

  1. Saves costs
    Remote bookkeeping services are given out by professionals, and comes at a lower cost. It saves space kept for a full team, and helps a specialised team working remotely to do all your bookkeeping. They are easy to reach out to, and come at a lower cost to company ratio.

 

  1. Higher availability
    Since they are working remotely and you are always in touch with them, you can contact them anytime you want and get real time updates about your financial status. Any time you need an update you only have to reach out to them. Such professionals are available full time, and will always take your call.

 

  1. Data assurance
    Your data will always be safe with a remote bookkeeper since they are centrally focused on your work and will never underestimate the pressure of being liable. Many remote workers use cloud storage as a way to safe your data, as well as to share it with you.

 

  1. Minimizes business pressure
    Since your bookkeeping is completely taken care of by a remote professional, you are free to focus on your business and help it grow at a steady pace. All your invoices, payroll management, cost to company ratio, and cash inflow is seen and taken care of by the remote working. With such insights, you are only empowered better to handle your business.

 

  1. Convenient and time saving
    You save time in hiring and profiling new employees for bookkeeping and you also save time in doing the work yourself. Where you have to follow a complete process to set up a new team, here with a remote bookkeeper you do all of it in one go. Compared to setting up a new team, you can hire a remote bookkeeper in comparatively low cost.

 

In conclusion
Remote bookkeeping is always preferred in times like the present. When the whole world is working from home, it’s not possible to reach out to your bookkeeper physical. Instead, hire a virtual bookkeeper so that your work is a done in low cost, you get a specialised professional, and your data stays safe.

 

Finsmart is a firm specialised in Outsourced Accounting, Compliances and Payroll , with over 15 years of experience and serviced over 200 clients they are leader in Remote & Outsourced Accounting Service.

5 Surprising facts about outsourced accounting you must know

All the companies, small or big, can be benefited from outsourcing their accounting services. But many still believe that there are more negatives to it than positives.

Many firms believe that their data will be at stake if they outsource their accounting needs, while some believe that small outsourcing teams cannot handle large IT data.

In this article, we plan to bust the myths regarding outsourcing accounting services, and we are here to shed light on the truth about outsourced services. You can gain more and even better if you select and verify proper outsourcing firms.

Outsourced Accounting Myths & Facts

So, explore most common myths about outsourced accounting: 

Myth 1: It isn’t easy to trust remote accounting firms with data privacy.

Fact:

This will only be true if you don’t verify the outsourcing firm before getting them on board. Nowadays, accounting firms are using cloud-based services to secure your data.

It’s completely foolproof, and you can access your data anytime you want. Most of the accounting firms will sign an agreement with you specifying that your data will be safe.

Myth 2: Only large companies require outsourced accounting and bookkeeping services

Fact:

It’s not true. It’s true that large companies can benefit from remote accounting services, but this applies to small to mid-sized firms too. For example, if you have a bookkeeping expert in the house but no one to deal with taxes, you can hand over the latter service to a remote accounting professional.

You save time and get an utterly specialized team at a low-cost. 

Myth 3: Outsourcing requires a high level of IT infrastructure

Fact:

The outsourced accounting team has its own infrastructure, and you need not worry about providing them anything. Most of the remote teams work on automated technologies that you won’t have to buy.

Your data is secured on a cloud-based platform that is impenetrable. All you have to do is introduce your outsourcing team to your company’s working style, and your work ready to go. 

Myth 4: Outsourcing and offshoring both are the same

Fact:

That isn’t true at all. Offshoring and outsourcing, even though both can be resourceful, aren’t the same. 

Offshoring means a company that’s remotely working from another country. While outsourcing means a country that isn’t a full-time part of your main organization.

While both can be beneficial, offshoring can be really good if the countries’ service rates are low.

Myth 5: Outsourcing teams only be used for the short term.

Fact:

You may have an in-house tax expert, but probably you won’t have someone to take care of your bookkeeping. 

The latter service can be given to a remote bookkeeping firm. Bookkeeping is done monthly, whereas tax returns filing is done yearly; you can bring onboard an outsourced bookkeeping firm as a yearly partner. 

So, basically …

Don’t believe in the myths that people have about outsourcing accounting processes. Instead, believe in the fact that these firms are experts at a low price and trustworthy if you verify them.

You have a lot to gain from outsourcing your accounting needs than to lose.

7 Benefits of outsourcing accounting services for your business

Many start-ups and small SMEs don’t realize that they should focus on business development more than funding.

Accounting plays a key role in business development. Accounting helps understand where your financial assets are going and how well it’s aligned to your business goals.

Especially in today’s time, if you hand over your accounting to a professional team, it can help you maximize your business. But how does outsourcing your business accounting help you focus more on your business? 

Benefits of outsourcing accounting services

Here are 7 benefits of outsourcing accounting that helps you focus more on your business.

1. Increases value addition

Since your internal team will be free of accounting processes like payroll management, invoicing, checking accounts receivables, billing, and other important functions, you will be able to put those employee resources towards other system functions.

In this manner, you will get efficient accounting done and an internal workforce boost.

2. Gives more time on hand

Your accounting processes require dedicated time, but since outsourced accounting experts will handle your accounting, you will have more time on hand to use for your core business. You can add more value to your company and pursue your business goals with more focus.

3. Maximizes your capital

Your hiring cost will be cut down greatly, as well as your time in training new employees. You will be able to maximize that saved capital by putting it into core business development. Your money gets saved for better use in increasing your traction.

4. Amps up productivity

Your employees will be free of tedious tasks like managing payrolls, balancing accounts books, and checking for financial leakages. They will be able to use their skills to run the business efficiently. The whole task of accounting will be taken care of by the outsourced team.

5. Accelerates accounting processes

A team will be dedicated to taking care of all your accounting needs. You won’t have to worry about tax delays, report timelines, and account reconciling. The outsourced team will be focused solely on your accounting needs, thereby accelerating the process. 

6. Expert advisory

Along with a team taking care of your accounting and bookkeeping services needs, you will also have good accounting advisors to seek help from. You will be able to reach out to them when filing IT returns and reconciling your accounts. 

7. Immediate execution

You won’t have to train anybody, and the outsourced team will only require a brief introduction to your company. Your account’s processes will be immediately looked at, and the work will start without delay. 

In conclusion

Your business needs your complete focus and maximum output from your team. With complete accounting taking off from your team, your team will generate more work, and you will be able to focus more on your business. So, time to try outsourcing accounting services needs.

Do you know 2A reconciliation is must under GST regime? – Finsmart

What is 2A reconciliation under GST regime?

Under the new Central Tax which is being issued by CBIC a few days back has made certain amendments in the CGST Rules. One of the important amendments in the Rules is to allow the credit to the recipient only in case the corresponding supplies have been reported in the GSTR-1 by his suppliers. This move is in line with the amendment made in the return format which will be effective from 1.4.2020. The main reason behind making this amendment is to lower the cases of fake invoices where fraudulent credits have been availed to deceive exchequer. The taxpayers under the new rule must reconcile their data regularly with the data declared by its vendors too. The return filing and processing will be semantically automated and the GST returns are inter-linked.

Before filing the GST returns it is important to reconcile the GSTR 3B with GSTR 2A so that you don’t have to pay any kind of penalty or demand notices from the department. In case a supplier files GSTR – 1 in any of the particular month with the disclosure of the sales, then the corresponding details need to be obtained in GSTR – 2A of the recipient.

For the businesses filing the return can prove to be a complicated tasks, especially post the amendments in CGST Rules, therefore more businesses outsource the services to accounts payable services providers who are experts in managing your tax more systematically.

By using accounting and taxation services, which is the process of outsourcing accounting service and taxation to a company outside of your business, the business owners can capitalize on benefits that previously were not known to them.

Advantages of outsourced accounting services:
• Businesses can have increased profitability by outsourcing accounting and taxation related work to the firms who are highly specialized in it. As a business owner, you will be able to spend more time with your customers and can offer them a higher level of service.

• You don’t need much staff internally who can manage the internal accounting functions. Rather you can make significant reductions in the overall employment costs like salaries, payroll taxes, benefits, training etc by outsourcing the work to an outsource accounting services provider.

• The ability to offer higher quality accounting information is found in the professionals to whom you have outsourced the work. Working with accounting professionals will deliver reliable and accurate information which in turn will help in taking improved business decisions timely.
These are just some of the benefits out of many which you can have by choosing outsourced accounting services, you will get the best professional assistance that keep your business focused on your critical objectives. So get the best guidance by hiring Finsmart Solutions which is a leading accounting outsourcing company in India offering the best and trusted accounting and bookkeeping services to its clients.

Great Accountant Leads to Great Business – Finsmart

One of the major causes of the downfall of any business is the poor financial management of the company. With the introduction of complex legislative changes to the tax structure, it is difficult for the entrepreneur/proprietor/owner of a company to understand its impact on his business. This is why collaborating with an outsourced accounting service can be beneficial for businesses.

There are several accounting services in India that offer their expertise to small businesses as well as large corporations. While it may feel daunting to provide an outsider with confidential information about your company, it will actually set you up for success in the long run.

Accurate filing of taxes is not the only benefits one can derive from any accounting outsourcing company. Maintaining transparency in the books of accounts and insightful reporting are some of the other valuable services provided by the outsourced accounting services company.
With that in mind, below are 5 reasons why employing the services of a great accountant from an accounting outsourcing company leads to great business.

1. Maximize the deductions

Many business owners often end up paying more taxes as they are unaware of the possible deductions they can avail. By partnering with an accounting outsourcing company, you will receive the services of a competent accountant capable of identifying potential deductions and thereby helping you save big on taxes.

2. Be prepared in case of an audit

An accounting outsourcing company will provide businesses with a trusted accountant responsible for ensuring that the company is legally compliant and follows the industry standard practices of the various accounting services in India.

3. More time to focus on your business

Delegating your company’s onsite accounting and tax services needs will free up your day. Therefore it is highly advisable to invest in any of the professional accounting services in India that will provide you with an accountant capable of performing insightful reporting while you can focus on growing your business.

4. Take good business decisions

The valuable insights and scope of knowledge of a good accountant will be an asset to any business. Apart from onsite accounting and tax services, an expert accountant will also provide businesses with budgeting and cash flow advice that will help the management make prude decisions.

5. Make long term plans
Finally, receiving advice for business forecasting and long term planning is a great incentive for hiring an accountant from any accounting outsourcing company. The accountant can analyze reports from previous months and give suggestions on the best time for buying inventory or the budget available to make big investments in the future.

Conclusion

The backbone of the accounting services in India is the well qualified and trained accountants. The various accounting outsourcing company provide their clients with a pool of good accountants who’s services they can avail at a marginalized cost.

Having an accountant trained not only in onsite accounting and tax services but also on various other business metrics will ensure that your business stays competitive as well as viable.

Our strength, Your Business – Finsmart

Small business owners often think that they can reduce costs by taking the DIY approach for accounting and bookkeeping instead of utilizing the various accounting outsourcing services in India. This works well if you have the time and expertise to maintain accurate records. Otherwise, it will lead to penalties and extra efforts related to the wrong filing of taxes. If accuracy in maintaining the books of accounts is not followed, it will cost you big time in the long run.

A reputed accounting and tax services firm will not only lower your stress level but also maintain transparency in your company’s records. These firms not only provide monthly accounting services but also provide bookkeeping services and tax services.

Messing with your taxes can cost you a number of penalties such as:
• Penalty for not filing TDS return
• Penalty for not complying with the IT notice
• Penalty for providing incorrect information and not disclosing the source of income.
• Penalty for not maintaining the book of accounts accurately.
• The penalty associated with not getting your company’s accounts audited.

Hiring an in house accountant may not be feasible for start-ups and small organizations. But with a firm specializing in providing accounting and tax services, you will receive tailor-made solutions for your monthly financial accounting service needs and other accounting requirements.

Below are some of the advantages of engaging with an accounting and tax services firm for maintaining your business’s books of accounts.

Access to experts

a number of changes have been introduced in the ITR forms. It may be difficult for a business owner to understand the accounting terminologies and enter the correct information. Wrong filing of taxes leads to penalties and notice from the IT department.
But by partnering with a bookkeeping and tax services agency you will have access to a pool of professional accountants capable of handing your monthly accounting services needs and filing your taxes error-free.

Access to accounting and tax services software

Gone are the days when business records can be maintained with mere pen and paper. In today’s business environment it is legally binding to maintain proper records of all business expenses. Utilizing accounting and tax services software will help you maintain good accounting records that are compliant with the law.

But unfortunately, the software for the bookkeeping and tax services are expensive. This is why it makes more sense to take the support of the firms that provide accounting services in India. Small businesses can get access to the latest technology at a reasonable cost.
Better Accounting Compliance

As the firms providing accounting services in India are staffed with experienced and professional accountants, they will ensure that your company stays compliant with various accounting rules and regulations.
You can avoid interest and penalties as accounting and tax services firm will identify the exact amount of tax to be paid without any delay.

Conclusion
The income tax department does not look kindly on individuals or companies that try to skip their taxes. Therefore don’t mess with taxes!

How to Identify & Fix Accounting Mess? – Finsmart

“Identifying that the problem exists is the first step to solve the problem.”

If you feel that your accounts have taken a bad shape, the prime concern is to identify the actual working condition of your business and you find the “MESS.”

The secret of success is to look inside the business functionality. Luckily, an accounting mess is not challenging to be solved and can be easily turned around.

Accounting function if not proper, can add stress, limit the growth opportunity and affect the backbone of an organization.

Through this read, you could know why it happens and how to fix it or make your accounts tidy with professional accounting and taxation services.

Why your record gets puzzled?

  • Improper accounting processes.
  • Limited knowledge of accounting systems and law.
  • Unsorted/Missing Data.

How to get rid of the accounting jumble?

  • Setting up tried and tested processes.
  • Keeping financial records up-to-date and accurate with minimal changes.
  • Capitalizing on experts knowledge of systems and law.

Outsource accounting service Vs Employees service 

Now you must be thinking to hire someone, but whether it goes well with an accounting service provider or an in house employee?

You may feel tempted to hire someone, but it needs to be that one who has the experience and know how of functional as well as technical aspects. Regardless of geographical locations, the accounting team needs to fit with perfection and with no barrier. This can easily be achieved by outsourcing accounting service.

At Finsmart Solutions, We are working with companies of all sizes, across industries and helping them with accounting services, which is further contributing a company to know it’s financial and business growth independently. We align our services to the expectations of clients and ensure there is a room to tweak the services any point in time during the journey of growth.

An Accounting Mess- Misguiding reports, last minute changes in entries, uneven deduction of taxes etc. lead to a chocked and inconsistent business growth and the best way to clear it, is to outsource your accounting and enjoy the seamless process.

What Exactly Should You Expect From Your Accounting Team? – Finsmart

Maintaining the accounts is utterly essential for any business. It provides you different information about the costing, expenses, pending payments, etc. Now, accounts management trends are different in various organizations. Few of them want an in house accounts team, which would maintain all the details of the same, whereas some are interested in taking services from the accounting outsourcing company. The outsourcing services in accounts management are even more popular nowadays for the quality of their solutions. There are so many global companies and even Indian companies to provide outsourcing accounting services to India.

The responsibilities of the accounts management team

The accounts management team has the respective responsibilities, which are crucial and even more vital than any other department in the organization. That is because money plays a pivotal role in the running of any business. If it can be handled and maintained correctly, then the growth would be faster. In this growth, the accounts team has some responsible roles to play, such as-

  • First of all, the responsibilities of the budget in different purposes and handling of them methodically belong to the finance part of the accounts team.
  • It verifies the needs of the organization and proposes the acts to be taken accordingly.
  • At the same time, it controls expenses and makes them meaningful to reduce the unnecessary costs of the company.
  • They should maintain the dues and pending amounts attentively so that they don’t cause a loss to the company.
  • The accounts and bookkeeping services are related to each other. So, bookkeeping is also another responsibility for the accounts team of some company.
  • It should also maintain the consolidated records of the earning, profits, and expenses to analyze the yearly growth of the organization.

The outsourced accounting services are too smart to handle all these matters. Mostly, in the case of bookkeeping services, these service providers have gained immense popularity.

The concept and the works of the outsources accounting services.

The concept of the outsourcing companies for accounts is comparatively new than the in house accounts services. You can even outsource the accounts services for your business that would provide smarter guidelines for the does and don’ts in your industry. There are many companies, which are outsourcing accounting services to India.

  • First of all, the outsourced accounts and bookkeeping services, save a lot of time and money of the organizations, especially the small business owners.
  • These provide overall consolidated solutions on the matters of accounting and bookkeeping services, for which you may need an entire team to hire for a full time with all the employees’ facilities.
  • This service uses the topmost and latest technology to execute the accounts works for the clients. So, there are preciseness and perfection at the same time in their works. A simple accountant or accountant team may not afford it in this manner.

Fins smart is an accounting outsourcing company, which smartly offers outsourced accounting services to its clients, especially the small business owners.

If you are looking for an Accounting Partner and not sure which Accounting and Bookkeeping company can be a right choice, then read our blog Factors To Consider While Choosing Your Accounting Outsourcing Partner.