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Is outsourced accounting right for your NFP?

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As your nonprofit strives to use its resources as effectively as possible, at some point, you might consider outsourcing the functions that fall under your accounting and financial umbrella.

Nonprofits often outsource areas that require specialized knowledge or a significant number of hours, such as payroll processing and payroll tax preparation. Outsourcing accounting functions also can provide benefits – if it matches up with your organization’s needs and budget.

Before committing to an outsourced accountant or an internal hire, consider the following:

Labor costs – Organizations that outsource their bookkeeping often realize an overall reduction in payroll, employee training and the cost of benefits. On-staff accountants are often charged with administrative tasks that could ultimately be accomplished with personnel that can be hired at a lower salary. Additionally, the outsourced provider would offer consistency, even when your organization has turnover. However, it’s important to know that sometimes the cost of outsourcing could be higher depending upon the mix of work required.

Depth of knowledge and expertise – Outsourcing with someone that specializes in nonprofit accounting often provides your organization with a higher level of expertise and greater resources than you could find if you hired your own accountant. The outsourced person likely has a number of individuals that they can consult with as issues arise, and these individuals will be knowledgeable in a variety of areas.

Efficiency – Bookkeeping is time-consuming, especially when dealing with multiple responsibilities. Moving bookkeeping, payroll and other financial responsibilities to an outsourced service provider allows your staff to focus on your organization’s mission. But, keep in mind that an outsourced accountant won’t be onsite every day.

Staying current with regulations and laws – Nonprofit regulations and laws are always changing, and it’s challenging and time-consuming to stay up-to-date on these matters. An outsourced accountant will likely be up-to-date on those matters that affect your organization.

Outsourcing allows you to work with financial professionals of varying levels of experience and expertise tailored to the functions they’ll perform. These responsibilities could include: …

Read the full article on: Charitable Advisors