What is Bookkeeping?
What is bookkeeping?Bookkeeping refers to the process of recording transactions to general and special journals and posting these transactions to their respective ledgers. Bookkeeping is an important record-keeping function of financial accounting that is essential in a duly-registered business of any kind.
This should be done by applying generally accepted accounting principles (GAAP) and the Financial Accounting Standards Board (FASB) for US companies.
The bookkeeping function consists of the first three steps of the accounting cycle: analyzing transactions, recording transactions in the general journal, and posting the transactions to the ledger. Most businesses outsource bookkeeping because hiring bookkeepers is expensive and most small-medium businesses don’t do large volumes of transactions per day.
Outsourcing bookkeepingThe bookkeeping function is best outsourced in order to keep administrative costs low while helping small businesses grow and become stable. Another advantage is that you are assured that you are working with a skilled and competent professional that has the appropriate experience and educational background for the job.
Outsource Accelerator provides you with the best bookkeeping outsourcing companies in the Philippines, where you can save up to 70% on staffing costs.
What are some of bookkeeping’s best practices?Bookkeeping is one of the most important processes in a company. Here are some of the best practices in bookkeeping that you might want to consider:
Use the services of an expertIf you don't want to perform your own bookkeeping for any reason, you don't have to worry about it. There are a lot of vendors who can provide you with bookkeeping services.
If you choose to outsource your bookkeeping, you should look for a reliable and reputable freelancer or a company. Professional accountants can save you a significant amount of money in taxes because of their extensive knowledge of tax regulations.
Monitor expenses with accounting softwareYour business budgeting should be thoroughly tracked down. Many companies document their expenses daily or weekly. They also save receipts to keep track of expenses.
Daily bookkeeping duties will take a lot of time if you don't have good core accounting software. As your firm grows, this load will only get heavier if you don't use technology.
There is a lot of time involved in daily bookkeeping tasks if you don't have suitable accounting software. If you don't employ technology, this burden will only rise as your company expands.
Get your finances under controlYou may monitor your business's cash balances by comparing your bank account balance to the register in your accounting software. Use the software's reconciliation feature each month to ensure that you don't miss any duplications, circular reference transfers, or other irregularities.
Make preparations for taxesThe end of the financial year is a critical time to pay attention to your tax obligations. Your firm could be in serious tax trouble if you overlook business's expenses.
Preparing taxes in advance avoids any unpleasant surprises during the tax payment period. Use an accounting system that properly tracks all loans and revenue streams to ensure that your company is paying taxes on time.
What is Payroll?
What is payroll?Payroll can refer to three things: 1) the calculation and distribution of paychecks; 2) the record of wages, taxes, contributions, and withholdings of employees; and 3) the total amount paid to employees by the company.
Payroll is important in different ways. For employees, the payroll is important for living expenses, and a timely or late paycheck can spell the difference between good and bad morale.
For businesses, payroll is important to see the actual net profit for the fiscal period. For business owners, a properly done payroll is important for compliance with the law. For this reason, many businesses entrust their payroll to dedicated professionals who can process them with speed and accuracy.
Outsourcing payroll servicesOne of the more popular outsourced functions is the payroll process. Because of the importance of having an efficient payroll, companies that can afford to do so tend to outsource it to dedicated professionals.
Outsourcing companies in the Philippines are experienced with the Generally Accepted Accounting Principles (GAAP) that are being followed in the country they are servicing.
Outsource Accelerator connects you with payroll firms that have extensive experience with the regulatory framework in the US and have a proven track record in accuracy and timeliness in payroll delivery. We make it easier for clients to learn about, and engage with payroll outsourcing.
How payroll is processedThe payroll process nowadays usually involves utilizing payroll software for more efficient and accurate handling. Yet, most small business owners still handle their payroll functions manually, especially when they are starting.
Before the payroll processing begins, employers should prepare the requirements given by their employees such as their tax and financial information. They would also need to secure their employer identification number (EIN) to ensure that deductions such as payroll taxes and employee benefits are accounted for.
The following are the steps for payroll processing.
Choose an effective payroll scheduleFirst, choose a payroll schedule that can work best for a business. Some of the most popular pay schedules include the following.
Weekly. Businesses can pay their workers on a specific day of the week, regardless of the date. For instance, payroll can be given every Thursday or Friday. Bi-weekly. In another variation of the weekly pay, businesses can provide payroll on a specific day every two weeks. Semi-monthly. Semi-monthly pay is the most common payroll schedule used in most countries. Employers pay their workers twice a month on two specific dates. Monthly. Lastly, employers can provide employee wages every month on a specific date.Pay schedules are usually affected by an organization's practice and the legal compliances for pay frequencies in a certain location.
Calculate employee's gross payDepending on an organization's practice, an employee's gross pay can either be fixed or based on their daily or hourly wages.
For the daily and hourly workers, employers should calculate the total number of hours or days an employee has worked in a pay period. A time tracking software can best benefit them for this.
Firms should at the same time consider overtime hours, late logins, leaves, and absences when calculating. Overtime calculations and other additional charges may depend on the country their employees are in.
Identify deductionsGather knowledge of the different deductions that employees are subject to. In the United States, the different deductions applicable for employees include the following.
Federal taxes/tax withholdings
State taxes
Social Security
401(k) contributions
Workers compensationDifferent states and countries collect different taxes and deductions. With this, employers should be mindful of the policies of each country where their workers sit. This would be easier with a reliable payroll provider on their side.
Calculate net pay and process paymentsSubtract gross pay to the applicable deductions for each employee. The amount left after deductions will be the employees' take-home salary for the specific pay period.
The most common ways to pay employees include direct deposit, prepaid cards loaded with salaries, and paychecks to be distributed to each worker.
Make necessary connections and keep recordsBe sure to keep records for salaries in different pay periods through copies of payslips and payroll records. Make any changes and corrections to employee salaries in case of discrepancies and inaccuracies in their pay.
Remit deductionsLastly, companies should make sure to remit the deductions from each employee as a part of their compliance. It's best to consult an accountant for the appropriate tax deductions and always report new hires to the Internal Revenue Service.
What is What is business process outsourcing?
What is Business Process Outsourcing BPO?Business Process Outsourcing (BPO) is the delegation of business processes to an external service provider to a nearby or farther location. BPO uses various technology-enabled services to optimize the delivery of services.
Some of the usual outsourced business functions are the following.
Payroll
Accounting
Human resources
Customer service
Sales
MarketingIn the case of content providers, these could mean hiring writers, remote editors, or virtual assistants.
BPO speeds up processes and enhances efficiency. Companies that outsource some of their business processes use their time on core services and competencies.
With this shift in focus, companies improve their current processes which may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies.
Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so. Outsourcing services can also help them save costs and resources in hiring suitable employees.
How does Business Process Outsourcing work?Business process outsourcing happens when a business taps a third-party service provider to operate some of its internal processes. Such ‘processes’ include customer service, accounting and finance, or sales.
It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.
Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing.
What are the benefits of business process outsourcing?There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include:
Cost savingsCompanies can enjoy savings of up to 70% by leveraging the salaries and costs in countries such as the Philippines and India.
Global marketBusinesses get to access a bigger pool of talent that can fit their requirements. They can have better options in hiring employees since they are not limited to what is available in their home countries.
Global presenceAt the same time, business process outsourcing opens clients to global trade opportunities. They can establish their global presence and expand more easily to other locations since they already have operations in the area.
Flexible workforceBPO reduces internal local compliance obligations including providing additional office spaces to employees. Instead, organizations can hold their business operations on a remote setup, most usually having their teams in an office provided by the BPO firm.
Leverage skillCompanies cannot always do everything on their own. BPO enables them to leverage the skills of other specialist companies on more complex tasks such as accounting and IT.
FocusLastly, BPO enables organizations to focus on their core business functions. This is since most of their non-core business operations are done with the help of a reliable service provider.
Business process outsourcing examplesThe business process outsourcing sector is a vast industry, generating over $200bn annually, and employing millions of people worldwide.
BPO can be seen in different forms and contexts, from hiring single staff to getting an offshore team. Some examples of BPO include:
Big enterpriseFacebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber
Medium-size businessesA medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines.
Small business and entrepreneurIt is common for small business owners to have a Virtual Assistant (VA) working for them full time and remotely from the Philippines.
What are the different types of BPO?The type of business process outsourcing can be characterised by their specialisation, location, and size.
Generalist or specialist BPOsBusiness process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalists, in that they offer a full range of professional services.
Meanwhile, some specialise in certain verticals such as the following.
Legal process outsourcingLegal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area.
Knowledge process outsourcing
Meanwhile, knowledge process outsourcing enables companies to outsource knowledge-related work including research and development, innovation, and creatives.
LocationBusiness process outsourcing typically operates from developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages.
Size of BPOThe bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.
Functions of business process outsourcingCollectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:
Finance and accountingOutsourced finance and accounting services help businesses manage their books, monitor cash flow, and keep up with corporate income tax compliances without fuss.
HealthcareHealthcare outsourcing, meanwhile, organizes various back- and front-end functions done for the healthcare and insurance industries.
Creative and contentCreative services outsourcing covers everything from post-production of Hollywood movies to newspaper and website content.
Tech, IT and developmentIT outsourcing involves delegating network management, web and app development, and cybersecurity protection to IT firms in different countries.
Sales & customer supportSome BPO providers specialize in sales and customer support for pre- and post-sales transactions. This helps companies meet the expectations and demands of their customers, keeping them satisfied even after their purchase.
MarketingBPOs and marketing firms can help in ongoing marketing, communication and branding activities for their clients. This helps them attract more suitable leads in a cost-efficient way.
Talent and HRBusinesses can delegate HR, recruitment and compliance to professional employer organizations to maximize recruitment and workforce management.
AdministrationGeneralist BPOs help organizations accomplish general business administration and operational activities. This includes data entry, appointment setting, and other related functions.
Supply chain managementLastly, e-commerce stores benefit from outsourcing supply chain management to manage warehouse and delivery processes.
Top BPO companies in the world’s top outsourcing hubsA wide range of business process outsourcing companies in different parts of the world provide utmost services to their Western and local clients. Many of them even earned recognition by award-giving bodies due to their performance in both their roles and their level of care for the employees.
Check out the top BPO companies in several outsourcing destinations below.
Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) servicesWith the rise of new offshore outsourcing locations, companies can have better options in terms of location and services they can delegate. However, finding a suitable BPO company can be a daunting task to be done on their own.
Good thing advisory services such as Outsource Accelerator is there to help them.
Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,500+ BPOs from different locations.
Outsource Accelerator's offerings make it easier for clients to learn about, and engage with, business process outsourcing companies worldwide.
Want to learn more about outsourcing? Check out the Inside Outsourcing book as well as the Inside Outsourcing book review today!
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