Importance of Finance and Accounting Outsourcing for Small and New Businesses

In today’s competitive business climate, finance departments are constantly under pressure for balancing costs with benefits in every key decision. Especially for small and new businesses, this task is very time consuming and expensive as well. The option these firms have is to either hire the qualified staff and resources or get it done by outsourcing, which is sure a smart move.

The outsourced firm can handle various accounting tasks ranging from bookkeeping, accounts receivable, accounts payable, general accounting, management reporting, and other major F&A functions, that too with excellence. They provide services, on as-needed or hourly basis, or quick and immediate expertise. That means you get a high quality expert’s solutions, without hiring one full time. Plus, you can spend all your time and efforts into what you are best at.

Finance and Accounting Outsourcing

Here are some of the key roles of Finance and Accounting you can get outsourced,

1. Bookkeeping Services: Bookkeeping is the activity of keeping records of the financial affairs of the company and a professional bookkeeper is mandatory for your business firm. It can be a stressful task for a new business trying to stay on top of their finances and establish a business at the same time, so using an expert bookkeeping service is essential for the financial health of your business.

2. Account Reconciliation: Account reconciliation is the act of confirming that the balance in one’s checkbook matches the corresponding bank statement. You can well understand that how important it is to ensure a correct method for account reconciliation.

3. Financial Statements: The outsourced firms understand the value of proper financial reporting. They create, interpret and work along with you and assist you in maintaining and improving your business growth.

4. Payroll Services: For the Payroll services you just need to input some data then using the Payroll service, the outsourcers directs the deposit of employee paychecks, employee login of pay stub information and electronic payment of Taxes etc.

5. Accounts Payable & Receivable: In Accounts Payable, your businesses might be having multiple vendors for various company related expenses. A well skilled team of accountants will manage them all, with correctness and expertise.

Connect Accounting incorporates SMSF Outsourcing fulfilling these needs by carrying out important accounting tasks for the businesses. In this way, the businesses do not require to hire new accountants from outside. All you need to do is, provide the source documents, like bank reconciliations, revenue, expenses, payroll, inventory etc. The rest of the job is done by the proficient accountants and they also make sure that your tax paper work, bookkeeping, month-end reporting, year-end reporting etc. everything get completed on time and in an efficient & accurate manner.

The Ups and Downs of Outsourcing for Small Businesses

The process of allocating the business processes to the outside firms is known by the term Business Outsourcing. Almost all the services ranging from legal, accounting, bookkeeping services to customer support and IT services, can be easily and efficiently outsourced and is fast becoming a business standard.
With the privilege of internet and progressive communication means, the sharing of confidential documents, data banks etc is as easy as within the office walls. For examples in case of company’s accounting tasks, one can easily get their accounting, smsf auditing, bookkeeping etc from an offshore company with the ease like that of full time staff with lesser overheads.

The Ups of Business Outsourcing:-
Outsourcing presents lots of advantages, both to the business and its employees. It is considered to be a highly efficient way to harvest the best talents available in the market on an as needed basis. Some other highlights of outsourcing are:

Staffing Control – Small businesses often face the dilemma of shortage of quality staff. People come and go, seeking quick growth. The companies put in their quality resources to train the hired staff, and later the employees set for bigger firms, taking with them their newly gained knowledge and experience. Thus, instead of constant recruitments and training sessions companies can save a lot of their time and resources by outsourcing their tasks to other firms, without hiring a full time staff.

Economically Feasible – Outsourcing largely reduces the need of in house staff especially forAccounting Outsourcing, bookkeeping and auditing services. The companies get the flexibility to hire experts for months and years yet they can pay them on as needed basis, without incurring any in house management and upliftment expenses.

Focus on Competencies – Outsourcing is a great option for small businesses who cannot afford to hire experts full time. Hiring experts through outsourcing is like transferring the headache to the contractor and focusing on other key business tasks.

The Downs of Business Outsourcing:-
Despite all the advantages mentioned above, there might be a few drawbacks of Outsourcing business tasks to external staff. Here are a few,

Confidentiality and Privacy Threat – In the process of outsourcing business tasks, a company needs to provide the outsourcing firm access to company’s confidential data. Although confidentiality agreements are signed off before such a partnership, but there is always a threat to misuse of classified data in the era of gadgets and internet.

Dependence - Outsourcing Accounting Work also involves transmitting functional uncertainties to the outsourcing contractor as when a company hands over business tasks to another contractor, they are dependent on the contractor’s business tactics, integrity and faith.

Divided Loyalty – Outsourcing firms generally work with many clients, and that may include competitors in the same trade, thus their sincerity may be an concern. They have all the means to leak information etc, or maybe something like inaccuracy or late compliance of their tasks.

In order to get the best out of business outsourcing, a company needs to determine the right tasks and business operations that are appropriate for outsourcing as well as to know how to properly select contractors.

MYOB versus Xero

MYOB vs Xero

With the arrival of cloud-based accounting systems, MYOB’s long supremacy has been challenged but choosing a suitable provider for your business comes down to more than price.

Every provider looks better than the other and it’s difficult to choose one. The leading competitors in the Australian market are MYOB, Xero, Quickbooks, Reckon and Saasu.

Selecting an accounting system is imperative yet a perplexing decision for new ventures, especially as the players aim to attract start-ups with free demos that can be converted into paid ones in future.

The outstanding performance of Xero shares depicts the significant change that cloud-based accounting and bookkeeping is bringing to our accounting practices. Xero is leading the way when it comes to ease of usability on smart-phones and tablets. But most providers usually recommend a range of systems to the clients based on their needs, as the Xero product on its own would not be sufficient. It may need some add-ons, like those included in MYOB.

A more hybrid model is provided by MYOB. Some businesses may sync it and choose to use it offline as per their requirement which is not possible with a cloud based solutions.

SMSF trustees paddle up the SuperStream

The trustees of more than 130,000 self-managed super funds will be receiving a letter from the ATO about their new electronic reporting obligations. The letter will tell the trustees they must ensure their fund complies with a new government reform – which applies to them from July 1, 2014 – aimed at improving the efficiency of the superannuation system.

Australian Taxation Office

This new data and e-commerce standard, called SuperStream, was a byproduct of the Cooper review into superannuation and was one of the measures in the Stronger Super reform package released by the then Labor government.

The reforms were designed to improve the administration of superannuation funds and included:

• New data and e-commerce standards for super transactions.
• The use of tax file numbers for members as the primary locator for members’ accounts.
• Allowing for superannuation account consolidation.
• Improved treatment of super contributions where there are insufficient member details.
• The establishment of a body to advise the government on the implementation and maintenance of superannuation changes in standards.

This last measure became known as the Superannuation Guardians and has since been scrapped. Another reform scrapped by the Abbott government was a register to be maintained by the ATO of validated SMSF bank accounts. The reason for this having been scrapped is a mystery as it would have made it easier for super funds to establish that a bank account belonged to a complying SMSF and resulted in faster rollovers of members’ superannuation.

At the heart of the SuperStream system is a standard set of minimum conditions for the electronic transmission of superannuation data and payments. In all, there are five standards: business terms and conditions; data message formats; requirements for the communication and security of messages; electronic payments; and verification services.

The new system is being introduced in two stages. Super funds with members who work for a large or medium-size entity – defined as employing 20 or more people – must meet the new data and e-commerce standard from July 1, 2014. All other superannuation funds must comply from July 1, 2015.

To comply, members of an SMSF who are employed by a large or medium-size entity must update their superannuation details with their employer by May 31, 2014. In addition to providing their ABN and bank details, SMSFs must ensure they have signed up with a provider that allows for the electronic transfer of the super contribution and data.

Trustees of SMSFs who use an administration service, or an accountant who processes their superannuation fund’s accounts using a software package, should not have to do anything as the electronic service address for receipt of a contribution data message will be provided to them.

For those SMSF trustees not provided with the required data and e-commerce information, there are several alternatives. Some financial institutions will provide an electronic messaging service that meets the requirements for SMSFs that use their accounts.

One option for SMSF trustees will be an Australia Post service that ensures trustees can comply with the SuperStream data standards. This will cost $25 in the first year and $50 from June 2015.

http://www.smh.com.au/business/smsf-trustees-paddle-up-the-superstream-20140311-34k9m.html#ixzz2vjAi6hGG

ASIC finds no New Daily, super fund conflict

The corporate regulator has found no immediate signs of conflict of interest in relation to the investment of $3 million of members’ money by three industry superannuation funds in media start-up The New Daily.

Late last year, during a Senate Estimates Committee hearing, Nationals Senator John Williams raised the issue over AustralianSuper, Cbus and Industry Super Holdings’ investment in the online publication.

Williams questioned the use of member funds in a media investment and asked ASIC chair Greg Medcraft to examine the situation for possible conflict of interest concerns.

Medcraft opted to take the question on notice. ASIC provided answers to Williams’ questions in a written statement last month.

“As we do with other advertising generally, we will monitor the potential for content and editorial bias on superannuation reporting,”

ASIC said in the statement. “ASIC reviews the communications strategies of super funds to their members … we also review this content to consider whether it is misleading.”

The types of member communication ASIC had reviewed from other funds included websites, e-learning, calculators, seminars, blogs and newsletters, he said.

“In regards to advertising on The New Daily, we note that currently all advertisements are for Cbus, AustralianSuper and ME Bank,” he said.

“The articles currently on the site appear to be neutral and are not biased towards the interests of the industry superannuation sector.

“As such, the concerns in relation to conflict of interest are currently not readily apparent. The majority of superannuation articles appear to be focused on general superannuation education or general discussion regarding changes occurring in the superannuation space.”

ASIC had worked closely with the Australian Prudential Regulation Authority (APRA) on the issue of the appropriateness of funding the site, he said.

“Our understanding is that APRA has made inquiries about the nature of the funding to determine whether this funding is in keeping with the spirit of, and covered under, the sole purpose test as set out in section 62 of the Superannuation Industry (Supervision) Act 1993,” he said.

Excessive contribution provisions impractical

While the Australian Taxation Office (ATO) has withdrawn its proposed action seeking to legally outlaw excessive contribution provisions within an SMSF trust deed as a means to prevent trustees from breaching the non-concessional contributions cap, the practical application of this course of action seems unworkable, according to an expert superannuation lawyer.

ATO

The provisions in question operated by imposing an obligation upon SMSF trustees not to accept excessive non-concessional contributions, potentially making them hold the offending contribution in a trust structure separate to the super fund, Townsends Business and Corporate Lawyers special counsel Michael Hallinan explained at his firm’s latest Bacon Super and Eggs seminar in Sydney.

“I have difficulty with how these provisions can operate. My simple argument is I can’t see how they can originally accept a contribution and then reject it two or three years later when the issue arises,” Hallinan said.

“Bear in mind it is not illegal to make excessive non-concessional contributions. There can be adverse tax consequences, but it is not illegal.

“The other problem is the contribution is not excessive. It’s only the aggregate of the contributions in a financial year which is the excessive component, so it’s not an attribute of the contribution.

“So in my view these provisions don’t work because at the time of receipt you really don’t know whether the contribution is excessive or not, and you won’t know if it is excessive until all the contribution information for the financial year has been provided to the ATO and the ATO does its calculations and works out whether the aggregate of those contributions exceed the relevant caps.”

He did concede those types of provisions could work in the rare circumstance where the trustee knew the specific contribution would lead to a breach of the non-concessional cap at the time it was made.

“I presume once that decision is reached the trustee would immediately have to extract the money out of the fund and pay it into another bank account,” he said.

ASIC names new SMSF taskforce focus areas

The corporate regulator has revealed one-stop shop operators and misleading advertising through social media channels and seminars will be on its self-managed superannuation fund (SMSF) taskforce’s radar in 2014. The decision to expand the SMSF taskforce’s focus was made at the most recent taskforce meeting held earlier this month. ASIC commissioner Greg Tanzer said the taskforce would firstly appoint a small project team to explore the trend of one-stop shop operators that offered a range of services to SMSFs. 
“The project team will investigate the often complex business model structures of these operators and the risks to investors that this trend poses,” Tanzer said. “This area of focus comes in response to the recent collapse of the Charterhill Group, which operated as a one-stop shop providing, amongst other services, advice to clients on establishing SMSFs, rollover of existing superannuation funds into an SMSF, and the sourcing and purchase of investment properties.” The second area the taskforce will expand its work into is misleading advertising of SMSFs. ASIC regularly identified SMSF advertising on websites, in print and on radio that failed to comply with “Regulatory Guidance 234: Advertising financial products and advice services: Good practice guidance”, Tanzer said. “This work will be expanded to cover online advertising channels such as Twitter, Facebook and YouTube,” he said. “We will also be looking at SMSF seminars for evidence of misleading and deceptive conduct, as well as any unlicensed financial services conduct. “Where we identify any breaches, regulatory action will be sought and we will look to issue an alert to industry and the public to be wary of shonky selling tactics at SMSF seminars.” The regulator’s warning on the issue of property spruikers remained the same, he said. “If you are targeting SMSFs, if there is something in your promotion material that says ‘yes, you should use your superannuation for this purpose’, we regard that as investment advice, therefore you need to be licensed and if you aren’t licensed, we’re going to come after you,” he said. “The other thing is the deceptive promotion or indeed potential for fraud. 
“The message for people is that if you see it, let us know and the key message for SMSF investors is that superannuation is a far too important investment for the future to be taken by a glitzy promotion.” The SMSF taskforce was established in September 2012 in response to an increase in geared investment strategies, increasingly aggressive advertising, the collapse of Trio, and the subsequent Parliamentary Joint Committee on Corporations and Financial Services inquiry.