23 Feb 2024

Offshore Staffing for Accounting Firms: A Comprehensive Guide

Tax and accounting services are a crucial component of any business or organization. With the growth in global opportunities and the growing importance of accounting in business organizations, hiring an offshore accounting company is gaining popularity. So, what is offshore staffing, and what makes it different from outsourcing? This blog briefly examines this trend and presents a comprehensive guide for offshore staffing for accounting firms.  

Offshore staffing for Accounting firm

What is Offshore Staffing in Accounting? 

At the outset, offshore staffing is quite different from outsourcing. These two are different and distinct hiring models. Offshore staffing in accounting involves hiring remote employees from other countries to perform accounting tasks for a company. However, it also presents challenges such as managing cultural differences, communication barriers, and potential legal and regulatory issues. In contrast, outsourcing typically involves contracting a third-party service provider to handle specific tasks or functions, often to reduce costs or focus on core business activities.  

The Shortage of Accountants in the USA 

According to a 2022 The Wall Street Journal article, over 300,000 U.S. accountants and auditors left their jobs in the past two years, which amounts to a 17% decline. While there are several reasons for this decline, here are some specific instances of how this shortage could harm businesses in the USA and other parts of the world.  

  • Delayed Tax Filings:  Businesses that find it difficult to locate qualified accountants could find it challenging to file taxes on time. If you file your taxes late, the IRS can charge a penalty on tax returns for failure to file a penalty after the due date or the extended due date. If you owe money to the IRS, there’s also a ‘failure to pay’ penalty.  
  • Increased compliance risks:  Increased compliance risks may arise due to a shortage of accountants, potentially leading to a lack of precision and diligence in accounting work. Insufficient qualified accountants may result in difficulties in adhering to relevant regulations. 
  • Lack of focus on core business activities: An increased accountant shortage can cause a lack of focus on core business activities. This is because your attention could be diverted towards non-core tasks such as accounting and bookkeeping. Moreover, your business could be hindered from carrying out core activities like financial analysis. Therefore, developing and executing effective long-term strategies might be challenging. Your company may also struggle to optimize its finances, make informed decisions, and allocate budgets effectively.  
  • Decrease in client satisfaction: Since you now cannot focus on your core business activities, clients will naturally be dissatisfied with your work’s output and quality. Your attention could be seriously diverted and cause a loss of quality in your products or services. You could find it increasingly difficult to provide high-quality service to your customers, causing lower customer satisfaction and a loss of business.  
  • Increased audit risk: Since experienced accountants are now exiting the field and a shortage of newcomers exists, an audit risk now looms, potentially hindering the thoroughness of audits in companies. The departure of seasoned professionals is leaving a void in the overall accounting expertise, which could compromise the ability of organizations to ensure compliance with auditing standards and accurate financial reporting. 
  • Increased workload on existing staff:  Existing staff may have to take on extra responsibilities and work longer hours to compensate for the staff shortage. This could lead to burnout, decreased morale, and a higher possibility of errors. Also, the lack of oversight could compromise the integrity of financial records and expose the business to economic risks. 

The accountant shortage is a significant issue for U.S. companies that could substantially impact business in the country. Several initiatives are on the way for U.S. accountants, such as competitive pay and perks, investment in training and development initiatives, and upgrading current skills. However, other ways are being explored to mitigate the accountant crisis in America, including offshore accounting for accounting firms. 

How Accounting Firms in the USA Can Benefit from Offshore Staffing? 

  • Ready Availability of a Competent Offshore Team 

The ready availability of a competent and knowledgeable offshore accounting team is the most attractive aspect of offshore staffing. This allows you to manage accounting and bookkeeping tasks with ease. If you choose offshore accountants in countries with different time zones, you can provide your services around the clock. For example, India and the USA have a 12-hour time difference, which makes it convenient for you to respond immediately to a client’s urgent need for assistance.  

  • Accessibility to Professional Staff 

Accounting professionals are hard to find. You will know how challenging it can be to hire the right accounting staff for your company. Therefore, if your accountant leaves, you could incur a significant loss. Further, if you are an SME, you could find this particularly harsh as you need to spend more time to acquire a new accountant in a relatively short period. Hiring an offshore accounting team can offset this, as you won’t lose work even if your in-house accountant leaves suddenly without warning. 

  • Stricter QC Measures 

You will understand that accounting is a highly sensitive domain. Even the slightest error can have far-reaching consequences. So, businesses generally trust offshore staffing as it gives accounting firms the prospect of being more demanding of their service providers. This means stricter Q.C. measures that can help your business boost operational efficiency and bottom line with this solution. 

  • Helps Adapt to Busy Periods 

Your company’s accounting and bookkeeping needs could fluctuate over time, especially at the end of the financial year, which could be quite busy. Your accounting firm could easily manage its peak season’s increased workload through the use of offshore accounting services 

  • Higher Profits 

The primary goal of offshore staffing is to increase profits while decreasing costs without compromising productivity. Offshore staffing helps save money by lowering expenses such as salaries. Also, the time saved can be used better by focusing on core strategies. This contributes to higher profits and better bottom lines. 

How Does Offshore Accounting Help Accountant Firms Scale Their Businesses? 

Offshore accounting and outsourced bookkeeping services can help bring top-notch benefits. This strategy can help make accounting business more effective and scale your business effectively in the market: 

  • Improved Compliance:  Offshore accounting helps keep your accounting firm compliant with the prevailing regulations. There’s no need to worry about submitting incomplete information or missing tax deadlines, as all this is now the responsibility of the offshore accounting staff.  
  • Keeps Errors to a Minimum: Good accounting is all about high accuracy, up-to-date number-crunching skills, and extensive expertise. By roping in offshore expertise, you can rely on experienced personnel who handle large volumes of documents and accounts. This helps you free up your time and ensure you have accurate records.  
  • Maintains Transparency and Security of Data: You may be worried that hiring an offshore service could lead to data exposure for your accounting business. To protect your data, ensure that offshore firms employ rigorous procedures and comply with international privacy standards. Most offshore accounting firms in India comply with such standards to protect their customers’ data and adhere to the latest security protocols.  
  • Provides Improved Reporting: Good accounting and financial management require efficient reporting. Most offshore accounting companies in India offer accurate and professional reports per international reporting standards. Since offshore agencies are efficiently staffed with experienced accountants and other personnel, you do not have to worry about issues such as the quality of reporting, unlike what is faced with an in-house team. 
  • You Own a Dedicated Team: Delegating your accounting to a dedicated offshore team saves you from several hassles like internal data theft and financial fraud. Offshore companies often conduct internal audits and run many internal checks to remain immune from these issues.  

Final Thoughts 

In conclusion, choosing offshore accounting can significantly benefit the operations of your accounting firm and boost your profit margins. Through this route, you can increase your profits and productivity manifold. At KMK, we offer an extended accounting back-office solution, providing outsourced accounting and tax filing services at a significantly reduced cost. Utilizing our offshore service model, we can support you across various areas, including daily transaction recording, monthly reconciliations, accounts payable and receivable management, financial planning and analysis, and tax filings for corporations, partnerships, or LLCs. Reach out to us today for further assistance! 

Read More:

You may also like – STARTUP FINANCIAL STRATEGY: A STEP-BY-STEP GUIDE

Leave a Reply

Your email address will not be published. Required fields are marked *